a referendum on the introduction of a sovereign money system called vollgeld, which requires that every credit granted by a commercial bank is entirely covered by deposits. the proposal was eventually rejected. this does not mean that central banks are entirely indifferent to sovereign money systems, as will become clear in a little while when i talk about central bank digital currencies. alternatives to money in the form of euro banknotes and deposit liabilities at central banks and commercial banks so far, i have been talking about central bank money which is being provided in the form of banknotes and deposit liabilities in euro. but any type of money can potentially be created and issued by for example private entities, as long as it allows in one way or another to fulfil the main functions of money. let us call these types of money alternative money ( in the sense that they are an alternative for both central bank money and for deposits in euro at commercial banks ’ accounts ). central banks also take an interest in alternative types of money, even though they would at first sight fall outside the ambit of the central bank ’ s usual competences. central banks may have more than one reason for this. for starters, a considerable increase in the quantity and use of alternative money may undermine the efficacy of the central bank ’ s monetary policy. if the market players were to massively move away from the use of banknotes and deposits in euro, a central bank could find it more difficult to attain its objective of price stability. indeed, by substitution for regular money such as banknotes and deposits in euro, widely adopted types of alternative money could significantly reduce a central bank ’ s control over monetary conditions, such as its ability to steer interest rates 12. furthermore, many central banks, among which the eurosystem central banks, are entrusted with the task of contributing to the stability of the financial system 13. financial stability may be impacted by sudden or considerable changes in the quantity and use of alternative types of money 14. 3. 1 local currencies a local or complementary currency is a currency that can be spent in a particular and usually limited geographical locality, which differs from an official currency ( like the euro ) and about which a group of private persons, companies or government instances have agreed to accept it as a means of exchange. a local currency therefore acts as a complementary currency to an official currency, rather than replacing it, and aims to encourage spending within a local community or to support the local or social economy. european law

in international transactions. indeed, the evolution of invoicing practices will be slow and will depend among others on the usual practices in the field of price setting on the international markets and in particular on the commodities and on the oil markets. the almost exclusive use of the us dollar stems from both custom and ease as these products are quoted in dollars, a fact which will not be easy to change. the international transactions denominated in dollars are therefore four times higher than us exports. while the relative share of the euro as a payment currency is bound to increase, this evolution will in all probability be slow and progressive. as an investment and financing currency, the euro already plays an important part on international capital markets. during the first two quarters of this year, the share of euro denominated issues in the total of international issues has by far exceeded the aggregate part of its preceding currencies. in the first six months of this year, new euro denominated bond issues have surpassed by almost 50 % the amount issued in the first six months of 1998 in the currencies that now participate in the euro. the international issues in euro now stand for more than 40 % of the total amount issued on the international markets, which is a proportion that comes close to the one of us dollar denominated bond issues. several factors which i have already referred to can explain this evolution : the financing of operations with regard to mergers and acquisitions, the bigger size and greater liquidity of euro markets and the euro issues undertaken by several major countries wishing to diversify the distribution of their foreign currency debt. given the international importance of the new currency, it is not surprising that the development of the euro exchange rate has attracted considerable attention despite the fact that the level of the exchange rate is less important for the euro area as a whole than it was for each of the participating countries before the start of emu, in particular for a small country like belgium. for this reason the level of the euro exchange rate is not in itself a precise policy objective of the eurosystem. nevertheless it is an important indicator in its monetary policy strategy. in the first part of the year the relative weakness of economic activity in the euro area compared with the high growth in the us has affected the euro exchange rate. but now, with the good prospects for an economic upturn in the euro area, the firm commitment of the eurosystem to internal price stability, which constitutes the best basis for the strength of the euro in the