Conference Banque de France ”Opportunities and challenges of the tokenisation of finance: which role for central banks?”  Tuesday 27 September 2022  Concluding remarks by Denis Beau, First Deputy Governor  Let me first start by thanking you all for attending this conference, both online and in person. I believe this large audience speaks to the significance of the issues that we have discussed together today and the depth and quality of today’s exchanges, which covered a wide variety of topics, were impressive. It is a tall order to summarise such rich discussions in so little time. I will only try to highlight three lessons I take away from each of the roundtables and chart a possible way forward. The first lesson I take away from this conference is that we could be at a turning point in the development of the crypto-asset ecosystem. • Over the past few years, the crypto-asset landscape has experienced a significant growth, buoyed in part by the low interest rate environment. It has expanded its initial scope and started offering more sophisticated products, getting increasingly complex and interwoven with traditional finance, with the emergence of DeFi. • However, recent tensions in the crypto-asset ecosystem, amidst a normalisation of monetary policy, raise questions about (i) first, its correlation with other types of risky assets and (ii) second, their sensitivity to changes in the monetary policy stance. The ongoing stress in the crypto-asset market is also altering the dynamics of the ecosystem, sparking bankruptcies and leading toward greater concentration.
Page 1/3  • In addition, the development of crypto-asset and DeFi comes with significant policy challenges for public authorities, that were highlighted in our discussions today: o First, they raise the question of how to regulate market players, which are not easily captured by existing regulation as they either lack central authority or may require close coordination between several regulatory and supervisory agencies due to the variety of their activities. o Second, the rise of these new assets has led central banks to reflect on the appropriate balance between public money and private assets and the way in which access to public money could be ensured in the digital era through the issuance of Central Bank Digital Currency. The second takeaway is that private players identify substantial benefits associated with distributed ledger technologies and consider that an appropriate regulatory framework would help make the most of these technologies. •  But we know from experience that public authorities need to act quickly, while this ecosystem is still nascent, to guide its development in a way that suits our public policy objectives. We are now at a tipping point. If we do fail to act, there is a risk that inefficient, fragmented, monopolistic solutions could develop in a silo mode, harming financial stability. But if we act early, we can foster the development of an innovative ecosystem, which will improve the efficiency of post-trading processes and infrastructures.