Jean-Claude Trichet: Completing the creation of a fully integrated European capital market Speech by Mr Jean-Claude Trichet, Governor of the Bank of France, at the Finance Foundation, Venice, 19 June 2003. *  *  *  Ladies and gentlemen, It’s a great pleasure to be here with you today. Let me start by expressing my thanks to the Finance Foundation for inviting me to speak at this conference in Venice. I would like to take this opportunity to share with you some thoughts on the creation and the completion of an integrated European capital market. One may first recall all the rewards of this march towards a truly integrated European capital market. The creation of this market is indeed the third layer of a process that began at the end of the eighties, with the Single European Act which formed the basis for the establishment of the internal single market for persons, goods, services and capital. The second layer was obviously the creation of the euro and the launch of the Monetary Union. And it is not a coincidence that the ambitious Financial Services Action Plan, which serves as the framework for conducting this integration, was launched precisely in 1999. Clearly, achieving a full integration of financial markets will allow our countries to reap the full benefits of these initial steps through a reduction in the cost of capital for businesses, a wider range of investment opportunities, an increasingly efficient allocation of capital. Ultimately, the positive contribution to economic growth can be hardly disputed.
We are already clear that we stand ready to act as settlement agent both for regulated systemically important schemes supervised by the Bank, and, on a case-by-case basis, for other new systems. 9 The Bank will use this to enable innovation and competition, without compromising stability. The third way the Bank is enabling the FinTech transformation is by exploring the use of Distributed Ledger (DL) technology in our core activities, including the operation of RTGS. If distributed ledger technology could provide a more efficient way for private sector firms to deliver payments and settle securities, why not apply it to the core of the payments system itself? The great promise of distributed ledgers for central banks is their potential to enhance resilience. Distributing the ledger means multiple copies of the system. It can continue to operate if parts get knocked out. That removes the single point of failure risk inherent in a centralised system. But if we are to entrust the heart of our financial system to such technology, it must be robust and reliable. The payments system we oversee processes £ trillion of bank transactions, equivalent to around 1/3 of annual GDP, each day. Disruptions are potentially costly. That is why, in payments and settlement, the Bank has an extremely low tolerance for any threat to the integrity of the economy’s ‘plumbing’. We won’t beta test RTGS. To help distinguish DL’s potential from its hype, the Bank has set up our own as a Proof of Concept.