help stimulate and enhance domestic financial reforms. actually, in the absence of the challenge created by foreign competition, domestic financial reforms may not be broad and fast enough. moreover, in terms of best practices dissemination, the presence of foreigners in the capital of domestic banks may ensure a faster adoption of international standards and codes, especially concerning the monitoring, control and management of financial and operational risks. this is crucial for the resilience and the stability of the financial system. the report of the cgfs working group on " fdi in the financial sector of emes " highlighted that a lasting benefit of these fdi was their effects on the financial sector efficiency, thanks to the generally associated technology transfers and innovations in products and processes. in addition to their lower volatility, this is one more reason why attracting long - term capital flows, such as fdis, seems preferable to catching short - term flows, although the lessons from the chilean experience versus some asian misadventures suggest there is no unique model for all. but i saw that the size of fdis in india which had been hitherto rather low is rising significantly ( 16 billions usd in 2006 - 07 ) which is good sign of its attractiveness. in france also we pay a lot of attention to inflows of fdis ( above 60 billions in 2006 ) as they matter as well in a more mature economy. so when setting the pace of internal versus external liberalisation, the authorities have to strike the right balance and rhythm between the two sides. in this respect, let me evoke briefly the way we managed this process in france in the 1980s. financial liberalisation started with the domestic side by : • modernising the money market ; • deepening the bond markets, using the public sector as a benchmark ( in order to price risks through a full yield curve for risk - free assets ) ; • broadening the basis of the equity markets ( including privatisations ) ; • last but not least, creating new financial markets ( futures, options … ). meanwhile, but sometimes with lags, the french capital account was liberalised. we switched from a situation, in 1983, where the exchange rate controls were at their tightest, following speculative attacks and three devaluations in 18 months, to a gradual removal of these controls beginning in 1984 and completed in 1990. trade - related operations were gradually liberalised, followed by most financial transactions and, finally, residents were allowed to freely open foreign

there are inefficiencies in the current payment arrangements, in particular – but not only - in the cross - border context, and that some innovations will help address them, if we do not strongly commit to fix the roots of inefficiencies. • this leads me to my main argument : we in europe face urgent and strategic choices on payments that will have implications for our financial sovereignty for decades to come. i see it as a “ strategic square ”, the four parts of the system to be solved for delivering a european strategy : i ) cross border payments shortcomings, ii ) bigtech ’ s global projects in the financial sector ( including stablecoins ), iii ) the developing european payment initiative and iv ) the potential central bank digital currency ( cbdc ). • indeed, the current digitalization triggers at least two important risks. o the risk ( in red ) that bigtechs, leveraging on their global reach, will build private financial 1 / 3 bis central bankers'speeches infrastructures and “ monetary ” systems, competing with the public monetary sovereignty since they will position themselves as issuers and managers of a universal “ currency ”. cbdc could then be issued but at the “ backend ” of this “ currency ”. o the symmetric risk ( in blue ) that some jurisdictions judge that the only way to respond to the otherwise overwhelming private payments ’ wave would be to issue and spread on a domestic but also a global basis, “ their ” cbdcs. this could, if not sufficiently coordinated within the global financial community, set precedents as to the features of the cbdcs and their articulation with the private projects, with no say for other central banks. the way forward for europe ( in green ) could be different and could rather disseminate central bank money in a retail form with the intermediation of the private sector and ensure interoperability between epi and other non - european payment solutions. 2. in this fast - changing environment, public policies should be agile and should help build innovation and growth • the success of the payment services directives ( psd1 & 2 ) has illustrated that the european legislation can accompany new trends and trigger innovation. with new settlement assets such as global stablecoins, the adaptation of existing regimes will have to fit into a larger regulatory framework, to be adopted at a global level. • central banks need to have an in - depth understanding of innovation and souldn ’ t be