A relevant issue in this regard is the extent to which these macropudential measures are complementary or substitutive with respect to monetary policy instruments. For instance, the activation/deactivation of a countercyclical capital buffer may weaken/increase the impact of expansionary monetary policy measures, as it may have a negative/positive impact on credit supply. 1  Countercyclical capital buffer  11  Implications for the financial system  Let me now briefly discuss the potential implications of ageing for the financial system. Demographic changes will affect the demand for financial products in various dimensions. First, the demand for credit will diminish due to the reduction in the number of middle-aged individuals since, over the life-cycle, the amount of debt usually peaks at around those ages (in the range of 25 to 34 years), falling to very low levels when the reference person of the household is older than 55. 12  Additionally, the demand for long-term financial assets will probably increase since working age individuals will need to build up more savings for retirement, against a background in which public pension income might not be sufficient to smooth consumption in the transition to retirement. The flow of funds data actually show that since the beginning of the 21st century the share of financial assets related to retirement in the financial portfolio of euro area households has increased significantly. In particular, the share of pension entitlements plus life insurance and annuity entitlements has risen by more than ten percentage points.
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.