For instance, such systems would render the reconciliation of transaction and balance data between banks and a third-party system obsolete. The paradigm seems to have been turned on its head: decentralisation – not centralisation – now appears to promise the greatest efficiency gains. I do not, however, believe that decentralisation will become the ‘new normal’ in all financial market functions and infrastructures. Many existing financial market infrastructures are already highly competitive, and barriers to entry for new technology are correspondingly high. The conventional, centralised model they are built on is already low-cost and meets high safety standards. And improvements are being made all the time. Distributed ledger technology, meanwhile, has yet to prove it can outperform the existing set-up with respect to safety and efficiency. Having said this, there may be some scope for deploying distributed ledgers in certain complex financial market functions or infrastructures. The settlement and safekeeping of securities is one example. In the end, we may well see conventional and new technologies coexisting or blending. Staying with the securities example: it is conceivable that we will see a hybrid scenario. This could entail security-specific information being settled via a distributed ledger, while the payment leg could continue to be effected via a traditional, centralised payment system. 4 5  6  7  Cf. Diana Chan, Florence Fontan, Simonetta Rosati and Daniela Russo, ‘The Securities Custody Industry’, European Central Bank, Occasional Paper Series, No. 68, August 2007.
Looking ahead, we expected that positive fundamental factors – notably strong global demand and robust earnings in the euro area – would contribute to a certain pick up and a broadening of economic activity. The latest data and indicators have not changed this assessment. According to Eurostat’s flash estimate, real GDP grew at a quarter-on-quarter rate of 0.3% in the second quarter of this year, compared with 0.4% in the first quarter of 2005, confirming that the underlying growth dynamics remained subdued in the first half of 2005. At the same time, the most recent survey indicators have, on balance, supported the view that economic growth could improve in the second half of this year. Looking further ahead, conditions continue to be in place for positive fundamental factors to influence the outlook and for economic activity to pick up beyond the short term. On the external side, ongoing growth in global demand and improvements in euro area price competitiveness should support euro area exports. On the domestic side, investment should benefit from the exceptionally low level of both nominal and real market interest rates prevailing across the entire maturity spectrum, as well as from the robust growth of corporate earnings and ongoing improvements in corporate efficiency. Consumption growth should gradually rise, broadly in line with expected developments in disposable income. This picture is consistent with the most recent ECB staff projections, which envisage euro area real GDP growing at rates of between 1.0% and 1.6% in 2005 and between 1.3% and 2.3% in 2006.