To this effect, Europe-wide measures are crucial, even if they do not take the most appropriate form for optimal efficiency, as would have been the case, for example, of a permanent macroeconomic stabilisation instrument depending on the common budget. That said, in the absence of such an instrument, the European recovery fund may fulfil this function in a reasonably adequate manner in the coming years. However, harnessing the maximum potential of these funds poses a huge challenge. The first difficulty lies in the need to develop the capacity to set in place a number of new high value-added projects that do not supplant those that would have been carried out had the European funds not been available. In addition, these projects require prompt execution, to permit a more robust economic recovery once the pandemic has been overcome. Indeed, this is the Government’s declared intention: to use these European funds as promptly as possible as a catalyst for structural transformation. Nevertheless, it is fair to acknowledge the huge challenge that the swift implementation of a potentially very large number of projects will entail for the existing structures. The projects executed under these programmes must be concentrated on areas such as digitalisation, the fight against climate change or improving human capital. Their effects on economic growth potential will depend, above all, on the projects to be executed being selected in accordance with a carefully designed structural reform plan.
As I have said in other contexts, one challenge in a rules-based regime is that the pace of rulemaking is not always commensurate with the pace of rule breaking.6 Complying with minimum legal thresholds may not be sufficient in all circumstances to appropriately mitigate risk to your firm or the payment system.7 Technology has greatly expanded access to the payment system. Many of us— everyday consumers, that is—effect payments not only directly through our banks, but also through various “fintech” intermediaries. There is much good in this, but technology is not riskfree. The creative development and application of technology can create opportunities to improve the payment system. Technology also creates new opportunities to compromise that system. Take, for example, the nascent challenge presented by the development of digital currencies. The New York State Attorney General’s office estimates that more than 1,800 virtual currencies are exchanged around the world.8 Many digital currencies use distributed ledger technologies, which can help institutions achieve efficiencies in customer due diligence programs. Distributed ledgers also promote traceability, which in theory assists law enforcement. That said, the use of private exchanges for these digital currencies may facilitate anonymity, which tends to help the bad guys. My concerns, however, are less about the technological frontier, and more about well-established risks to the payment system. Recent press reports about financial crimes involving 1MDB, Danske Bank, Swedbank, and, yes, Bangladesh Bank make no mention of fancy new digital currencies.