first concerns the resolution of large or even systemically important banks. the provision of potentially significant amounts of liquidity in times of crisis is a prerequisite for successful resolution. the framework for the ecb to provide " eurosystem resolution liquidity " has yet to be built. the other priority, at the other end of the spectrum, is to shift from resolution " for a minority " - a far too small minority of cases : two in the last nine years - to resolution " for the majority " of cases, including small and medium - sized banks. the european commission's proposal for a revised crisis management and deposit insurance ( cmdi ) framework is a step in the right direction. yet, level - playing field must be ensured not to give unfair advantage to smaller banks ; and greater pooling between the resolution fund and deposit guarantee schemes should not lead to large companies potentially benefiting from the same protection as the smaller deposits of individuals or smes. ii. the digital currency for a changing world let me now turn to my second topic : the technological evolutions underway in the fields of finance and payments, which has led us, the eurosystem, to have launched an investigation phase on a retail central bank digital currency ( cbdc ) under the sponsorship of president christine lagarde and my friend and colleague fabio panetta. pending an approval by the governing council, a preparation phase will then start at the end of this year, before a potential and gradual launch from 2027 or 2028 onwards. i am aware i am entering here a less consensual ground, listening to banks ’ doubts along two arguments ( i ) the cbdc would be a ‘ solution in search of a problem ’, the ‘ why? ’ question ( ii ) and the cbdc would be a competitor to commercial bank money. the purpose : a digital banknote about the ‘ why? ’, i can imagine that two centuries ago, there were many voices questioning the need for a paper banknote – at that time a huge technical innovation – to be issued along the good old gold and silver coins. today, it all page 4 of 6 boils down to one simple question : as everything is becoming digital, why should central bank money be the only thing to remain in paper? as many of you know, central banks have also – and fortunately so – innovation in their dna i, keeping pace with technological disruptions. the eurosystem has made headway on the design of the digital

there are no signs of a wage - price spiral, which is important as wages are particularly relevant for services. on the contrary, average compensation per employee is slowing markedly. true, services disinflation can be slower, but not more arduous ; the last kilometer could differ in pace, but not in nature. 5 moreover, accepting that this last kilometer could naturally take longer may also provide protection against the risk of undershooting the inflation target, rather than remaining excessively tight to accelerate the process. this is why the time has come, in the euro area, to ease monetary restriction : following our governing council meeting last week, we should, barring major shocks or surprises, decide on a first rate cut at our next meeting on 6 june [ by the way, on the 80th anniversary of the d - day ]. i would then argue in favour of a policy of pragmatic and agile gradualism : there will have to be further cuts this year and next ; their pace will be guided by the data, in a genuine meeting - by - meeting approach. we do not have the same business cycle as the united states, with activity that is much less buoyant : the gradual easing of our monetary policy is therefore more evident, even though it should not be complacent. that said, we will monitor closely the geopolitical developments in the middle - east, and their possible spill - overs on energy prices. if ever these consequences happened to be lasting and propagating – i. e. affecting underlying inflation –, we would have ample room after the first rate cut to adjust the pace and the destination if needed, in the incoming monetary path : indeed, we'll anyway still be in restrictive territory for a while. iii. where could we end? is the neutral real rate ( r * ) helpful? last, where could we end? here the economic profession gets divided about the use of a concept dear to john williams, the neutral or equilibrium rate r * : the rate that balances supply and demand, and savings and investment as well. it is both an essential structural variable and a key cyclical marker : it is the dividing line between a restrictive and an accommodative monetary policy – if inflation is too high, interest rates have to go above r * to curb demand, and conversely. but the challenge is that r * is not observable and needs to be estimated : for this reason, some doubt whether the