, which sets europe on a steady path to tackle emerging challenges. the legislative journey has just begun and will provide further opportunities for fine - tuning the proposal. the ecb is analysing it with a view to providing a formal legal opinion. implementing these oversight and regulatory initiatives will guarantee that the prospective use of stablecoins to provide payment services within the eu will respect the same standards that currently exist for payment systems and instruments. a multi - sectoral response from central banks, financial regulators, data protection authorities and competition authorities is necessary. the european commission, in its retail payments strategy for the eu, announced that it will examine the need for legislation in this area. introducing systemic products based on stablecoins before the necessary elements of a comprehensive policy have been implemented, especially as regards the oversight and regulatory response, could endanger rather than benefit the european financial system. in september, five eu member states ( germany, spain, france, italy and the netherlands ) issued a joint statement which maintained that no global stablecoin [ 17 ] project should begin operation until the relevant legal, regulatory and oversight requirements have been addressed and met by the project. and in october, the g7 statement on digital payments [ 18 ] recognised the regulatory and public policy issues arising from global stablecoins. conclusion the process of digitalisation cannot be reversed – on the contrary, it is picking up speed. global stablecoins are an expression of the need for change. however, they can pose serious risks, both to our monetary sovereignty and financial stability and to the eu ’ s market structure, competitiveness and technological independence. we should continue to be open to global competition in order to foster innovation. but we should first ensure that we are prepared to make the most of it, to the benefit, not the detriment, of eu citizens. the ecb ’ s response to the ongoing transformation of the payment system is first and foremost a policy response. our focus is on stimulating the development of safe and efficient eu payments that are fit for global competition. [ 1 ] for a detailed analysis of these solutions, see ecb ( 2019 ), “ implications of digitalisation in retail payments for the eurosystem ’ s catalyst role ”, july. [ 2 ] bullmann, d., klemm, j. and pinna, a. ( 2019 ), “ in search for stability in crypto - assets : are stablecoins the solution? ”, occasional paper series, no 230,

policy has an impact right across the real economy. this brings me back to my initial hypothesis – namely that monetary policy in the euro area may work better if other policy areas play their part. because the dynamics of the abs market are significantly influenced by the regulatory framework. and there is still work to be done here. let me say quite clearly : no one wants to have the complex, opaque products of the precrisis years. also, repackagings of the umpteenth tranche of a financial derivative should be things of the past. no one wants to promote a certain class of product just for its own sake. and securitised sub - prime mortgages in the united states certainly made an inglorious contribution to the emergence of the financial crisis. but the regulatory framework should be appropriate for the actual risk. and in this respect there are significant differences between current and previous securitisations and between the experiences in the us and those in europe. bis central bankers ’ speeches since the start of the 2007 – 08 financial crisis, the default rates of european abs were on average between 0. 6 % and 1. 5 %. in the us over the same period, they were on average 9. 3 % to 18. 4 %. european sme abs are even further below these default rates, at about 0. 1 %. the current rules lump all abs together and are much too conservative. they effectively question their existence. under the current regulatory conditions simple, transparent abs built on real assets face almost as many problems as much more complex financial products. the ecb has therefore, in cooperation with the bank of england, made a number of proposals for a better functioning securitisation market in the european union. that this approach has been welcomed in principle by the governments of the member states is shown by the joint working paper of the finance ministries in berlin and paris. the proposals are derived in part from the quality and transparency demands that the central banks place on abs, which can be deposited as collateral in monetary policy operations. and because we, as a central bank, have to protect our balance sheet, these demands have always been very high. the abs market is therefore a good example of how financial market policy can benefit our monetary policy and can also contribute to the recovery in the euro area. thus, two goals of good financial market policy in the european context can be named : it should be growth - friendly and it should support a successful implementation of monetary policy