peer - to - peer electronic cash system ) : “ what is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. " i feel that too little attention is being paid to nakamoto ’ s primary goal of constructing a groundbreaking, trustless electronic payment system which, like cash, would facilitate peer - topeer ( p2p ) transactions. at the same time, nakamoto was looking to create a currency which was not based on trust. this aspect – forging a new currency that does away with central banks 1 / 5 bis central bankers'speeches – has become a major talking point in the current debate. i have come here today to explain why a trustless currency is not feasible, and i will also argue that the merits of blockchain can be harnessed more readily with trustworthy institutions than without. to get a grasp of bitcoin, we need to put our minds to the essence of money. there are two types of money. money as a commodity, and money as a claim. money as a commodity, that could be a commonly used consumer good which is mostly nonperishable. cigarettes, for instance, were used as a money substitute in germany after the second world war. but equally, money could be a durable good – gold being the most prominent example of this. gold is extraordinarily durable, and it has an intrinsic value as a sought after industrial metal, say, or as jewellery. indeed, for centuries, delivering gold was regarded as the ultimate form of settling a claim. consumer and durable goods which can be used as money substitutes both have an intrinsic, consumption or utility value. virtual currencies, meanwhile, which are transferred much like goods, are a fabrication. that is not to consign them straight to the category of “ fraud ". yet they have no intrinsic value, just an exchange value. you can ’ t consume or use them, only exchange them. on the other hand, there is money as a claim. the bulk of our money – central bank money and commercial bank money – is a claim on either the central bank or a commercial bank. every euro in cash and every euro in credit balances in target2represents a liability for the eurosystem. and the euro is backed by the eurosystem with its constituent central banks, one of which is the

for investors. in other words, will the change in fair market valuation of certain financial instruments give users of financial statements additional insight into the nature of the bank's revenue streams? on certain transactions, including those involving substantial servicing activities, fair value accounting could serve to front - end income that is better recognized over time. principles - based accounting standards during my six years as a member of the fasb's emerging issues task force, i developed a better appreciation for the challenges that standards - setters face when dealing with topics that are becoming increasingly complex. informed and objective professionals can legitimately disagree on the best accounting standard to apply to new types of transactions. that is part of the challenge of keeping accounting standards current. the rapid pace of business innovation makes it impractical to have rules in place to anticipate every business transaction. rather, the more complex and dynamic the business world becomes, the more important it is that accounting be based on strong principles that are sufficiently robust to provide the framework for proper accounting of new types of transactions. but improvements in accounting and auditing standards are also needed to address other problems that have been identified. in particular, it would be very helpful if fundamental principles and standards could be revised to emphasize that financial statements should clearly and faithfully represent the economic substance of business transactions. standards should also ensure that companies give appropriate consideration to the substantive risks and rewards of ownership of their underlying assets in identifying whether risk exposures should be reflected in consolidated financial statements. to effectively implement such accounting principles, every corporate accountant and every outside auditor must follow clear, overriding professional standards. corporate accountants and external auditors should be required to ask themselves whether a particular accounting method adequately represents the economic substance of the transaction and whether it provides readers with sufficient information to evaluate the impact of the transaction on a company's risk profile, cash flows, and financial condition and performance. if not, it is likely that the procedure is not the best accounting method to apply. in a proposal recently issued for comment, the fasb acknowledged that the amount of implementation guidance provided has increased significantly, adding to the complexity in applying accounting standards. thus, it is considering adopting a principles - based approach to u. s. standards - setting, one similar to the approach used in developing international accounting standards and accounting standards used in other developed countries, such as the united kingdom. this proposal is timely and important to consider in the profession's environment of reform and could result in more - effective accounting standards.