there are no plans to reuse these prototypes in the subsequent phases of the digital euro project. we have run a public call for expressions of interest for joining the prototyping exercise. all interested parties had to fulfil several " essential capabilities " that were outlined in the call, e. g. data protection / privacy compliance. we assessed which providers best matched the " specific capabilities " required for specific use cases. see ecb ( 2022 ), " ecb selects external companies for joint prototyping of user interfaces for a digital euro ", mip news, 16 september. 13 users will have the option to choose whether the conversion of commercial bank money or cash into digital euro, and vice versa, should take place manually or automatically. for the automatic option, we are investigating a waterfall functionality that would allow users to make or receive payments in digital euro above the holding limit by linking a digital euro account to a commercial bank account. when receiving a payment, this would allow automated conversion of retail cbdc in excess of a holding threshold into a bank deposit held in a linked commercial bank account chosen by the end user. similarly, a reverse waterfall would ensure that end users can make a payment even if the amount exceeds their current digital euro funds. additional liquidity would be pulled from the linked commercial bank account and the transaction would be completed in digital euro at its full value. 14 the eurosystem's sepa migration impact assessment noted that, in the context of the growing technical complexity of payment services in europe, one of the lessons that can be learnt from the sepa project and the implementation of the revised payment services directive ( psd2 ) is that technical standardisation and development of the scheme would ideally be completed before legislation to mandate its use is introduced. 15 for instance, the eurosystem might only be responsible for issuing the digital money, without providing the settlement infrastructure or intervening in distribution – the " issuance model ". alternatively, in an open access model, the eurosystem would only provide the settlement infrastructure and set access rules ; every entity that fulfils these 6 / 7 bis - central bankers'speeches rules could then use the infrastructure in their own way. while they give the market room to innovate, these two models may not achieve widespread distribution to end users or sufficient interoperability, which would hamper the end - user experience and financial inclusion. one could also imagine an alternative distribution model in which the eurosystem would provide the

transparency for banks, and the public, and it will help to ensure a level playing field. so, while it is ultimately up to the banks to deal with npls, we supervisors play a role too. it ’ s our job to address vulnerabilities in the banking sector. npls are probably the single biggest challenge – and of course they are a drag on the entire economy. and while i am convinced that the ecb has led the way with its work on npls, we are not the only ones who can and should take action. european finance ministers agreed, in july this year, on an action plan to tackle npls. also, national governments can help to resolve the npl problem by reforming their legal and judicial systems. in some countries, it can take quite a long time to recover npls in court. this is something that can only be addressed at national level by national governments. npls are a joint problem, and we need to make a joint effort to resolve it. each party has to play a role : banks, supervisors and politicians. in line with our mandate, we supervisors have done and will continue to do what is necessary. thank you for your attention. 2 / 2 bis central bankers'speeches