financial crisis has intensified the debate as to whether monetary policy should be actively used to contain asset price booms and bubbles. this is the idea that central banks should “ lean against the wind ” of a sustained and swift upward movement in asset prices. in general, the view on “ leaning against the wind ” in the central bank community seems to have shifted more in its favour since the outbreak of the crisis. in the past, there were some very vocal critics of “ leaning against the wind ” whose arguments included the following : monetary policy is too blunt a tool to contain bubbles. increasing the main refinancing rate has implications not just for mortgage rates but also rates on loans given to other sectors of the economy and other potentially non - booming asset prices. “ leaning against the wind ” is a very complex tool to use in a currency union such as the euro area where one can experience diverging trends in house and other asset prices across countries finally, as i have mentioned, asset price booms are not always costly and it ’ s difficult to identify those that are in real time. since the outbreak of the financial crises, more and more empirical evidence and theoretical arguments have been put forward either directly or indirectly supporting the “ leaning against the wind ” proposition. the arguments supporting this proposition include the following : the current and past crises highlight the potentially significantly high costs of asset price booms and busts simple deviation indicators help with the early detection of potentially costly house price booms / busts. ( deviation from long term trends in credit - to - gdp ratio is a trigger for the activation of the counter - cyclical capital buffer. data on house prices and mortgage loans may also be used by authorities as complementary source of information in buffer settings. ) there is increasing evidence that banks ’ attitude to risk are correlated with the monetary policy stance ( risk taking channel ) small increase in rates might break herding behaviour of private investors. the debate is ongoing. regarding the ecb ’ s stance, some elements of “ leaning against the wind ” are implicitly incorporated in the monetary policy strategy through the second pillar of monetary analysis. having said this, it should be clear that “ leaning against the wind ” is only a second best instrument, to be considered once macro - prudential tools should have proven to be ineffective and only to be used in very special circumstances, e. g. in case a rise in asset prices is geographically widespread and thus threatening price stability in the monetary union in the long - run.

– putting the existence of the two - tier banking system at risk. in this situation, the efficient flow of credit to the economy would likely be impaired. the central bank – now holders of deposit funding – would have to decide which projects were financed, either directly by replacing commercial banks, or indirectly by deciding which banks received funding. this is an undesirable situation for european central bankers for two reasons : 1. legally, the treaty provides for the ecb to operate in an open market economy. 2. and, by the same logic, we are well aware of friedrich von hayek ’ s warnings about “ the pretence of knowledge ”. 14 decentralised market decisions are the “ first choice ” when it comes to allocating resources in an optimal way. this includes the allocation of credit. overall, there is currently no convincing motivation for the eurosystem to issue dbm to the general public. it is unnecessary at present and, when the likely negative impacts on the financial system are taken into account, such a move appears disproportionate to the aims put forward by 7 / 9 bis central bankers'speeches its proponents. there is no need to fix something that is not broken. if anything, one could imagine a digital representation of cash that replicates the features of cash in the reasonably distant future, if citizens demanded it. such an approach seems more appropriate for jurisdictions whose currencies face domestic regress as they are also not widely accepted beyond their territory – which is certainly not the case for the euro. conclusion let me conclude. virtual currencies are not money, nor will they be for the foreseeable future. their market share is still small and their ties to the real economy are still limited. but this can be subject to change. regulators and legislators on all levels should therefore urgently pay close attention to mitigating the potential risks that could stem from growing vc business. it is not unknown for new innovations to bring about euphoria and hype, which in turn fuel bubbles that eventually burst. and indeed, the hot air is already escaping from some of these bubbles. but just because the initial euphoria and hype subsequently fade, it does not mean that the innovation is without virtue, even if early market leaders may not last the distance. despite the many defaulted railroad bonds, railways are a common mode of transport today. from london you can even take a train directly to many parts of europe through the channel tunnel – whose