For instance, as late as last summer it became possible in Germany to shop after 6 p.m. on weekdays and on Saturday afternoons. However, it is still almost impossible to find a shopping centre in Berlin or Frankfurt that is open on Sundays, a day that ought to be very suitable for retail trade since customers are usually not at work then. So a continued modernisation of working-hour laws could contribute to further improving efficiency in the German economy. Another area is the costs associated with downsizing. European firms are in many cases obliged to pay for laid-off employees a long time after their employment has finished. This may make the labour market less efficient in downturns, as firms often try to retain existing staff instead of implementing costly cutbacks. The situation can become particularly serious if the downturn turns out be longer or deeper than firms initially fear, since cutbacks during the economic downturn risk aggravating the decline. In this respect, the euro area and Sweden are at a disadvantage compared with the UK and the US, where the labour market responds much quicker to changes in economic conditions. Labour market legislation can therefore also be significant for the economic cycle. Firms that are forced to retain a larger workforce than they have use for during a downturn will not be as financially well prepared to meet a future upswing. We can see signs today of how this is having an adverse effect on the European economic recovery.
International standards explicitly call on payment systems to settle in central bank money when possible and where that’s not possible, to settle in commercial bank money and to strictly limit any credit and liquidity risk of the instrument being transferred and settled. However stablecoin arrangements propose to transfer new instruments that they will create themselves – and to settle most of their transactions across their own books. With the right regulation, stablecoins may be safe for use in systemic payments chains. But the protections these stablecoins would offer are currently big question marks. Some major stablecoin proposals offer no legal claim for holders. None. This is significantly different from how we currently pay: When my parents pay for their groceries using their debit card, the shop ultimately receives an electronic deposit in the shop’s bank account - a promise from the shop’s bank to redeem the amount deposited in local currency on demand. When – pre-COVID – my parents paid in cash, the shop got banknotes with a central bank promise to “pay the bearer.” Were they to pay in the future with some proposed stablecoins, the shop would just get a bunch of stablecoins. If the shop can’t sell the stablecoin to get local currency or other goods in an amount equivalent to the price of the grocery order, tough luck. Additionally many stablecoins propose backing in instruments that may have market and liquidity risk. While these risks might be acceptable for speculative investment purposes, payments are different.