Such a step would only be taken in accordance with the principle of subsidiarity, and all the sums borrowed would  Page 5 of 6 be gradually repaid by the banking sector. Rather, it is about building confidence in bank resolution in Europe by showing that it will always be able to intervene effectively in the event of a crisis. Such a system will also encourage the lifting of the constraints imposed by certain national authorities on capital and liquidity flows. I regard the European Commission's proposal to set up a backstop through a credit line provided by the European Stability Mechanism (ESM) as a top priority. We also need a common scheme for providing liquidity to financially sound banks after resolution which is in line with euro area monetary policy rules. Of course, a compromise will have to be found in order to make headway on the third pillar of the Banking Union, deposit insurance. Once we have completed the resolution framework, we will be less in need of a shared European scheme. A pragmatic approach could be to introduce a system of loans between national deposit guarantee schemes (DGS), with guarantee mechanisms to ensure that liquidity advances do not lead to losses for the lending DGS. This would lead to a sharing of liquidity without sharing risks, which would be a first step towards shoring up financial sector confidence and strengthening depositor protection.
SPEECH  Paradise lost? How crypto failed to deliver on its promises and what to do about it Speech by Fabio Panetta, Member of the Executive Board of the ECB, at a panel on the future of crypto at the 22nd BIS Annual Conference, 23 June 2023 Basel, 23 June 2023  Introduction Some 15 years ago, software developers using the pseudonym Satoshi Nakamoto created the source code of what they thought could be decentralised digital cash. [1] Since then, crypto has relied on constantly creating new narratives to attract new investors, revealing incompatible views of what cryptoassets are or ought to be. The vision of digital cash – of a decentralised payment infrastructure based on cryptography – went awry when blockchain networks became congested in 2017, resulting in soaring transaction fees. [2] Subsequently, the narrative of digital gold gained momentum, sparking a “crypto rush” that led to one in five adults in the United States and one in ten in Europe speculating on crypto, with a peak market capitalisation of € trillion. [3] However, this illusion of crypto-assets serving as easy money and a robust store of value dissipated with the onset of the crypto winter in November 2021. The fall in the price of cryptos (Chart 1) led to a decrease of around € trillion worth of crypto assets within less than a year. This caught millions of investors unprepared. [4] An estimated three-quarters of bitcoin users suffered losses on their initial investments at this time.