we can weigh the arguments and draw any conclusions. alternatives to cbdc ladies and gentlemen, page 8 of 10 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel : + 49 ( 0 ) 69 9566 3511, fax : + 49 ( 0 ) 69 9566 3077 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. looking at the future of payments, consumers ’ preferences and needs should be front and centre. the general public want quick, convenient, secure and cheap payment methods – including for payments abroad. that, however, does not necessarily require cbdc. of course, market failures could justify a larger role of the state. but in a market economy, offering innovative payment solutions to the public and interacting with customers should be a primary task of the private sector. central banks have to ensure that the payment system runs smoothly and they can act as a catalyst. this is why the eurosystem is supporting the “ european payments initiative ” launched by a group of 16 major euro area banks. this initiative is seeking to replace national schemes for cards, online and mobile payments with a unified card and digital wallet that can be used across europe. 12 beyond that, digitalisation will leave more and more processes fully automated. therefore, incorporating a programmable payment medium would be practical and relevant for smart contracts or machine - to - machine payments. to facilitate this idea, the bundesbank and the federal ministry of finance are co - chairing a group comprising representatives from the two institutions, the financial industry, and the real economy. i ’ m sure that private sector providers will be able to develop convenient and efficient applications for consumers and businesses. _ _ _ _ _ _ _ _ _ _ _ _ _ 12 european central bank ( 2020 ), ecb welcomes initiative to launch new european payment solution, press release, 2 july 2020. page 9 of 10 deutsche bundesbank, directorate general communications wilhelm - epstein - strasse 14, 60431 frankfurt am main, germany, tel : + 49 ( 0 ) 69 9566 3511, fax : + 49 ( 0 ) 69 9566 3077 presse @ bundesbank. de, www. bundesbank. de reproduction permitted only if source is stated. however, in the future, as today, recipients of large payments will prefer settlement in central bank money

##s are repaired. where does all this leave us? the argument that it ’ s possible to grow the economy without much increase in inflation is, of course, seductive and enticing. it ’ s like being offered a free lunch. and yes, there are some grounds for thinking that the trade - off between growth and inflation may well be unusually favourable. but how strong those mechanisms actually are is far from clear. and it seems for a more detailed discussion of some of these points, see mccafferty ( 2013 ). there are a number of empirical studies that suggest financial crisis can have material effects on productivity and output. see, for example, furceri, d and mouragane, a ( 2009 ), oulton, n and sebastia - barriel, m ( 2013 ), imf world economic outlook ( 2009 ). bis central bankers ’ speeches particularly optimistic to assume that the financial crisis and the near crippling of our banking system has played little role in the recent limp supply - side performance of our economy. taken to its limit, the argument that monetary policy can be used to expand demand with little or no implications for inflation challenges the consensus that the best contribution that monetary policy can make to the long - term health and prosperity of the economy is to deliver price stability. that consensus is based on painful experience that monetary policy can ’ t affect the level of output in the long run. that we can ’ t generate permanently higher output and permanently higher employment simply by printing more money. 9 we should be nervous about how quickly we overturn that consensus. conclusion and summary let me conclude. the financial crisis has thrust the rather reserved world of central banking and monetary policy into the spotlight. that is both understandable and healthy. monetary policy failed to prevent the financial crisis. and in many countries, including the uk, it has failed to stimulate the growth that we all long to see. it ’ s only right that inflation targeting – the dominant paradigm governing the operation of monetary policy in much of the industrialised world – should be questioned and challenged. and to my mind it has a good story to tell. the inflation target ensures that the primary objective of monetary policy is to deliver price stability. but it affords the flexibility that it can be operated in such a way as to support output and employment. the mpc has used that flexibility to the full in recent years : it has been at the forefront of providing support to our economy in the aftermath of