drawn to the idea of issuing a fast, efficient, digital currency that does not carry the cost of securing, distributing and processing physical banknotes and coins and that can be tracked in real time as it moves through the financial system. the development of dlt in recent years now provides the possibility of a supplement to physical cash in the form of central bank digital currencies. the bank of england was among the first central banks to take notice of the feasibility of a central bank digital currency, and other monetary authorities have since followed7. cbdc is a potential new form of digital central bank money. in the current banking system, only commercial banks hold digital money in deposit at the central bank, i. e. reserves. by introducing an universally accessible cbdc, every household and business would be enabled to hold direct claims against the central bank. in practice, the central bank would guarantee free convertibility at par ( i. e. 1 : 1 ). this practice would make the digital currency a secure store of value, incentivizing individuals and businesses to hold the cbdc. one major issue, however, is whether the cbdc should be an interest bearing asset or not. 3 / 6 bis central bankers'speeches there are two cases : a ) cbdc pays no interest, just like paper currency. in this case, households and companies would be incentivized to hold most of their liquid funds in interest bearing deposit accounts at commercial banks, keeping the use of the digital currency fairly modest. however, this form of digital currency would constrain the ability of central banks to push interest rates below zero during periods of weak aggregate demand and deflation because depositors would swiftly move their funds into digital currency paying zero interest. thus, the effective zero lower bound on interest rates would become a more binding constraint for monetary policy. b ) cbdc is introduced as an interest bearing currency. in this case, the central bank would pay interest for digital currency accounts held at the central bank by individuals, companies and banks, similar to the deposit facility for commercial banks. if the digital currency bears interest, it will likely affect the demand for physical cash out of circulation, at least to a large extent. in a recent working paper of bank of england, cbdc is defined as “ a central bank granting universal, electronic, 24x7, national - currency - denominated and interest - bearing access to its balance sheet ” 8. furthermore, with an interest bearing cbdc, still

john iannis mourmouras : implications of the uk vote to leave the eu – a view from the south panel intervention by professor john iannis mourmouras, deputy governor of the bank of greece, at the bank of italy - omfif main meeting, rome, 22 september 2016. * * * intervention in a panel meeting with lord ( norman ) lamont, former uk chancellor of the exchequer, ambassador antonio armellini, and philip middleton, deputy chairman, ernst and young, omfifadvisory board, moderated by fabio pannetta, deputy governor, banca d ’ italia, at the banca d ’ italia - omfif main meeting in rome ( italy ) on 22 september 2016. disclaimer : views expressed in this speech are personal views and do not necessarily reflect those of the institutions i am affiliated with. ladies and gentlemen, it is a great honour for me to take part in such a distinguished panel. on this very important matter of implications of the uk vote to leave the eu, i would like to focus on a couple of issues : firstly, on the potential effects of brexit on the dynamics of european integration and indeed offer a southern point of view and, more particularly, make five points from the south on the brexit vote. secondly, i will examine the implications of brexit on what central banks do in terms of monetary policy, including the ecb. 1. a southern view on brexit ’ s implications for the eu the european union is currently facing crises on multiple fronts ( anaemic growth, high unemployment, persistently low inflation close to deflation, a debt crisis, an ongoing migrant crisis ), but brexit represents the biggest medium - to long - term challenge of all. point number 1 : a deeper look into some european failures that influenced the brexit vote euroscepticism is now a strong sentiment in europe. populist, authoritarian parties are in government or in a ruling coalition in nine ( 9 ) countries of the eu. this is an alarming figure. referendums in italy and hungary, and national elections next year in the netherlands, the czech republic, france and germany, are expected to reinforce this eurosceptic mood. eurocrats should take note of this reality. beyond the obvious economic concerns which triggered the uk vote to leave the eu, everyone agrees that the eu needs to address the issue of its democratic deficit and accountability. this is obviously