IGTA Journal - Summer 2018

First, a networking pillar. Today, Europe’s financial services potential is spread over various locations. It does not have a cumulative effect. However, for a fully-fledged financial ecosystem to truly flourish, there needs to be enough providers and users of financial services in the local market. At present, no European financial centre can tick this box. The continental venues could, however, tap into an aggregate potential if they were to form a network in which any financial product can be bought and sold in any quantity at any time, just as you would expect from a globally competitive financial centre. The second pillar is digitalisation. Financial centres in continental Europe need robust digital market infrastructure that leverages all the state-of-the-art digital capabilities – of which distributed ledger technology (DLT) is but one. Only then can these centres overcome fragmentation and replicate agglomeration effects of physical proximity. The Eurosystem will also be expected to contribute here, seeing as it already provides a key piece of infrastructure for payments in the shape of the TARGET system. These first two pillars create a digital network across European financial centres. But to make the most of Europe’s potential as a “financial Amazon”, market -driven specialisation will also be needed as a third pillar. Specialisation can help deliver economies of scale, increase the potential for innovation, and a chieve excellence. In an environment of “coopetition” – a neologism merging the words cooperation and competition, European financial centres could cooperate, compete and, at the same time, hone their own areas of expertise. But this is a vision for the future. It’s a picture of the future that is also very much in our own inherent interest as a central bank, because the more that financial flows end up where our system is in force, the more we are able to promote financial and price stability as well as a strong currency. 5 Conclusion Ladies and gentlemen, “Brexit means Brexit” – but at the end of the day, what this means for the financial centre of Europe is very much up to us. This goes for those of you who are domestic and foreign banks, for those of you who make policy at the regional, national and European level, and for us as central banks and supervisors. Now a change of perspective is in order: let’s see Brexit as an opportunity for us, not by naïvely whitewashing what is a regrettable development, but by planning a sober yet forward- looking model. Thank you for your attention. Deutsche Bundesbank Communications Department Wilhelm-Epstein-Straße 14, 60431 Frankfurt am Main, Germany Internet: www.bundesbank.de | E-mail: info@bundesbank.de Tel: +49 69 9566-0 | Fax: +49 69 9566-3077 Reproduction permitted only if source is stated. IGTA eJournal | Summer 2018 | 26