of the euro area. also, at a regional level outside europe, progress is ongoing in asia towards strengthening the asian financial safety net, known as the chiang mai initiative multilateralisation ( cmim ), with the doubling of the cmim fund to usd 240 billion. in parallel, important steps have been taken to mitigate the spreading of risks within a highly interconnected global financial system, making it more resilient to unexpected events : bis central bankers ’ speeches systemically important financial institutions, which contribute to the spreading of risks given their high level of interconnectedness, will be subject to stricter capital requirements under the basel iii agreement ; financial infrastructures have been made more resilient. first, the financial stability board is working on safeguards aimed at promoting global clearing in order to facilitate access to, and the use of, global clearing houses. second, regulators and overseers have just finalised a new set of regulatory principles for financial market infrastructures aimed at ensuring that any such infrastructures, whether domestic or global, will be better able to withstand shocks and unforeseen events. moreover, regulators and overseers are required to adopt regimes for effective cooperation with each other. 2. further improvements to global financial stability nets while all these measures have undoubtedly made an important contribution to stabilising the global economy, many observers have argued that gaps remain in the current global financial safety nets. existing mechanisms for dealing with crises have been seen as being deficient in three respects : ( i ) insufficient amount of financial fire - power ; ( ii ) insufficiently flexible or fast decision - making and ( iii ) insufficient coordination with respect to both financing and surveillance. these deficiencies have been seen as leading countries to increase their foreign exchange reserve holdings. for the holders, the great attraction of reserves is that they provide instantaneous and unconditional liquidity. however, the accumulation of a large stock of reserves is not only based on precautionary motives. moreover, even at the level of the individual holder, there are downsides as reserves come with a quasi - fiscal cost. 1 how can we go forward and what can be done differently? overall, there is widespread agreement about what a global mechanism should do : ( i ) reduce the demand for selfinsurance through reserves accumulation ; ( ii ) provide fast - disbursing financial assistance in large amounts to the “ innocent bystanders ” ; and ( iii ) reduce global imbalances. 2 however, it is clear

yves mersch : the next steps in the evolution of the eurosystem ’ s market infrastructure opening remarks by mr yves mersch, member of the executive board of the european central bank, at the eurosystem community session at sibos, geneva, 26 september 2016. * * * introduction one year ago, the eurosystem shared some initial reflections on the strategy for the future development of its market infrastructure. the rationale behind these strategic reflections was the need to keep pace with technological developments in line with the mandate of our treaty to promote the smooth operation of payment systems. digitalisation of financial services the digitalisation of financial services could result in new business models or products with disruptive potential in the financial sector. in particular, distributed ledger technology ( dlt ) has the potential to fundamentally change securities and payments business. however, this technology is still in its infancy. there are substantial functional, operational, governance and legal aspects which need to be carefully looked at before thinking about possible mass adoption. hence, the eurosystem cannot, at this stage, consider using dlt in the market infrastructure. nevertheless, we are exploring whether its possible future use could bring benefits. a multitude of different dlt approaches and models could jeopardise financial market integration by increasing fragmentation. undue periods of market consolidation and standardization could hamper the smooth functioning of a single payments area. we could be in a situation similar to the one that lead to the establishment of t2s. the next steps in the evolution of the eurosystem ’ s market infrastructure the eurosystem ’ s strategic reflections on the future development of its market infrastructure centre around three components : 1. the consolidation of target2 and target2 - securities ( t2s ) ; 2. settlement services to support instant payments ; 3. a eurosystem collateral management system. now, these strategic reflections have entered into the next phase. last week, the eurosystem decided to launch the investigation phase into these three components. the aim is to ascertain whether there is a business case for each, to agree with the users on the scope of services and to prepare a cost - benefit analysis. let me say a few words now on each of the three components. 1. consolidation of target2 and t2s target2 and t2s are the cornerstones of the eurosystem ’ s market infrastructure for payments and securities settlement. but as they were developed at different points in time, they operate on separate platforms and