yves mersch : the next steps in the evolution of the eurosystem ’ s market infrastructure opening remarks by mr yves mersch, member of the executive board of the european central bank, at the eurosystem community session at sibos, geneva, 26 september 2016. * * * introduction one year ago, the eurosystem shared some initial reflections on the strategy for the future development of its market infrastructure. the rationale behind these strategic reflections was the need to keep pace with technological developments in line with the mandate of our treaty to promote the smooth operation of payment systems. digitalisation of financial services the digitalisation of financial services could result in new business models or products with disruptive potential in the financial sector. in particular, distributed ledger technology ( dlt ) has the potential to fundamentally change securities and payments business. however, this technology is still in its infancy. there are substantial functional, operational, governance and legal aspects which need to be carefully looked at before thinking about possible mass adoption. hence, the eurosystem cannot, at this stage, consider using dlt in the market infrastructure. nevertheless, we are exploring whether its possible future use could bring benefits. a multitude of different dlt approaches and models could jeopardise financial market integration by increasing fragmentation. undue periods of market consolidation and standardization could hamper the smooth functioning of a single payments area. we could be in a situation similar to the one that lead to the establishment of t2s. the next steps in the evolution of the eurosystem ’ s market infrastructure the eurosystem ’ s strategic reflections on the future development of its market infrastructure centre around three components : 1. the consolidation of target2 and target2 - securities ( t2s ) ; 2. settlement services to support instant payments ; 3. a eurosystem collateral management system. now, these strategic reflections have entered into the next phase. last week, the eurosystem decided to launch the investigation phase into these three components. the aim is to ascertain whether there is a business case for each, to agree with the users on the scope of services and to prepare a cost - benefit analysis. let me say a few words now on each of the three components. 1. consolidation of target2 and t2s target2 and t2s are the cornerstones of the eurosystem ’ s market infrastructure for payments and securities settlement. but as they were developed at different points in time, they operate on separate platforms and

year china added more than $ 250 billion to its stash, breaking the usd1 trillion record level. by november last year, ten east - asian countries plus india have amassed some usd3 trillion of foreign - exchange reserve. such a huge accumulation of international reserves certainly entails opportunity cost and exchange rate risk especially amid the looming global imbalances. however, the build - up of these reserves in a way also provides cushion against unanticipated reversal of capital flows given the openness of the foreign exchange regime and financial market the integration. in connection to this, more and more countries have settled their obligations to the fund. indonesia, one of the crisis - hit - countries, closed the final chapter of the asian crisis following the last prepayment of its obligation in october last year. such a prepayment reflects the strength of economic recovery and the balance of payments positions of the crisis hit countries, which in a way provide an evidence of the fund ’ s success in asia. yet it may also suggest that countries tend to prefer executing their own self - formulated programs when conducting reforms. in addition, indonesia ’ s recent experience with the fund during the crisis suggests that turning back to the fund in case of another crisis will be politically much more difficult than in the past. third, while asian economies have fully recovered from crisis, investments as percentage of gdp have been well below the pre - crisis level. other non - crisis asian economies except china also exhibited a slowdown in the growth of their investments. after showing a slight recovery in 2004, the ratios moderated in 2005. the slump in investment in asia mainly reflected a sharp fall in private investment. many economists shared the view that the low level of investment cannot be explained by changes in fundamentals. with the exception of china, aggregate saving has been stable over more than 10 years. among key factors responsible for the slump include investor ’ s perceptions that the investment environment is riskier. i would appreciate it if fellow governors would share their experience on this issue. finally, many emerging countries in asia were forced to abandon their traditional dollar - peg system and to allow their exchange rates to float in the summer of 1997 amidst intense currency attacks by speculators. after a period of sharp depreciation accompanied by high volatility, exchange rates in these countries bottomed out against the us dollar in the autumn of 1998, thanks to a return of confidence in the economic prospects of these countries. however, simply turning to flexible exchange rate regime