in asset values of recent years has had important effects on virtually all areas of our economy, but perhaps most significantly on household behavior. it can be seen most clearly in the measured personal saving rate, which has declined from almost 6 % in 1992 to effectively zero today. arguably, the average household does not perceive that its saving has fallen off since 1992. in fact, the net worth of the average household has increased by nearly 50 % since the end of 1992, well in excess of the gains of the previous six years. households have been accumulating resources for retirement or for a rainy day, despite very low measured saving rates. the resolution of this seeming dilemma illustrates the growing role of rising asset values in supporting personal consumption expenditures in recent years. it also illustrates the importance when interpreting our official statistics of taking account of how they deal with changes in asset values. with regard first to the statistical issues, capital gains themselves are not counted as income, but some transactions resulting from capital gains reduce disposable household income as we measure it, while having no effect on consumption. as a consequence, as capital gains and these associated transactions mount, published saving rates are decreased. for example, reported personal income is reduced when corporations cut back payments into defined - benefit pension plans owing to higher equity prices ; however, such reductions do not diminish anticipated retirement income and thus should not lower consumption. and reported disposable income is decreased when households pay taxes on capital gains realizations that would not have been so – 3 – large in less ebullient markets. however, capital gains tax payments also are highly unlikely to be associated with lower spending because the cash realized from the sale of the asset exceeds the tax, and in most cases the typical household presumably does not perceive this transaction as reducing available income or financial resources. together these two effects probably account for an appreciable portion of the reduction in the reported saving rate. but beyond these statistical issues, there is little doubt that capital gains have increased consumption relative to income from current production over recent years. economists have long recognized a “ wealth effect ” – a tendency for consumption to rise by a fraction of the capital gains on existing assets owned by households – though the magnitude of this effect remains difficult to estimate accurately. we have some evidence from recent years that all or most of the decline in the saving rate is accounted for by the upper income quintile where the capital gains have disproportionately accrued, which suggests that

does not embody a claim of its holders against the libra association. if libra were to be treated as a transferable security or a different type of financial instrument, both the libra association and any other entities engaged in providing investment services through libra coins would fall within the remit of the markets in financial instruments directive ( mifid ii ). alternatively, if libra were to qualify as a virtual currency then, under the fourth anti - money laundering directive, both calibra and its authorised resellers would become subject to the directive ’ s anti - money laundering and counter - terrorism financing obligations, and to its registration requirement. given the different regulatory implications of libra ’ s legal 2 / 4 bis central bankers'speeches characterisation, regulatory intervention is essential, to either confirm libra ’ s classification under one of the existing legal and regulatory frameworks, or to create a dedicated regime adjusted to its specificities. a second challenge is to ensure that the relevant eu and member state regulatory and supervisory authorities can assert jurisdiction over libra and its network. but how can this be done when the entities behind libra are located outside the eu? one way would be to require national custody of a share of the libra reserve funds equivalent to the amount of libra in circulation in any given eu member state. but there may be other ways to ensure effective public control over libra and its network, and these are worth exploring. ensuring that payment systems are safe and accessible and exercising control over the financial market infrastructures that underpin our economies will remain public good objectives. and the conditions under which collateral or settlement finality are accepted will remain prerogatives of the regulatory or legislative authorities. the third challenge is the need for cross - border cooperation and coordination. because libra will be used across borders, it is a matter of international interest. its global nature would also call for a global regulatory and supervisory response to avoid regulatory arbitrage, ensure consistency of outcomes and guarantee the efficiency of public policy responses to libra. there are welcome signs that the global community is already working together to mitigate libra ’ s risks. both the g7 and the committee on payments and market infrastructures have evaluated libra, with an emphasis on its potential use in money laundering and terrorist financing. further work is expected by the g20, the financial stability board and other fora with a stake in the stability of the global monetary and financial system. finally, i would like