fast to the principles that innovation, competition and consumer choice are good, and that disruption is not the enemy. but it is essential to understand and manage the risks to individuals, businesses and the entire financial system that arise from any product offered to the public. contingency planning for a central bank digital currency all of this leads me to my final area of focus. in the context of the issues i ’ ve raised today, there has been increasing discussion around a central bank digital currency ( cbdc ). we can think of this as a digital version of cash. digital currencies are designed to provide the same benefits as cash — safety, universal access, resilience, privacy and competition — but in an electronic format that could be used for online transactions or at the point of sale, using a mobile phone or a special card or device. 4 / 8 bis central bankers'speeches it would be truly equivalent to cash. today we have released a comprehensive document that outlines in greater detail our recommendations with respect to a cbdc. i encourage you to visit our website and read some of our thinking, but i ’ ll share the highlights with you. we have concluded that there is not a compelling case to issue a cbdc at this time. canadians will continue to be well - served by the existing payment ecosystem, provided it is modernized and remains fit for purpose. this means that : bank notes remain available to canadians who want to use them, including marginalized populations in our society ; the canadian payment system is brought up to date and problems with cross - border payments are addressed ; and an appropriate regulatory framework for stablecoins and other private digital currencies is established, both in canada and globally. all this being said, the world can change very quickly. the bank of canada can imagine scenarios in which we would consider issuing a cbdc so we can continue to provide canadians with trustworthy methods of payment. one scenario would be if we ever reach the tipping point where cash could no longer be used for a sufficiently wide range of transactions. that scenario would raise several potential concerns : payment services offered by large financial institutions could become the only game in town, giving them increased market power ; people without adequate banking services would find it even more difficult to participate fully in the economy ; people would lose the ability to conduct transactions privately ; and the system could have a single point of failure, making it more vulnerable to computer system breakdowns and power outages. of course, even such a shift toward

the borrowers as well as those of the lenders. no wonder that developing a sound legal system to support financial markets is a very complicated matter and we hope to learn something from today ’ s conference. 2. legal systems and competitiveness of financial centres fundamentally, the legal system should ensure that contract and property rights are sufficiently clear and predictable ; if there is a dispute, participants in the contract do not feel i wish to thank l. stracca, m. svoboda, s. kerjean, f. recine and c. zilioli for their contribution. mishkin ( 2005 ). precisely through its negative impact on the quality of institutions and law enforcement. the need to take legal action unless as a last resort. moreover, if there is litigation, the court is independent and able to resolve the claim effectively and in a reasonable time. furthermore, the judgment, once delivered, has to be quickly enforced. to underline the importance of this aspect let me give the example my own country. there is a growing literature suggesting that one of the reasons for the relatively slow pace of financial development in italy is the slowness of the civil courts, with the result that, for example, mortgage debt is still a fraction of what it is typically in other advanced countries. 4 at this point it should be clear that an efficient legal system is a key ingredient of competitiveness among financial centres. one of the reasons of the traditional lead of us financial markets over europe ( and the rest of the world ) is greater standardisation of legal norms and systems, while the european financial system is still characterised by considerable fragmentation of legislation, regulation and enforcement. without a proper legal system, it becomes harder to trade in almost any financial instrument. two distinct effects may be considered. on the one hand, yields may rise and consequently asset prices fall. in other words, asset yields may incorporate a “ legal risk premium ”. it is interesting to note that under the basel ii system legal risk is a part of operational risk, which implies that it is taken seriously by the regulators. on the other hand, an inefficient legal system may simply lead business to move elsewhere, namely influence the quantities rather than prices. the importance of the legal environment was recognised most notably in the january 2007 bloomberg - schumer report, “ sustaining new york ’ s and the us ’ s global financial leadership ”, which reported that “ a firm and predictable legal environment was the second most important criterion