for digital transactions? how do prices behave when the marginal cost of producing more is very small, even close to zero? addressing all these questions is no easy task. overall, digitalisation complicates our understanding of the transmission process from extra output to inflation. this has implications not only for the way we model the economy – and here i am thinking about possible adjustments to the new - keynesian phillips curve – but also for the role we devote to monetary policy. should monetary policy set different objectives if prices are highly flexible and the costs of inefficient price dispersion are much smaller than presumed? too early to tell, of course, but definitely worth an in - depth investigation. meanwhile, i welcome advances made in measuring macroeconomic aggregates in the digital economy, in particular consumer prices. across the atlantic, the billion prices project and adobe analytics data are promising examples of that. they provide tentative evidence that us inflation could be overestimated, although this result seems to depend on the dataset used. at the euro area level, national statistical offices ’ initiatives on integration of online and scanner prices into hicp measures, as well as the eurosystem's choice of investing heavily in research on pricesetting using micro data will certainly help too. while digitalisation challenges our thinking about macro - economic accounting, it can also provide a whole new set of granular and at the same time multidimensional data. in that sense, big data can become our ally. i will briefly come back to this point at the end. third challenge : the changing role of the financial sector a third challenge to traditional thinking relates to the changing nature and role of financial intermediation, well documented in a research area that literally exploded during the last decade. we have not only witnessed greater fragmentation within the banking sector which has forced us to take unprecedented non - conventional measures to preserve a smooth transmission of monetary policy. we are also observing a slow - moving tendency towards a larger role for nonbanks in the financing of the economy. with the capital markets union, a project i fully endorse, the role of players outside the traditional banking sector will hopefully get bigger. this justifies particular vigilance on the part of the ecb to be ready to monitor developments in this area. we should also make sure we are able to monitor developments in so - called private virtual tokens that aim to play a role as money – even though i tend to think that these developments

to enable the financial system to absorb the failure of individual firms as others grow and prosper ; and ( d ) we are strengthening international cooperation arrangements necessary to be able to effectively regulate in a digital environment that may have little regard for national borders or jurisdictional reach. disruptive innovation and the global unbundling of traditional financial services models in banking, insurance, and funds management can also have implications for financial stability. international consolidation in the financial services market to maximise the scalability benefits of new technologies may create larger firms that are more difficult to resolve. greater specialisation may also foster the growth of mono - line firms that are more exposed to sectoral shocks. it is also important to assess the implications of new types of settlement systems and digital currencies for the role of central banks in the domestic and international monetary systems, including the pros and cons of digital base monies supplied by central banks. 10 conclusions in summary, the dual forces of globalisation and innovation are high on the research and policy agendas for financial regulators and central bankers. an immediate challenge relates to the postbrexit reconfiguration of the european financial sector. in managing the transition to the new post - brexit regime, it is essential for policymakers to take a global perspective in view of the importance of non - european investors and financial intermediaries to the functioning of the european financial system. equally, financial innovators will be looking for clarity about the new regulatory and trading arrangements between the uk and the eu, since uncertainty about institutional frameworks is an obvious inhibitor of investment plans. let me conclude by thanking the organisers of the european financial forum. the agenda and lineup of speakers for the rest of today looks fascinating. 1 philip r. lane ( 2011 ), “ innovation and financial globalisation, ” in lessons from east asia and the global financial crisis : annual world bank conference on development economics global ( justin yifu lin and boris pleskovic, editors ), 309 - 332. 2 philip r. lane and gian maria milesi - ferretti ( 2016 ), “ international financial integrationin the aftermath of the global financial crisis ”, presentation, imf annual research conference. 3 philip r. lane ( 2014 ), “ cross - border financial linkages : identifying and measuring vulnerabilities, ” cepr policy insight no. 77. 4 daniel carvalho and michael fidora ( 2015 ), “ capital inflows and euro area long