##ification ” is inevitable as more financial products are standardised and traded electronically. we are likely to see more algorithmic trading which do not require human intervention in trading decisions. as the cost of setting up trading platforms declines, trading venues including exchanges, electronic crossing networks, multilateral trading facilities will proliferate and compete for liquidity. 42. we have seen significant investments in technology to reduce latency and design in eversmarter algorithms to trade more efficiently. whether such innovations have led to more efficient markets for end - users to invest and to manage their risks are still subject to some debate. regulators worldwide also have been keeping abreast with innovative developments to understand newer forms of risks and market linkages, as well as to embrace the opportunities that these may bring. i will highlight a few examples that will be relevant to the world of exchanges. 43. i think we can expect innovations in distributed ledger technology that will be applied to the “ plumbing ” of financial markets, areas which we hitherto tend to take for granted. a distributed system should in theory improve resilience as it theoretically removes the risk of a single point of failure. if the clearing and settlement of equity trades can be reduced from the existing standard of 2 – 3 days to as little as 10 minutes, this will further reduce settlement risk. some have said that the near instant settlement of transactions can transform the financial system and free up billions of dollars ’ worth of collateral that is locked up during the trade settlement period. 44. technology can also lead to “ commoditisation ” of certain financial intermediation functions. just 15 years ago, the cost of brokerage for retail investors was as much as 1 %. but now our retail investors are able to access global markets at significantly lower brokerage costs. there will be no let up on cost pressure. we used to hear about brokerages such as e - trade offering stock trading at a $ 9. 99 flat commission ; now we have the likes of robinhood in the u. s. offering retail trading for free. 45. the advent of “ robo advisers ” also suggests that investors can access automated investment advice on their smartphones, without the need for human interface. some bis central bankers ’ speeches commentators believe that computer algorithms can essentially provide customized advice to investors at a fraction of costs compared to human financial advisers. 46. the interplay of new technology, different platforms and new players inevitably suggests faster and cheaper options ahead. these can impinge on the

to see what i have called “ tit - for - tat ” inflation [ 9 ] – with both parties trying to offset any real income losses [ 10 ] – we could see a negative spiral taking hold. monetary policy transmission the ecb cannot allow this to happen. and since profits are ultimately influenced by the business cycle, it is our responsibility to restrict demand enough to prevent such a spiral. that should, in turn, lead to slower margin growth and lower wage demands while reducing pressure in the labour market. but to gauge whether rates are sufficiently restrictive, we need to know how much traction our policy tightening is having – and is likely to have – on spending in the economy. that is why policy transmission is the third element we are looking at. so far, our rate hikes are being transmitted forcefully to bank borrowing [ 11 ] and lending rates – faster even than during previous hiking cycles. for the euro area, bank lending rates to firms currently stand at 4. 2 %, up by 267 basis points since may last year. this is their highest level since january 2009. bank lending volumes are also weakening, leading to a sharp contraction in money growth. from november onwards, monthly lending flows to firms have been negative on average. money ( m3 ) has also seen negative flows, causing its year - on - year growth rate to plunge from almost 12 % in mid - 2020 to 1. 9 % in april this year. and banks report that credit standards are tightening, which heralds lower lending flows to come. in the ecb ’ s latest bank lending survey, the pace of net tightening in credit standards was at its highest level since the sovereign debt crisis in 2011. this is the desired effect of our policy : we want financing conditions to tighten. and, so far, it has not been at the expense of bank performance, with the positive impact of higher rates on banks'interest margins outweighing the negative impact on volumes. but we know that our rate hikes have not yet been fully reflected in financing conditions. and we are also aware that recent financial market tensions may have intensified the tightening by increasing bank funding costs and encouraging more risk aversion. so we need to monitor carefully how this pass - through process is playing out. and if the recent tensions do leave a lasting footprint on markets, a given level of rates would mean tighter financing conditions – and that would have to be reflected in the level at which rates peak. at the same time, there is also uncertainty