through self imposed regulation or self discipline. how can a bank change the incentive structure underlying its remuneration scheme if the others are not and – more importantly – if unregulated institutions like hedge funds are cannibalising them? how can boards improve their knowledge of what management is doing if they have little understanding of the complexity of financial instruments? there is clearly a coordination problem, i. e. a role for public policy. financial institutions would generally oppose constraints that reduce their profitability, but would ultimately accept them if the constraints are imposed on all. the bottom line is my starting line. the main problem with financial markets comes from conflicts of interest, at all levels. the problem with conflicts of interest is that those that are affected by them do not recognise them, sometimes not even in private ( i myself as a central banker might not be immune from this sense of denial ). experience has shown that self discipline and self regulation are not sufficient. there must be constraints and obligations, not only for individuals but also for institutions. if we really want to overhaul the financial system so that it can face the challenges of the future, we have to recognise this and act accordingly. in a global financial system, such an action requires a strong european initiative.

simply too important to be left to the market. 1 / 4 bis - central bankers'speeches second, in the absence of a public anchor, the emergence of new kinds of digital assets could harbour instability and confusion among citizens about what is money and what is not. take for example crypto assets, held or used by 16 % of americans and 10 % of europeans in 2021. their unbacked variants – such as bitcoin or ether – are too volatile to act as a means of payment. and while stablecoins are designed to be less volatile, and therefore more suitable for payments, they are vulnerable to runs - and often not backed at all as we witnessed earlier this year. this highlights the importance of the european crypto - assets regulation ( mica ) that will protect consumers against some of the risks associated with crypto assets. third, the entry of big techs into payments could increase the risk of market domination and dependence on foreign payment technologies, with consequences for europe's strategic autonomy. already now more than two thirds of european card payment transaction are run by companies with headquarters outside the european union. designing digital public money by designing digital public money we can get ahead of these developments and ensure that confidence in the monetary system is maintained and innovation is nurtured. issuing a digital euro would indeed safeguard people's confidence that " one euro is one euro ", allowing them to convert private digital money at par into digital central bank money. it would ensure that money continues to be denominated in euros. and it would be based on a european infrastructure, facilitating intermediaries to scale payments innovation throughout the euro area and thus strengthen europe's strategic autonomy. our work on exploring the underlying rationale, potential benefits and risks and core design principles of a digital euro has made good progress. it is not a race, but as a matter of fact the euro area is at a relatively advanced stage in exploring a central bank digital currency ( cbdc ). but to realise this vision, the focus of our work now shifts to the concrete design and embedding the digital euro in a sound legal framework. this is as an area where colegislators have an even more important role to play. i'm therefore very much looking forward to the legislative proposal for establishing a digital euro which the european commission will propose shortly. in particular, co - legislators must define the balance between competing public objectives in the policy areas that the treaty assigned to them. two aspects come to