What ought to matter more is whether efforts are being stepped up to achieve sustained growth over the medium-term – by reducing vulnerabilities in the system and implementing structural reforms. Second, markets seem to be under-estimating the pace of monetary policy normalisation, particularly by the US Fed. The Fed’s guidance suggests one more rate hike in 2017, and three each in 2018 and 2019. But markets are pricing in less than three hikes in total for the rest of this year through 2019. Granted – with lower oil prices and muted wage growth, the risk of inflation surprising on the upside is low. But what if that risk materialises, especially if the labour market tightens further? Unemployment is already around its natural rate. Past experience suggests that the pass-through from labour market tightness to inflation tends to accelerate as unemployment falls below the natural rate. That could well lead to a faster pace of monetary policy normalisation than the market currently anticipates. Finally, there is a conundrum between volatility and uncertainty. Why is volatility so low in financial markets when uncertainty is high on the policy front? Perhaps it is because uncertainty about economic growth is lower. - The size and number of revisions to global growth forecasts have clearly come down. But surely, political uncertainty is at elevated levels? And when politics is uncertain, can the economics remain unaffected? A disorderly Brexit could lead to increased market turmoil and trigger sharp asset price corrections.
In this way, experimentation allows us to send the right signals for the ecosystem to realise the potential of new technologies without fearing a delayed and unexpected “backlash” from the Supervisory Authority. The experiments underway at the Banque de France on a central bank digital currency (CBDC) are an illustration of the same experimental approach in the field of work specific to central banks. They present with issues directly related to the need for the Eurosystem, should circumstances require it, to be ready to issue a CBDC in order to ensure that central bank money is accessible to the general public and to preserve their freedom of choice of means of payment and their confidence in our currency. By testing the possible uses of a CBDC, we investigate not only the potential of blockchain technologies but we also question the players in the ecosystem on what tomorrow’s landscape could look like, on subjects as fundamental as the methods of exchanging financial instruments for CBDCs, the improvement of the conditions for executing cross-border payments or new ways of making CBDCs available to financial sector players. 2/4  BIS central bankers' speeches  *  *  The second thrust of our work is to promote a regulatory framework and appropriate supervisory practices. In this respect, our immersion, as a player, in the innovative FinTech ecosystem is a valuable asset that we intend to build on in order to contribute to the impending and necessary changes in regulations and supervision.