important all along. modern central banks, in fact, have their origin in the transition from a payment technology based on commodity money to one based on fiduciary money. payments made in fiduciary money differ from those made with commodity money in that they are carried out by transferring liabilities of a third party. hence, the value of these liabilities and the cost of effecting payments, namely the " quality " of payments, depend to a large extent on the standing of the third - party issuers, their organisational efficiency, and the structure of the money market. • one may wonder what kind of impact securities clearing and settlement systems ( scsss ) have on the issuance of money by central banks. the exponential growth of securities trades and the increasing use of securities to collateralise obligations can give an idea of how a key role of the central bank is affected by these systems. but here i do not wish to focus on how important scsss are for central banks, but on how important central bank money is for scsss. • in the traditional configuration, each domestic csd settled the cash leg of securities transactions in the account of its central bank. today, many argue that in a multi - currency environment settlement in central bank money is unpractical because there is no " global " central bank able to provide finality in a variety of currencies. • international fora, such as the cpss, have recognised that in a multi - currency environment, commercial bank money can be used as settlement mean, provided that it carries limited risks and these risks are properly addressed. a practical example of central bank cooperation to meet the challenges of global systems is cls. cls will settle in commercial bank money for practical reasons ( i. e. different time zones ), but a wide range of risk control measures have been put in place in order to control risks and, in particular, the concentration of financial risks on a single entity. • but the role of central bank money is also challenged when turning from global to domestic systems. i believe this is due to one of the trends pointed out earlier. the struggle to be at the centre applies not only to securities, but also to cash. every commercial bank ( or csd ) would like to be in the position of the central bank in order to exploit the monopoly over the money supply and obtain additional profits. but, likewise, no commercial bank would like to see a competitor occupying the position of

within financial institutions. as such, consolidation not only facilitates integration, but may also help to reduce the cost of trading, clearing and settlement by making use of scale economies and network externalities. therefore, consolidation is a key concept for the integration and hence the rationalisation of the euro area. • while no one seems to deny the need for further consolidation and integration, there is no consensus on the way forward. in principle, two extreme configurations, or end points, can be identified for integration. one is open access : it means that all custodian banks and central banks have direct or remote access to all clearing and settlement systems. in an environment with multiple systems, however, this approach is complicated and costly because it would imply that every bank would need to have accounts with every system. • the other extreme way of achieving integration is full consolidation, i. e. to create a single service providing structure. if there were only one single provider for trading, clearing, and settlement in the euro area, differences attributable to location would necessarily disappear. however, a monopolistic market structure also suffers from deficiencies, to which i shall return later. 4. the need for an open architecture • if instead of speaking about end points we speak about paths, then two paths of consolidation are often distinguished. horizontal consolidation affects institutions providing the same services ; for instance, at the trading level, the merger of several exchanges or trading platforms into a single one. vertical consolidation affects institutions providing different services in the value chain. the typical example is the establishment of structures ( so - called " silos " ), where trading, clearing, and settlement are proposed to customers as a package. • a common argument in favour of local silos is that they enable local markets to be more competitive by providing better and cheaper services. furthermore, it is often argued that the consolidation in the euro area can be attained only with a two - steps approach, i. e. after consolidation has been achieved at the local level. • however, in the new domestic ( euro area ) environment local silos may also present drawbacks in terms of fragmentation and lack of competition. in order to foster competition, the use of a particular clearing facility should not be compulsory for users of a particular trading platform or of a particular securities settlement system. similarly, trading platforms should not be able to prevent other trading platforms from having access to clearing and settlement systems they are linked to. • against this background, many market players and some