its development in a way that suits our public policy objectives. we are now at a tipping point. if we do fail to act, there is a risk that inefficient, fragmented, monopolistic solutions could develop in a silo mode, harming financial stability. but if we act early, we can foster the development of an innovative ecosystem, which will improve the efficiency of post - trading processes and infrastructures. • authorities have already taken significant steps to design a regulatory framework that could stimulate innovation while preserving financial stability. the european mica regulation is a necessary first response to regulate the use of crypto - assets and it needs to be implemented as soon as possible. however, let me stress the mica regulation is not an end in itself but rather the start of a process. our regulatory framework will need to be adjusted on a regular basis to keep up with the development of defi. • in addition, these responses from public authorities need to be coordinated at the international level, to avoid arbitrage across jurisdictions. international bodies have a central role to play in coordinating responses, notably the bis and the fsb, but also the imf and the oecd. page 2 / 3 my third takeaway is that central banks could accompany usefully the tokenization of finance, by leveraging new technologies to provide central bank digital currencies, thereby improving the efficiency of securities settlement and payment systems. • the discussion showed that this possible positive impact is not confined to retail payments. o a wholesale cbdc directly integrated on dlt could be used to settle tokenised assets, bringing the security of central bank money. in addition, a wholesale cbdc has the potential to improve cross - border payments. o but we need to properly measure the economic impacts and the associated risks. that is why we are working on it step by step, including through experimentation with private actors. • indeed, these investigations must be undertaken hand in hand with private intermediaries. the tokenisation of finance creates a new ecosystem which is also a challenge for them, especially as their role could be transformed by decentralised technologies. • and we need to ensure that this ecosystem is fully interoperable with legacy securities and payment systems, which are likely to remain an important element of the landscape. • in that context, our goal at the banque de france is to facilitate responsible innovation from the market, while safeguarding the use of central bank money and thus financial stability. • my final

are presumed to be desirable and based on fundamentals. but short - term flows are by no means all undesirable and destabilizing. and there is no way of discriminating between useful flows and destabilizing speculative ones. for example, because foreign trade and investment inflows and outflows are not always fully offsetting, short - term capital flows are typically needed to balance out a country ’ s external accounts. these capital flows occur in response to actual and anticipated movements in the exchange rate, and thus serve to smooth out exchange rate fluctuations. because such flows are often driven by small differences in perceived rates of return at home and abroad, they could well be discouraged by a transactions tax. on the other hand, speculative flows that actually “ bet ” on a sharp movement in a currency, have rather large expected returns and are unlikely to be discouraged by the tax. in the end, a transactions tax would likely increase, rather than decrease, exchange rate volatility, as well as reduce market liquidity and raise the cost of capital. needless to say, where financial market fluctuations reflect changes in domestic macroeconomic policies that put investors at greater risk than before, the tax would be aimed at treating the symptoms rather than the cause of the problem. in all, i find the case for a tax on currency transactions completely unconvincing. promoting greater financial market stability if a tax is not a good idea, how else can we promote greater stability in international financial markets and reduce potential disruptions to domestic policymaking? i have already talked about the value of a flexible exchange rate system in facilitating adjustment to “ real ” shocks and allowing national authorities to pursue an independent monetary policy. flexible exchange rates can also be helpful in moderating the size of, and aiding in the adjustment to, capital flows. in addition, governments are increasingly coming to the realization that the issue of international financial stability is best addressed not by retreating into isolation or by falling back on distorting, costly restrictions, but rather through sound and transparent domestic economic policies. international co - operation can also help. it can help by encouraging countries to pursue national policies that lead to economic stability, thereby reducing the risk of sudden changes in market sentiment and sharp exchange rate fluctuations. and it can help by setting widely accepted standards for transparency and disclosure. such standards should support more informed market judgments about the riskiness of investments, especially in emerging market economies, and thus help avoid the crises that can be triggered