costs of higher capital requirements are offset by relief elsewhere, namely for the taxpayer – quite apart from the stabilising effects which larger capital buffers have for financial stability. from a microeconomic perspective, one can, of course, well understand that there is resistance to higher capital requirements. that does not mean that such resistance is justified in macroeconomic terms, far from it. or, as mr hellwig put it, “ given these negative externalities from banks using debt rather than equity, there is no reason to refrain from requiring banks to have more capital on the grounds that equity is expensive and the regulation would raise bank ’ s cost of capital. quite the contrary, such a regulation would merely counteract the perverse incentives that are created by the corporate tax system and by the inability of government to commit to not bailing out banks. ” 5. conclusion allow me to summarise my thoughts as four basic propositions. first : the business models of a number of banks underwent a fundamental transformation associated with turning away from traditional business towards investment banking. second : this meant that profitability was subject to a high degree of volatility. third : if we solve the “ too big to fail ” problem, there will then be no reason to forgo the advantages of universal banks. fourth : adequate capital is a key element in achieving financial stability. these propositions might not cover everything, but i see them as vital elements. if these lessons are applied in the reform efforts, we shall already have achieved a great deal. i, at least, shall do my utmost to make this happen. bis central bankers ’ speeches

what purpose is the new form of money supposed to serve? and second, how can cbdc achieve its goals without compromising other central bank objectives such as price stability and ﬁnancial stability? clearly, central banks must ensure that the good that comes with cbdc more than outweighs any harm it might cause. that ’ s why benoi t ( tonne ) cœure calls for a “ monetary hippocratic oath ” in this context. we would need to make many important economic and technical choices on the design of cbdc. for example, should we use a token or an account - based system? should cbdc be issued directly to consumers or through intermediaries? should it bear interest or not? many more issues would have to be resolved. [ 4 ] all these characteristics must be tailored to the purpose of the new currency and to curtail potential side effects. 2. 1 potential benefits several arguments have been suggested in favour of cbdc, and i would like to highlight three of them. first, cbdc is often expected to be a practically costless medium of exchange, making economic and ﬁnancial transactions more [UNK]. [ 5 ] according to researchers at the bank of england, cbdc could give rise to productivity gains similar to those of a substantial reduction in distortionary taxes. [ 6 ] its availability may enable transactions to be made that have not previously been possible due to a lack of suitable payment medium. think of the small businesses that have potentially steered clear of online transactions because of the card processing fees. consumers, on the other hand, might have shied away from submitting their card information owing to security or privacy concerns. in the end, cbdc could increase the production of those goods that can be purchased with it and thereby raise total output. [ 8 ] take micropayments, for instance : if they became cheaper than they are today, cbdc could allow for new services and business models to take hold. for example, individual news articles could be sold online for a few cents and help ﬁnance journalistic efforts. of course, innovative payment solutions by private providers can also raise [UNK]. but there is a second argument in favour of cbdc : preserving ﬁnancial sovereignty. in view of facebook ’ s stablecoin initiative and other efforts, politicians have grown increasingly worried that bigtech companies could come to dominate payments in europe. in this context, cbdc is often regarded as a public alternative to foreign payment initiatives. yet