responsible for the area of payments, i am a member of this group. on 2 october, we published the first results of our analysis. 4 the main question to be asked is this : under what conditions might it become necessary to introduce cbdc for the general public, or a digital euro? a structural decline in demand for cash, general support for digital transformation, and potentially competing other offerings of digital money from bigtech firms or other central banks are mentioned as possible motives for issuing a digital euro. this brings me back to disruption. the debate on the digital euro has just started. my impression is that many stakeholders in the economy have only now begun to understand this thing called cbdc. banking sector players who run successful business models for cashless payments, especially, need to grasp what it means to issue a digital euro in the euro area. some challenges would need to be overcome in this regard, particularly concerning the potential impact on banking business, financial stability and the central bank balance sheet. whether we will issue a digital euro is something which has not yet been decided. i would like to mention the ongoing public consultation which is open until 12 january 2021. the aim of this consultation is to find out the opinions of individuals, companies and other stakeholders on the digital euro, which we need to take on board when reaching a decision about an imminent “ go ”, a “ no - go ” or a “ go later ”. considering what covid - 19 has taught us about real disruption, i think there needs to be a response to the growing demand in the economy for cheap, quick and convenient means of payment which can also be used in new payment situations, like machine - to - machine payments. the bundesbank is deeply engaged in the debate on cbdc. but we are also thinking about alternative solutions, which could avoid disruption and help overcome the existing challenges, reap the benefits of going digital, and support new payment use cases without introducing cbdc. one way could be to enhance conventional payment systems, both at a domestic and a global level. in this respect, we urge the market to develop a pan - european payment solution with full deployment of the new instant payments infrastructure. in addition, we believe that the roadmap developed by the financial stability board ( fsb ) provides an excellent plan to enhance crossborder payments. 5 in this respect, it also becomes clear that cbdc is not a panacea ; the challenges we face are multi - faceted, and we

3 plots the financial account and fdi net inflows against growth in colombia. fluctuations in international lending precede or coincide with fluctuations in gdp growth in the 1980s. in the late 1990s, just as recently, fdi inflows were attracted especially by the petroleum and communication sectors. capital flows were another source of impulses for some of these cycles, again just as now. the charts also illustrate that terms of trade and international lending flows to colombia are volatile and can reverse. they have acted first as impulses to these booms and then often reversed to act as detonators to expose the vulnerability built up in the intervening years. for example in 1998 a sharp rise in international market spreads associated with the asian crisis triggered a recession here. the literature confirms that this pattern of impulse and detonation is common to developing countries. the consensus is that terms of trade shocks are an important source of shocks to growth in emerging market countries ( mendoza, 1995 ). others have found evidence that capital inflows are procyclical ( reinhart, vegh and kaminsky, 2004 ). the question relevant to then and now is : if terms of trade fluctuations and capital inflows are so volatile, why do we not save during the sunny days for the rainy days? to understand this, lavan mahadeva, at the banco de la republica, has offered me a simple scheme to differentiate roles in the drama of the business cycle. he classifies variables into impulses, amplifiers, symptoms and detonators. see chart 4. impulses start the cycle. amplifiers are those factors that generate unsustainable outcomes from what should be favorable impulses. the symptoms are data that reveal the growing vulnerability. detonators trigger crises by exposing those vulnerabilities. the point is that impulse and detonators, which as we have seen are typically international factors, are inevitable. a developing country like colombia cannot shut itself off from them. on the other hand, symptoms of ill health such as an unsustainable current account deficit, or an appreciating exchange rate, can be treated, but sometimes that treatment is worse than the disease. our focus is therefore on amplifiers where we think there is a clear responsibility for domestic policy. what could be an amplifier? intertemporal consumption theory provides a simple answer. an amplifier is any factor that prevents consumption smoothing in response to a favorable income impulse. chart 5 plots real private consumption against real private