also has to be a stable unit of account for the value of the goods and services that are exchanged. and it should also be used as a long - term store of value, for example for saving. cryptocurrencies such as the much - discussed bitcoin do not perform these functions adequately, if at all. trust is the very essence of a stable currency. this trust cannot evolve without a solid framework, including a state governed by the rule of law, a sustainable economic and fiscal policy, and also an independent central bank. cryptocurrencies that have no link to a conventional currency ( the swiss franc for instance ) display a high level of price volatility. they are more of a speculative investment instrument than a means of payment capable of retaining its value. the chart on the right - hand side of the slide illustrates this. compared with exchange rates, commodities and equities, cryptocurrencies are subject to very high volatility, and investors must be aware of the financial risks they are taking on when buying them. cryptocurrencies therefore do not meet the requirements of a currency. however, this does not mean we can simply dismiss them out of hand, for behind all of the hype there is an array of technological innovations. particularly important among these is the distributed ledger technology, known as dlt for short and often also referred to as blockchain. in other words : it is important to make a clear distinction between cryptocurrencies as assets, and the underlying technology, which does indeed have potential. dlt could facilitate solutions in various areas of the economy that would enhance the safety page 2 / 8 and efficiency of digital information flows. a distributed ledger is essentially a decentralised and synchronised database that allows participants to read, write and save information. dlt makes it possible to unequivocally define ownership structures within a computer network, without the need for a central third party. these facets also give rise to interesting possibilities for the financial sector, and dlt is therefore regarded as one of the biggest innovations in the fintech area. today i would like to look at the effect fintech innovations could have on a key element of the financial system, namely the financial market infrastructure. the financial market infrastructure, fmi for short, comprises trading platforms, securities settlement systems and payment systems via which financial transactions are conducted electronically. the fmi is generally not in the spotlight. nevertheless,

institutions. equity capital is key to the stability of the banks as it constitutes their main buffer for absorbing losses. under the new rules, banks have to satisfy higher capital requirements in terms of both quantity and quality. since last year, these institutions have been required to hold cet1 capital equal to 4. 5 % of their risk - weighted assets. this was followed on 1 january by an additional 0. 625 % for the capital conservation buffer, which is set to rise to a total of 2. 5 % by 2019. from 2019, when it is possible for all instruments to be deployed in full, banks and savings banks will have to hold cet1 capital equal to at least 7 % of risk - weighted assets. this is a significant increase compared with the 2 % minimum ratio that applied until the end of 2013. what is more, the other new capital instruments, which include the countercyclical capital buffer and the additional buffers for the most significant institutions, also need to be backed by cet1 capital. the new rules will help make the banking system more stable as a whole. at the same time, however, it goes without saying that the new rules also place a cost burden on the banks. this is by no means unintentional in the case of buffers for the most significant institutions : as their systemic importance puts them at an advantage in terms of funding costs, this burden levels the playing field at least in part. however, some observers fear that this is also detrimental to the real economy. they argue that the new rules are making it more expensive for banks to lend and are therefore concerned that the institutions will be forced to reduce their lending activities in the future. the basel committee was well aware of the impact that the new rules would have. it was for this reason that the committee also established transitional periods with the aim of rendering it easier for banks and savings banks to make the necessary adjustments. these apply to both the qualitative and the quantitative aspects of the new capital requirements. for example, the capital instruments that are no longer eligible for inclusion in cet1 capital will not be excluded in one fell swoop ; instead, they will be phased out over a period of several years. furthermore, increasing requirements regarding the level of capital to be held will be introduced only gradually. but the basel committee has also come in for criticism in response to these transitional periods – in the eyes of some government representatives and market observers, they appeared to constitute too great a