carl - ludwig thiele : citius, altius, fortius – challenges for payments and settlement systems and their analysis speech by mr carl - ludwig thiele, member of the executive board of the deutsche bundesbank, at the conference " economics of payments viii " 2016, eltville am rhein, 9 november 2016. * * * dear participants of the economics of payments conference, dear president weidmann, thank you for your welcoming introduction to this conference. on behalf of the executive board of the bundesbank and of the directorate general payments and settlement systems i too would like to extend a warm welcome to everybody attending this event at our training and conference centre in eltville. the latin phrase “ citius, altius, fortius ", which translates as “ faster, higher, stronger ", has been the motto of the olympic games since 1949. the french dominican preacher henri didon originally coined the term back in 1891 for a youth sports competition, the aim being to motivate his students to give their level best and survive the stress of competing. this rallying call strikes me as equally prescient today with regard to payments. market participants ’ expectations of the availability, speed and security of payment systems are growing at an ever increasing rate. users are demanding that payment be made almost immediately, wherever the recipient is in the world and round the clock, all without any hiccups during transmission. ideally, payees would like to know exactly when they will take receipt of payment so as to be able to use that expected liquidity again in real time. if we are to fulfil these expectations then it will be necessary to massively expand the requirements that apply regarding the operation, oversight and analysis of payment and settlement systems. the operators of payment and settlement platforms, be they public or private in nature, are now consequently faced with growing challenges. the payments landscape is currently undergoing a number of significant developments that may prove game - changing. these include the advent of instant payments and the establishment of innovative fintech solutions as well as distributed ledger technology, which is built upon blockchain algorithms. the eurosystem is currently examining and enhancing its market infrastructure services by pursuing a range of project initiatives. on the one hand, following the successful migration of target2 securities, it is anticipated that the benefits and modern technology offered by this new platform can be put to use for target2 as well. moreover, in a second project, the eurosystem

we are now asking ourselves what the next – hopefully stable – phase will be like. in the academic and political discussion on future monetary policy, these questions include : what monetary policy strategies will be employed? which monetary policy instruments will be used? and what will monetary transmission look like in the various currency areas? that said, one thing is clear : monetary policy cannot ignore long - term changes in the underlying conditions. the new world will definitely not be the same as the old one. the circumstances surrounding monetary policy – such as the structure of the financial system and banks ’ business models – have changed. the key questions here are : in what way and to what extent? discussion of the post - crisis setting in monetary policy must be accompanied by an analysis of market conditions. if we wish to be able to steer monetary policy effectively and efficiently, then we may need to respond to the new state of affairs in an appropriate way. in this context, however, we must bear in mind that this state of affairs also shows the influence of monetary policy. central banks certainly do not want to shape the financial system according to their own inclinations. that should be left to market forces and policy makers. instead, the financial system is the channel through which monetary policy signals and impulses are transmitted to the real economy in order to achieve our goal of price stability. that is why monetary policy is, above all, dependant on the functional viability of the financial markets. “ work in progress ” – determining the “ new normal ” as the bundesbank executive board member responsible for markets, i would now like to draw your attention to several areas where the financial markets have witnessed change and are thus leaving their mark on the “ new normal ” : notably, money market activity, the market muscle - power of new players, fragmentation in our monetary union, the implementation of digital changes, and modifications arising from regulations. that topic, incidentally, will be discussed in more detail by jens weidmann in his speech tomorrow at the european banking congress. let ’ s look first at the money market. the 2007 financial crisis caused the traditional money market to dry up, effectively rendering it dysfunctional. since then, we have seen heightened risk aversion. banks hold larger liquidity buffers and are less keen to source liquidity from the market. interbank turnover has dwindled considerably in the unsecured segment and the emphasis has shifted significantly from unsecured to secured money market funds. step by step,