11 / 29 / 2019 consistency as a mandate | deutsche bundesbank consistency as a mandate speech at the ceremony to commemorate “ 250 years of the pfandbrief ” 28. 11. 2019 | berlin | jens weidmann 1 introduction 2 the pfandbrief as a model of success 3 monetary policy 4 financial stability 5 green ﬁnance 6 capital markets union 7 conclusion 1 introduction dr hagen, ms lambrecht, ladies and gentlemen, many thanks for inviting me. it gives me great pleasure to be with you today. last week, a new exhibition opened at the german historical museum here, dedicated to wilhelm and alexander von humboldt. wilhelm, the older of the two brothers, is supposed to have said : “ only those who know the past have a future. ” it is therefore worthwhile to take a look back at the past. we have already learned much today about the genesis of the pfandbrief. just over two weeks after frederick the great issued the cabinet order which paved the way for the pfandbrief, wilhelm ’ s brother alexander, whose thirst for adventure and knowledge holds us in thrall even today, was born. alexander von humboldt was much more than a polymath and scientist. he was also a daredevil for whom no risk was too great. on the long boat trip along the orinoco and rio negro rivers, his boat capsized twice in waters infested with crocodiles and piranhas. in the andes, too, humboldt narrowly https : / / www. bundesbank. de / en / press / speeches / consistency - as - a - mandate - 816296 1 / 9 11 / 29 / 2019 consistency as a mandate | deutsche bundesbank escaped death when, next to him, a wall of snow suddenly broke off and plunged into an abyss. the other birthday celebrant has no such tales of derring - do to offer. the pfandbrief is less about daredevil adventures and more about consistency and soundness. in this respect, it shares a similar fate to the bundesbank : both are regarded as being rather dull. boredom is less desirable for a festive occasion such as this, but all the more so for friedrich nietzsche, to whom boredom was a precondition for original thought and productive action. central bankers do not ﬁnd boring to be all that bad, either. as former bank of england governor mervyn king used to

bundesbank. unlike consumer or durable goods, central bank money does not have any consumption or utility value. and the issuing central bank ’ s credit quality and integrity is reflected in the value of its currency. the value of a currency, then, hinges on trust in the central bank. not just that : the issuer – so in the euro ’ s case, the eurosystem – takes collateral from its monetary policy counterparties as a “ deposit ” for providing euro currency. that indirectly anchors the euro in the real economy. virtual currencies, by contrast, have no issuer, no footing in the real economy. no one has to redeem them. they are a fabrication and propagate according to a fictitious set - up in virtual systems which, in some cases, can be altered or newly created at the whim of a small group of participants. what is more, their governance regime is opaque, if not to say obscure – not to mention the fact that the identity of the participant or participants – no one knows for sure how many there are – behind the pseudonym satoshi nakamoto remains shrouded in mystery. virtual currencies are exchanged in the same way as goods, but they have no intrinsic value of their own. that is undoubtedly one reason why their value is highly volatile. over the long term, that naturally also exposes bitcoin holders to the risk of total loss. for us, bitcoin is not money, it is a speculative plaything. the great number of sometimes dubious initial coin offerings is a clear indication that bitcoin is more of a funding instrument. to repeat : it is more of a speculative plaything than a form of payment. hence my repeated warnings against investing in virtual currencies. we are witnessing a remarkable increase in the value of some virtual currencies. but that does not alter the risk of total loss. 2 / 5 bis central bankers'speeches 2. blockchain / dlt in the world of payments for us, bitcoin ’ s most important contribution is the underlying blockchain technology, or to put it more broadly, distributed ledger technology ( dlt ). this technology could help boost efficiency in payment and settlement processes. that is why we have been looking at this technology from three different perspectives. first, the bundesbank develops and runs major payment and settlement systems, often in conjunction with other central banks, and in this context we explore innovative technical capabilities which can