Another consideration is that notwithstanding the low growth of demand, inflation has been surprisingly high. These forces have acted with varying strength on the Riksbank’s inflation forecasts in recent months. Roughly speaking, when economic activity is slowing — with a given potential growth rate — after a time inflation falls back. A weak exchange rate pulls in the opposite direction, however, and can lead to higher price increases: directly through rising import prices and indirectly by stimulating production for export. In addition, abrupt exchange rate movements are liable to affect inflation expectations, a problem that is accentuated when inflation is springing unpleasant surprises. The krona’s weakening in the early summer, after the Riksbank had presented this year’s second Inflation Report, probably had to do with a combination of slackening export activity and portfolio adjustments. Moreover, inflation outcomes in the late spring had been surprisingly high. If higher inflation expectations are allowed to take root and also show up in time in a currency depreciation, public confidence in monetary policy’s systematic commitment to a rate of inflation in line with the 2 per cent target may be shaken. The weakening of the exchange rate in that period was an isolated Swedish phenomenon, which made it particularly serious. The krona also weakened in the aftermath of the terrorist attacks on 11 September but the circumstances then warranted a different interpretation. General uncertainty in the financial markets was accompanied by extensive portfolio adjustments after the terrorist attacks.
•  Indeed, these investigations must be undertaken hand in hand with private intermediaries. The tokenisation of finance creates a new ecosystem which is also a challenge for them, especially as their role could be transformed by decentralised technologies. •  And we need to ensure that this ecosystem is fully interoperable with legacy securities and payment systems, which are likely to remain an important element of the landscape. •  In that context, our goal at the Banque de France is to facilitate responsible innovation from the market, while safeguarding the use of central bank money and thus financial stability. •  My final point is to say that today’s discussion showed that central banks need to further their exploration of new technologies to prepare for the future of finance. This is the goal that Banque de France has been pursuing since the launch of its first experiments on wholesale CBDC in 2020. We are now taking this endeavour a step further with a second round of experiments. Let me stress that it is a collective work, whose conclusions will feed the Eurosystem’s reflection on CBDC. •  The entry into force of the European "pilot regime" next year offers an invaluable opportunity for private players but also for public players. In this sense, offering settlement solutions in central bank money - for the cash leg of transactions involving tokenised securities - could allow tokenised finance to benefit from the most secure and liquid asset. •  Thank you again for your participation. Page 3/3