Our CBDC experiments, on which I will elaborate in a few minutes, also led us to develop our own permissioned blockchain (called DL3S- Distributed Ledger for Securities Settlement System) in collaboration with an IT provider. We have also drawn on artificial intelligence for various uses, such as a new forex trading tool and supervisory tools. The question that now attracts public attention is whether central banks’ investigation phases will lead to the development of CBDCs. Almost all of that attention is focused on retail CBDCs. At the same time, we can sometimes hear, and not only from commercial banks, that they are “a solution in search of a problem”. iii In my view, this phrase simply misses the point. What we are currently doing is keeping our eyes and minds open on this new way of making “public money” available. In Europe, we are halfway through our  Page 4 sur 5 investigation phase: the Eurosystem will make its decision by the end of 2023, before a potential launch in 2026 or 2027. I am sure President Christine Lagarde will be able to shed some light on the project. Beyond purely technical considerations, a retail CBDC could play an anchor role in the digital world, similar to the role played by banknotes in the physical world,iv and hence preserve the accessibility and usability of central bank money.
Fintech, as it is known, seems to be the next big thing. It’s true that, in continental Europe, fintechs still account for just a small share of the markets for banking, payment services and asset management. Still, over the past years, they have received a lot of attention and a lot of funds. Fintechs are on the rise. They have entered the markets, and they are competing with banks – at least in some parts of the value chain. The question is: where will this innovation take us? Is it the end of banking as we know it? Will it create new risks? As I said before, it is hard to guess how innovations will evolve and easy to get it wrong. That said, let us take a very brief look at some potential futures. Scenario one: banks might embrace the digital trend and team up with fintechs. For banks this would be one of the more benign outcomes. And it seems to be happening right now. Scenario two: fintechs might break up the value chain of banking. Banks would end up losing revenue, market share and direct contact with clients. The result might be a more fragmented market where some players operate outside the scope of regulation and supervision. Scenario three: banks might still end up being crowded out. At the same time, however, the fintechs could be swallowed up by big tech companies, such as Google, Amazon and Facebook. The market would become more concentrated, less competitive and less diversified.