to monetary sovereignty with the rise of significant new private actors and settlement assets. three policy responses are currently under consideration to address them. 1. drawing up an adequate regulatory framework the first response is regulatory. the regulatory framework and the supervision methods have to evolve, to address in particular the threat to financial stability and monetary sovereignty that digitalisation of finance and the real economy may create. in this matter, the enforcement of national regulations will not be enough. one of the main challenge is indeed to make sure that all countries adopt strict enough regulations, especially regarding crypto - assets. all kinds of regulatory arbitrage, which would enable firms to relocate to other jurisdictions to bypass national regulations, should be avoided. in this regard, the european union is currently building a harmonized regulation. last september, the european commission launched its proposal for a “ markets in crypto - assets regulation ” ( also known as mica ). if this proposition is adopted by the eu, companies that issue crypto - assets or provide additional services will be subject to the same requirements, under the watch of supervisory authorities. for example, the crypto - assets intended as a means of payment will have to provide a predictable redemption right in sovereign currency for asset holders, which is deemed necessary for the protection of consumers. at the international level, a cooperative framework is gradually setting up in order to deal with the challenges raised by stablecoins. 2. supporting initiatives to strengthen europe ’ s sovereignty in payments such as epi the second response is to support private initiatives that can have a constructive impact on market functioning, payment systems efficiency and help address european sovereignty in payments. the best example of this is the european payments initiative ( epi ), a project led by a set of major european banks and processors aiming at creating a unified, innovative and autonomous european payment solution. the eurosystem, as well as the european commission, has been in support of this work right 2 / 4 bis central bankers'speeches from the start. 3. exploring the issuance of cbdc in order to be ready to launch a cbdc, if necessary the third response is to be ready to launch a central bank digital currency ( cbdc ), which means a digital form of central bank money, possibly for both the public and the financial sector. this response would help reassert the anchoring role of central bank money in both the retail and wholesale settlement and payment space, if needed in complement to what can be achieved with the regulatory and market

the desirability of having a strong, efficient and inclusive financial system with a low incidence of failure of regulated entities. have regard for proportionality in relation to the costs imposed by regulation, and, encouraging investment and innovation that improves productivity and sustainable long term growth. consider the government ’ s objectives in relation to more sustainable house prices, building resilience and facilitating adaption to climate change, improving financial inclusion and improving cyber resilience. statement of prudential policy the statement of prudential policy provides transparency about how we will act as a prudential regulator to achieve our financial stability objective. this statement also promotes public awareness and understanding of our activities and operations. we recently published our first statement, which outlines how we will act when : 20 _ _ _ _ _ _ _ _ _ _ _ _ 19 the remit is available here : rbnz. govt. nz / - / media / e0ab579412d24185acbc037cbddb3ad9. ashx 20 the reserve bank ’ s statement of prudential policy can be viewed on the rbnz website : https : / / www. rbnz. govt. nz / regulation - andsupervision / cross - sector - oversight / prudential - policy our transformation as a prudential regulator unclassified ref # x798971 v1. 2 unclassified carrying out prudential supervision ; imposing prudential standards or other requirements ; monitoring and investigating compliance with our prudential framework ; and taking appropriate enforcement and resolution actions. the statement covers the principles that we consider in making decisions, and tailors these for prudential policy, supervision, enforcement and resolution. broadly, these principles can be summarised as being : outcome focused : we will take actions to promote financial stability through reducing the likelihood and / or impact of instability in the financial system, as well as opportunities for pursuing our purpose of promoting the prosperity and wellbeing of new zealanders and contributing to a sustainable and productive economy. considerate of system - wide implications : we will consider the system - wide impacts of our decisions, including having regard for the factors outlined in the financial policy remit and our purpose. proportionate : our actions will be proportionate to the costs and risks to ourselves, the regulated population and the public good. evidence - led and risk based : our decisions will be evidence - based and subject to robust governance arrangements. we