christian pfister, monetary policy and digital currencies : much ado about nothing? banque de france working paper 642 ( paris : banque de france, 2017 ), https : / / publications. banquefrance. fr / sites / default / files / medias / documents / dt - 642. pdf. john barrdear and michael kumhof, the macroeconomics of central bank issued digital currencies, bank of england working paper no. 605 ( london : boe, july 18, 2016 ), https : / / papers. ssrn. com / sol3 / papers. cfm? abstract _ id = 2811208. - 8financial system, which will require the digital verification of identities. there are a variety of approaches to safeguarding the privacy of payments transactions while also identifying and preventing illicit activity and verifying digital identities. addressing these critical objectives will require working across government agencies to assign roles and responsibilities for preventing illicit transactions and clearly establishing how consumer financial data would be protected. increase financial inclusion today 5. 4 percent of american households lack access to bank accounts and the associated payment options they offer, and a further 18. 7 percent were underbanked as of 2017. 11 the lack of access to bank accounts imposes high burdens on these households, whose financial resilience is often fragile. at the height of the pandemic, the challenges associated with getting relief payments to hard - to - reach households highlighted that it is important for all households to have transactions accounts. the federal reserve ’ s proposals for strengthening the community reinvestment act emphasize the value of banks providing cost - free, low - balance accounts and other banking services targeted to underbanked and unbanked communities. 12 and a core goal of fednow is to provide ubiquitous access to an instant payments system via depository institutions. cbdc may be one part of a broader solution to the challenge of achieving ubiquitous account access. 13 depending on the design, cbdc may have the ability to lower transaction federal deposit insurance corporation, how america banks : household use of banking and financial services ( washington : fdic, october 19, 2020 ), https : / / www. fdic. gov / analysis / household - survey / ; and federal deposit insurance corporation, fdic national survey of unbanked and underbanked households ( washington : fdic, 2017 ), https : / / www. fdic. gov /

and prevention of systemic risk. with regard to the latter, whether insurance companies could cause systemic risk has been frequently discussed. one camp argues that, compared to banks, insurance companies themselves are less likely to become the epicenter of a liquidity crisis or to cause systemic risk because their liabilities are mainly long - term ones based on insurance contracts. although such an argument is valid in a comparative sense, the global financial crisis shows that we cannot safely say that the failure of insurance companies would not cause systemic risk. as financial markets become increasingly interconnected, we cannot deny the possibility that a deterioration in the business conditions of insurance companies, or their failure, could trigger cancellations of savings insurance products or a deterioration of market sentiment that would undermine the stability of the financial system as a whole. when insurance companies are also involved in a wide range of business operations through their subsidiaries, such operations could trigger systemic risk. during the financial crisis, the u. s. federal reserve provided a large amount of funds to aig, based on the judgment that such risk was highly significant. when small and medium - sized insurance companies failed in japan, the insurance policy - holders protection corporation was established and the bank of japan established a temporary credit line to the corporation, although it was never activated. designing regulatory and supervisory frameworks : finding the right balance various international efforts have been made in the areas of regulation and supervision of financial institutions, including insurance companies, with the aim of preventing future financial crises. with regard to bank regulation, the introduction of the basel iii framework bis central bankers ’ speeches was internationally agreed in 2010. this summer, planned measures were announced for global systemically important financial institutions, or g - sifis, including an additional capital charge and the establishment of a smooth resolution framework for winding down such institutions. in parallel with such developments, active discussions have been taking place to change the regulations for insurance companies, including the solvency ii directive in europe. as financial transactions become more complex and globalized, reforming our frameworks for financial regulation and supervision is becoming an extremely challenging task. although it is easy to point out problems with any reform proposals, it does not mean that current frameworks should remain unchanged. in order to prevent financial crises, the regulatory and supervisory authorities, central banks, and financial institutions need to do their utmost to successfully make the necessary reforms. today i am not going to discuss specific reform measures given the time constraints. instead, as a guiding principle for reforming the frameworks for international