that optimises the stimulus for the broader economy without undermining the incentives for financial intermediaries to remain actively engaged in transmission. at the same time, additional adjustment needs should be addressed decisively to ensure a healthy euro area banking sector : tackling legacy npls, responding to structural change, providing regulatory clarity. these relate both to individual banks and to the institutional environment. adjustment needs for individual banks a number of banks are now tackling their legacy and structural challenges rather than waiting for better times. but many still need to adjust faster to the new conditions they face. the process of disposing of npls is moving too slowly in some jurisdictions. and cost efficiency has to adapt to the new macroeconomic and regulatory environment. as noted, euro area banks have made important progress in reducing costs since the start of the crisis. but there is clearly scope for further improvements : cost - to - income ratios, for example, have remained high for euro area banks compared to their global peers, and progress in efficiency improvements has levelled off. opportunities for efficiency gains are there. the technological challenge posed by fintech, for example, is also an opening for established market participants to push out the efficient frontier, thereby protecting market shares and raising new sources of revenue in the customer - to - bank relationship, and / or increasing efficiency and cutting costs on infrastructure. there is also scope 5 / 8 bis central bankers'speeches for both further rationalisation within banks, especially those burdened with expensive branch structures, and further consolidation among credit institutions, in particular in countries where fragmentation leads to unsound competitive behaviour and low operational efficiency. indeed, even though the number of branches in the euro area declined by 16 % between 2008 and 2014, almost half of the decrease in the number of local bank units was accounted for by spain. countries undergoing structural adjustment programmes have also seen the largest relative decrease in the number of credit institutions. banking systems in some larger countries have also adjusted but remain at relatively low concentration levels, implying scope for rationalisation and consolidation without reinforcing the “ too - big - to - fail ” problem. to navigate the new environment, banks ’ business models will need to adjust as well. as a consequence of both market pressures and regulation, many banks have shifted from revenue generation based on investment banking, high leverage and / or reliance on relatively cheap wholesale funding, towards business models built around retail banking, lower leverage and increased reliance on deposit funding. these are welcome developments from the perspective

paneuropean payment initiatives have shown that ensuring broad access throughout the euro area has ultimately always required regulatory measures. so, both sides of the coin – widespread acceptance and broad access – are necessary to ensuring the digital euro would be a public good that meets the expectations of consumers and merchants. these two aspects are also key to achieve other public policy goals. for instance, they are essential to ensure that the digital euro can support financial inclusion and generate opportunities for financial intermediaries. a digital euro would offer a new platform for innovation that is truly european. it would allow these intermediaries to build services for their customers that are instantly available across europe. it could help domestic payment providers and new instant payment solutions to scale up and operate at the european level. and it would reduce dependence on a few dominant providers, increasing competition and resilience. ensuring a seamless european payment experience over the past 20 years euro banknotes have enabled everyone in the euro area to easily recognise and use public money, regardless of what country they are living in, or where they are paying. the same should be true for the digital euro. people should be able to pay and be paid in digital euro anywhere in the euro area, no matter which intermediary they are using to access the digital euro or which country they are in. to achieve this, we need a common set of standards – which we call a “ payment scheme ”. the scope of these standards will be limited to what is strictly necessary to establish and offer users a harmonised and convenient payment experience, while enabling and inviting the supervised intermediaries to develop further services and solutions. even if supervised intermediaries will distribute the digital euro, one should not forget that it will be a liability of the central bank. the eurosystem, as its issuer, would be accountable to euro area citizens for its correspondence to their payment needs. the eurosystem should therefore be able to govern the standards to ensure that using a digital euro in the future is as standardised as using cash today. it would do so by steering consensus among all involved stakeholders – consumers, retailers, banks and nonbanks. ensuring wide availability through the right economic incentives economic incentives should be used to encourage the active distribution of the digital euro and to ensure that it is widely available. we have already proposed a set of four core principles for a digital euro compensation model. you asked for more details on these principles in previous hearings, so i will share our thoughts on them