lorenzo bini smaghi : the internationalisation of currencies – a central banking perspective speech by mr lorenzo bini smaghi, member of the executive board of the european central bank, at the joint conference “ the euro at ten : the next global currency? ”, sponsored by the peterson institute for international economics and bruegel, peterson institute for international economics, washington dc, 10 october 2008. * * * introduction 1 ladies and gentlemen, it is an honour to be here to celebrate the approaching tenth anniversary of the euro. it is a privilege to represent the institution – the european central bank – which over the past ten years has watched over the first steps of the euro and brought it up to be the second most important international currency in the world. the euro is now leaving behind its childhood and entering the phase of adolescence. as with many adolescents, it is faced with a common question : “ what would you like to do when you grow up? ” the ecb, like any parent, might tend to have an over - optimistic vision of its own child ’ s future. this is why we have adopted a policy of neither encouraging nor discouraging the international use of the euro. it should be an entirely demand - driven process. like modern parents, we recognise that the euro does not belong to us but should develop according to its own ambitions. we are here to ensure that it has a few key virtues, the first being stability. there are already several people – including in the united states, where even the birth was considered improbable a decade ago – who predict a bright future for the euro, anticipating that it will surge to become the dominant international currency in the coming decades [ chinn and frankel, 2008 ]. others, however, think that the euro is unlikely to overtake the us dollar [ eichengreen and flandreau, 2008a ]. today, i will not try to review what the euro has already achieved over the last decade. the ecb regularly publishes a report that can be easily consulted [ ecb, 2008a ]. what i would like to do instead is to assess what the implications are, in particular from a central banking point of view, of becoming an international currency. i will analyse both the advantages and the challenges. i will then try to assess whether the euro has the potential to further increase its role and examine what the main obstacles could be to achieving such a status. implications of an international

g., serving on a board of a civic institution ) that may not have a primary purpose of community development. in rural areas, bank participation in these kinds of activities can make a difference in supporting economic development. the anpr also seeks feedback on providing cra credit for bank volunteer activities in rural areas that do not involve the provision of financial or related services but have a clear community development purpose and greatly impact local communities, like helping to build affordable housing. our final major goal of the anpr is to provide a foundation for the agencies to converge on a consistent approach that has broad support among stakeholders. stakeholders such as the icba have expressed strong support for the agencies to work together to modernize cra. by reflecting stakeholder views and providing an appropriately long period for public comment, we hope the anpr advances the goal of building a foundation for the banking agencies to converge on a consistent approach that has the broad support of stakeholders. all three regulators have benefited from stakeholder input provided through comment letters, roundtables, and meetings. there is significant interagency agreement on the objectives of cra reform, and many of the ideas in the anpr reflect interagency discussions and regulatory proposals. in closing, we look forward to modernizing the cra in a way that strengthens the regulations to advance the core purposes of the statute, while providing greater certainty, tailoring regulations, and minimizing burden. we have appreciated the icba ’ s strong engagement throughout this process, and we look forward to your continued engagement as we seek to converge on a consistent approach that has broad stakeholder support. thank you. 1 i am grateful to amanda roberts, nancy riley, and joseph firschein of the federal reserve board for their assistance in preparing this text. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. return to text 2 see independent community bankers of america, “ data show community banks lead economic recovery, ” news release, august 19, 2020. also see, michelle w. bowman, “ community banks rise to the challenge ” ( speech at the “ community banking in the 21st century ” research conference, st. louis, mo, september 30, 2020 ). return to text 3 see federal reserve board, “ advance notice of proposed rulemaking : the community reinvestment act ( pdf ), ” ( september 21, 2020 ). return to text 2 / 2 bis central bankers'speeches