Spain’s global position in terms of innovation and digitalisation Now let me give you some figures on Spain’s relative position in terms of innovation and digitalisation. According to Eurostat10, R&D expenditure as a percentage of GDP stood at 2% in the EU in 2017, below the target of 3% of GDP set at “Europe 2020 strategy” and also below US levels (2.8%). Spain’s investment in R&D was lower than the EU average. It only accounted for 1.2% of its GDP in 2017 despite having been growing for the previous three years. According to COTEC11, Spanish companies fund the majority of their investment in R&D, around two thirds, with internally generated resources. Regarding external funding sources, venture capital and private equity are the most relevant ones. Another key element for innovation is the supply of human capital, i.e., the availability of high-skilled workers such as researchers. In this dimension, there is also an important gap between Spain and the EU average. In particular, according to Eurostat12, in 2017 Spain had 0.27 researchers per 100 employees in the private sector, while the EU average was 0.45. Regarding digitalisation, Spain is gradually improving its global position. According to the Digital Economy and Society Index, published by the European Commission13, that tracks the evolution of EU member states in digital competitiveness, Spain ranks 11th among the 28 countries of the European Union. The index comprises five indicators: connectivity, human capital, use of Internet services, integration of digital technology and digital public services.

National authorities are concerned with the risks of asset inflation and volatility of capital flows. But properly structured, these provide unique opportunities to channel the much-needed capital for growth and development. In this regard, Islamic finance which has its central emphasis on supporting real economic activities in trade, investment and the growth of productive capacities is especially relevant. 12. However, effective intermediation of capital requires focused attention on the management of risks. As I mentioned in my speech at the previous WIBC, many risks – including credit, market, liquidity, operational and reputational risks are common to both conventional and Islamic finance. Overly-optimistic projections of growth, or overconcentration in particular sectors, or mismatches in assets and liabilities can give rise to risks that can damage financial institutions. The crisis serves as a valuable pause from the frenzy of financial activities. This allows us to re-evaluate risk management practices in individual financial institutions, as well as the systemic linkages across institutions, instruments and markets. 13. Central banks and regulators need to cooperate closely so that risk assessments can be shared and common action taken where necessary. The Central Bank of Bahrain (CBB) and MAS have enjoyed very good relations, and have worked to promote Islamic Finance. The CBB is a highly-regarded central bank and integrated financial regulator. I am pleased that the MAS and CBB will be signing a Memorandum of Understanding later today to build on our existing strong relationship to enhance supervisory cooperation and information-sharing. 14.