Today I would like to look at the effect fintech innovations could have on a key element of the financial system, namely the financial market infrastructure. The financial market infrastructure, FMI for short, comprises trading platforms, securities settlement systems and payment systems via which financial transactions are conducted electronically. The FMI is generally not in the spotlight. Nevertheless, both the financial sector and the Swiss economy as a whole depend on a secure and efficient FMI. The SNB monitors developments in this area very closely given that facilitating and securing the operation of cashless payment systems is one of its statutory tasks. In this speech I will be discussing the significance of fintech for the financial market infrastructure. First, I will address DLT’s potential in the FMI. Second, I will be talking about the tried-and-tested division of roles between the central bank and commercial banks. I will look at how this two-tier system paves the way for harnessing fintech innovations that could enhance efficiency, while ensuring that this is not to the detriment of either safety or reliability. Third, using the example of retail payments, I will show that there is a lot more to fintech than just DLT, and that private sector players are much better suited to providing timely solutions and flexibly addressing the needs of customers in this area.
We don’t see many positive effects from the ECB’s policy in other ways either: economic growth is fragile at 1.5%, unemployment stands at 10%, with youth unemployment as high as over 20%. You can’t really give the ECB good marks for that? If the ECB had not taken the measures that it did, we would be in a depression; I’m convinced of that. And a depression would be much worse than what we are experiencing today and worse than what we went through over the past decade. Let me recall: after the banking crisis, we had a severe recession in 2009 and the economy then recovered in 2010 and 2011. This was followed by the debt crisis – centring on the sovereign debt of several European countries – which plunged the European economy into another recession. This recession was not as deep as the one in 2009 but it did last longer, because it took us two years to get over it. Economic growth picked up again somewhat at the end of 2013 and in 2014, but as of the spring of 2014 we saw another slowdown in growth and were at risk of running into a third recession. In January 2015, ECB President Mario Draghi announced that the ECB would pursue a policy of quantitative easing: we now print money and pump it into the economy in order to help ease credit conditions. Were it not for the monetary policy of recent years, we would certainly have landed in a deep recession.