moreover, precautionary savings may be compounded in emerging economies that are characterised by greater macroeconomic instability. in addition, when the private sector has limited access to credit, agents have to rely on self - financing, whether for household purchases of durable goods or for corporate sector investment. what are the underlying mechanisms that cause these private savings to end up in public balance sheets? such a substitution of public savings for private savings in emerging countries results from the interaction of two basic ingredients : incomplete financial markets and inflexible exchange rate regimes. beyond credit constraints, a key feature of financial market incompleteness in emerging economies is the lack of domestic financial assets, such as fixed - income securities. as a consequence, a large share of these savings ends up in bank deposits. the other key ingredient is of course the exchange rate regime. in many emerging economies, trade surpluses reflect net foreign currency revenues. capital account regulations sometimes involve surrender requirements of such currency - denominated income but more importantly, in a fixed or a pegged exchange rate regime, the central bank purchases foreign currency to prevent appreciation. the capital account regime and financial constraints of developing economies result in the central bank “ borrowing ” from the private sector as a domestic counterpart to the hoarding of international reserves. banks naturally play a central intermediation role in this mechanism by taking deposits of private savings and purchasing sterilisation bills. that completes the mechanism of excess private savings being diverted into public holding of excess reserves. of course, one could argue that central banks are doing their job in taking over foreign exchange positions : naturally, holding foreign assets would expose private agents to currency risk exposure, and in that respect the public holding of foreign assets may be seen as relieving domestic agents from that risk. however, this reasoning raises two objections : - as taxpayers, domestic private agents are still indirectly exposed to the realisation of the large currency risk that public managers of foreign assets bear, which entails fiscal costs ; - if the capital account regime had not resulted in the public sector management of these savings in the form of foreign assets, in principle, corporates ( and possibly households ) would have directly invested their savings in financial instruments of their choice abroad. more realistically, they would probably have unwound their currency exposures and saved in domestic assets. in the absence of official intervention, the exchange rate would have adjusted. however, the fact remains that foreign reserve holdings belong to the nation that has accumulated these assets, hence indirectly

the european payment ecosystem has become extremely reliant on non - european players – today the global card schemes, and tomorrow the bigtechs – with the result that it now has limited control over the management of personal data. in parallel, the rise of crypto - assets and above all of stablecoins means they could potentially try to replace central bank and commercial bank money, even though they offer none of the same guarantees in terms of liquidity, service continuity and neutrality. in light of this situation, europe needs to develop a payments strategy. i have often pushed for 2 / 3 bis central bankers'speeches this over the past two years. recently, we have made decisive progress thanks to the strong involvement of the ecb and the commission. we now have to put this into action and “ deliver ” – this is urgent for the next two years. this strategy notably combines three elements : 1 / european regulation on stablecoins : on 24 september, the european commission published its mica project, which in our view provides a good basis for reconciling innovation with consumer protection and financial stability. 2 / an acceleration on the european central bank digital currency ( cbdc ), the “ digital euro ”. we haven ’ t yet decided on it, but we need to be ready to decide if it becomes necessary, and as soon as it becomes necessary. the banque de france was the first to start a programme of eight experiments on a wholesale cbdc, notably with a number of fintechs, to improve the functioning of the financial markets and institutions. if necessary, the eurosystem could decide to issue a retail cbdc to ensure the general public have access to central bank money, especially in countries where cash payments are in decline. the ecb has created a high - level task force whose report we published ten days ago. we will now launch a public consultation, starting today, examine all regulatory and technical issues, and begin experiments at the national central banks – the banque de france will contribute actively to this. between now and mid - 2021, the eurosystem will decide whether to launch a project for a digital euro, which would start with an investigatory phase. and while we ’ re on the topic, let me just comment on the terminology used : you sometimes hear people talk about cryptocurrencies, but the term is a contradiction. you either have a currency, with all its functions and a public guarantee, or private crypto - assets.