assume, for simplicity ’ s sake, that these goods are only produced domestically. if the prices of these products grow at a rate of 2 % per year, the overall average inflation is 2. 6 %, exceeding the 2 % objective of most central banks in advanced countries, including the ecb ’ s. if some of these goods and services are produced abroad, the rate of their price increase may be even higher, due in particular to the balassasamuelson effect that i mentioned previously. as the shifting of production to countries with lower wages tends to fade away, any wage increase or exchange rate appreciation in eme will lead to higher import prices in advanced economies. the central bank then has to choose between either revising the inflation rate objective upwards and taking account of imported inflation, or maintaining the inflation objective unchanged, which means lower core inflation. in both cases, headline inflation is bound to be higher than core inflation. this means that price increases for imported goods must not feed into wages and domestic prices. the implications for monetary policy are quite complex. the stance of monetary policy cannot be assessed on the basis of core inflation, given that the interest rate incorporates expectations of headline inflation. keeping the policy interest rate unchanged while headline inflation rises – even if core inflation remains unchanged – implies de facto allowing for the monetary stance to become more accommodative. over time this is likely to impact on core inflation. it is certainly a challenge to make sure that core inflation remains subdued and lower than headline inflation if imported goods prices increase by more than 2 %. this can be achieved without additional monetary policy tightening only in a friction - less world, in which domestic wage and price - setters accept the permanent change in relative prices. we obviously need more work on these issues, which are particularly relevant in light of past experience. indeed over the past decade international and national institutions have often made forecast errors in the same direction, underestimating inflation and overestimating growth in advanced economies ( chart 6 ). this has led to an overly accommodative policy. if we want to avoid repeating the same bias, we should be more alert to this issue. macroeconomic policies another way in which advanced economies are affected by globalisation is through its unbalanced nature. globalisation is very advanced in trade and economic activity. in the financial area, however, globalisation is more limited, in the sense that emes are characterised by an excessive demand for and an insufficient production of high quality

of central bank digital currency on physical cash? what would be the impact on central bank seigniorage? how would market participants change their investment bis central bankers ’ speeches strategies and business models? would there be any implication on the integration of the european capital market, financial inclusion, and economic growth? i will certainly not attempt to answer today this list of questions, which could be further continued. i just want to show that the narrow issue of a move of the eurosystem ’ s market infrastructure for the settlement of payments and securities would involve far more issues than an assessment of the technical capabilities of dlt. we have a lot of more thinking to do. within the ecb, i will steer an organisational structure for analytical work on technological innovation in the financial sector. it will range from practical aspects, such as the possible usage of dlt for our eurosystem market infrastructure, to more research driven activities like the implications of the issuance of central bank digital money. in this context, we publish today two papers on the impact of dlt on securities post trading. i dare say that there is a big demand for research into the dlt related questions and their policy implications. contributions in this field are highly welcome. part 3 : observations on dlt from the catalyst and oversight perspective let me finish with some reflections from the eurosystem ’ s catalyst and oversight perspective. we strongly believe that the creation of an integrated european market for payments and securities brings improvements in efficiency and contributes to economic growth. in its catalyst role, the eurosystem aims to ensure that technological innovation does not lead to a disruption or re - fragmentation in the market. as a facilitator, the eurosystem stands ready to help the industry co - ordinate its efforts to work on standardisation and interoperability both in the payments and in the post - trade domain. standardisation and interoperability are also key issues for dlt. it would seem almost ironic to look at a consensus technology from a proprietary perspective and to create silos. on the other hand, is a permission - less world without a trusted third party or a supervised gatekeeper a utopian approach that flies in the face of human history? it is a positive signal that there are collaborative initiatives between fintech companies and banks and between banks, market infrastructures and technology companies. in the post - trade domain, we recently had a workshop which came to the understanding that the involvement of the eurosystem in the