olli rehn : central bank issued digital cash speech by mr olli rehn, governor of the bank of finland ( at time of speaking deputy governor of the bank of finland ), at the seminar on " central bank issued digital cash ", helsinki, 13 june 2018. * * * ladies and gentlemen, dear colleagues, it is a pleasure for me to open the second session of the seminar on central bank issued digital cash. this session asks what would be a rational and justified reason for central banks to pursue digital cash. today ’ s seminar is part of a trio of events this week, partly academic and partly for a wider audience in the financial sector. this seminar is for central bankers only, since we wanted to facilitate open and possibly frank discussions, with no any need for official statements. we have also chosen different colour codes for the three events. i ’ m not sure if the yellow colour of our badges has been deliberately chosen to indicate a yellow card, i. e. to be warned due to a foul. maybe some people see that even a discussion about a digital central bank currency is dangerous play. but here today we won ’ t be afraid of discussion. in fact, virtual currencies or crypto assets, as we prefer to call them today, already emerged on central banks ’ radar screen many years ago. since then, central banks, other authorities and academics have studied the phenomenon and published analyses on it. when the market turned into a highly speculative one, both financial supervisors and central banks issued warnings. in our view, virtual asset creation and trade should be regulated in the same way as other tradeable assets. it is important to protect consumers and prevent fraud. originally, promoters of virtual assets like bitcoin claimed they would provide an alternative to banks ’ payment systems and change the whole financial system. even if virtual assets currently don ’ t have the capacity to fulfil the original vision, they did bring to the surface two very interesting issues : the potential of blockchain technology, and the future role of central bank money in the modern financial infrastructure. the discussion on the future use of central bank money, whether physical cash or digital, has emerged and even intensified recently, especially in countries where the role of cash in society has been declining. this raises several pertinent and difficult questions : what would happen if physical cash really vanished? how would it affect central banks, the financial industry and society as a whole? what will legal tender mean in the future

cost savings for banks as customers can conduct many of their bank business at home on their computers. at the same time, as we learned the hard way from the deposit flight in the united states a little over a year ago, increased digitalisation may also make banks more vulnerable to liquidity risks. sooner or later, new technological advances, such as artificial intelligence and quantum computing, will bring profound changes to the functioning and structures of economies, finance and society in general. it is essential that we understand the relevance of these technologies and the use of big data in relation to systemic risks. the vulnerabilities and risks from the climate and nature crises can no longer be categorised as long - term issues ; they require our immediate attention. cybersecurity is also a challenge for banks, as geopolitical tensions take cyber risks to a new level and present hybrid and physical cyber risks. a recent prominent example of this is the damage to telecommunications cables in the baltic sea. 4 / 6 bis - central bankers'speeches these factors should also be properly taken into account in our own analysis of systemic risks. a lot of work has already been done, but there is still a lot of room for improvement, especially on potential macroprudential tools in these areas. [ slide 7 priorities in developing the esrb ] given the constantly evolving environment, the esrb's mandate and set - up need to be reviewed from time to time. the european commission is currently tasked with reporting on the review of the esrb to the european parliament and to the council of the european union. for this purpose, the esrb has established a high - level group to identify what changes to the esrb's mission or framework might be necessary, and to provide insights to the eu's co - legislators prior to the review process. i have the honour of chairing this group. the high - level group will soon publish a report on the future of the esrb. let me highlight a few priorities that i consider important for developing the esrb and that are likely to be reflected in the report. first of all, it is important that the esrb's focus should move towards a holistic assessment of systemic risks in the eu financial system. given its large and diverse membership, including national supervisory authorities, national central banks, the ecb, the european supervisory authorities ( esas ), the commission, etc., the esrb has a unique ability to examine cross - sectoral,