The development of cheap and innovative digital payment solutions is leading to a decline of the use of cash in transactions, and an increase of cashless payments, which leads to a wider use of commercial bank money. Besides, our European ecosystem has become critically dependent on non-European players – already major global card-schemes, and more and more Bigtechs – with little control over business continuity and data protection. Meanwhile, the development of crypto-assets and socalled “stablecoins” aims to create a new category of settlement assets. Stablecoins may compete against both commercial and central bank money, even though they do not offer the same guarantees in terms of credit risk, liquidity, service continuity, and neutrality. Indeed, current digitalisation triggers at least two important risks: (i) the risk that BigTechs will build private financial infrastructures and “monetary” systems, competing with the public monetary sovereignty; and (ii) the symmetric risk that some jurisdictions judge that the only way to respond to the overwhelming private payments’ wave would be to issue and spread on a domestic but also a global basis, “their” CBDCs (Central Bank Digital Currency). 2/4  BIS central bankers' speeches  I already called – including here at Europlace – for a holistic European payments strategy. The good news is that in the last months we made decisive progress in designing it, thanks to the commitment of the Commission and the ECB. Christine Lagarde as President, and Fabio Panetta as Board’s member in charge of payments changed the game through their personal involvement.
Bond yields reversed their movements from the early part of the pandemic, with 10 year US treasury yields rising by 65 bps in this period and 10 year gilt yields moving 64 bps higher. Bid-offer spreads on US treasuries widened by a factor of 10. The gold price fell by 12%. Investors suddenly looked to redeem from money market funds (MMFs). Sterling MMFs saw outflows of 11% in just over a week. Similar outflows were seen in the US prime MMFs. This self-reinforcing dynamic was broken by massive central bank intervention. On 19 March, the Monetary Policy Committee (MPC) announced the stock of asset purchases would increase by £ of gilts. We also launched special repo operations (the Contingent Term Repo Facility), a 1/6  BIS central bankers' speeches  credit scheme (the Covid Corporate Financing Facility), extended term credit to banks (the Term Funding Scheme with additional incentives for SMEs) and joined other major central banks in activating the swaplines. In the US, amongst other actions, the Federal Reserve announced a $ asset purchase program, quintupled its repo operations (from $ to $ and established a temporary repo facility for international authorities with a view to support treasury market functioning. In Europe, the Pandemic Emergency Purchase Programme was put in place to purchases eligible assets up to € As a result, order returned to financial markets and subsequently the growing realisation that governments would step in to limit economic damage further restored confidence. What lesson should we learn from that episode?