denis beau : european association of cooperative banks keynote speech by mr denis beau, first deputy governor of the bank of france, at the general assembly of the european association of cooperative banks, 29 april 2022. * * * ladies and gentlemen, i ’ m delighted to be with you, even if i would have preferred a more serene context after two years of crises. the war in ukraine is casting a new shadow on our times with deep and possibly long standing consequences on economic and financial relations at global and regional levels. in the short run, it could alter significantly our macroeconomic and macrofinancial environment, bringing new challenges and amplifying old ones both for financial institutions and public policy makers and supervisors. today, i would like to discuss some of these challenges, by sharing with you, with my central banker and supervisor lens, my perspective on short run challenges associated with the macroeconomic and the financial stability outlook and on longer term challenges associated with climate change and digitalisation of finance. 1. the macroeconomic outlook : the challenges associated to a new interest rates environment the war in ukraine is likely to play an important role in the growth and price perspectives in the euro area, as it represents a so - called “ slow - flationary ” shock whose impact in terms of length and magnitude is highly uncertain at the current juncture. it is already clear however that it will amplify the headwinds to the strong recovery that the euro – area has been experiencing in 2021, and that it will intensify inflation pressures in a context where inflation has already increased significantly and will remain high over the coming months. the general uncertainty that marks the euro - area macroeconomic environment has implications for the conduct of monetary policy. in these conditions, it is important to balance carefully the risks of waiting too long to act as opposed to those of normalizing too soon. in any case, the commitment of the ecb is clear : the governing council will do what is necessary to bring inflation firmly and durably to around two per cent over the medium term. the forward guidance, relying on state contingent criteria and the “ sequencing ” are instrumental to this goal. policy normalization will follow a clear order : the ecb will end its asset purchases first, likely in q3 2022, then raise the key interest rates, eventually reducing its balance sheet in a third step. all along this gradual process of normalization, the governing council of the ecb made it clear that it will maintainop

regulatory challenges that will need to be addressed. with this in mind, the acpr has begun identifying potential avenues of regulation. these were set out in a paper published in october 2023. they include three measures : ( 1 ) first preserving the resilience of public and private dlt infrastructure via security standards ; ( 2 ) second, certifying smart contracts, even if this raises operational questions ; and ( 3 ) third, regulating defi entry points to protect investors against the risks of abuse. work is continuing in 2024 with stakeholders on one of the acpr's key proposals, namely the mandatory certification of smart contracts prior to their use. my fourth and last point is about the use of our second lever, the adaptation of the services we provide in cebm. it has taken the form so far of two major endeavours to prepare for such adaptation. first, the banque de france was the first central bank to launch an ambitious experimental programme on wholesale central bank digital currency ( cbdc ) for largevalue payments, in 2020, to support dvp and pvp settlement processes of tokenised financial assets, both domestically and cross - border. the experiments are now pursued under the aegis of the ecb. the banque de france's wholesale cbdc technical 2 / 3 bis - central bankers'speeches solution, based on our own dlt ( dl3s ), is one of the solutions currently trialed by the eurosystem. the banque de france is also taking part in several important international initiatives, notably those spearheaded by the bank for international settlements'innovation hubs, to explore the future of market infrastructures and interoperability between traditional systems and different types of dlt. in the latest project, agora ¡, the banque de france will represent the eurosystem, and will explore with six other central banks worldwide the tokenisation of cross - border payments using both tokenised central bank money and tokenised commercial bank deposits in an ecosystem that preserves the two - tiered architecture of the financial system based on the concept of unified ledger. the second major endeavour is our participation as a central bank of the eurosystem to the preparation of the digital euro, but i do not develop this aspect as my colleague of the ecb will tell you more on this. if and when we will deploy these cbdcs, wholesale and retail, remains uncertain as we speak. the only certainty we have and market participants should have, is