The more this can be realised the more the new financial system will support the new creative jobs people will need – and enjoy – in the coming Machine Age. 20  While only private sector ingenuity will make these gains possible, authorities have essential, supporting roles in reinforcing them and managing the associated risks to financial stability. To help realise FinTech’s promise, we should refresh our supervisory approaches in a few ways. First, regulatory sandboxes can allow businesses to test innovative products, services, business models and delivery mechanisms in a live environment and with proportionate regulatory requirements. This supports innovation and learning by developers and regulators. The FCA was an early mover launching Project Innovate in 2014. 21  The G20 might consider the extent to which such approaches should be adopted  more widely. Second, existing authorisation processes can also be adapted to ensure they do not unnecessarily block new business models and approaches. This is why in the UK, the PRA and FCA now work closely with all 22  firms seeking new authorisation as banks. Third, the Bank of England is expanding access to central bank money to non-bank payments service providers (“PSPs”). Allowing access to the Bank’s Real Time Gross Settlement System allows PSPs to compete directly with banks, and so supports innovation, competition and financial stability. 23  Fourth, a number of authorities, including the Bank of England with its FinTech accelerator, are developing Proofs of Concepts with new enabling technologies from machine learning to distributed ledgers.

And it is the combination of the uncertainty derived from the war (and more in general from geopolitical tensions) with the increase of inflation and the rising interest rates that has generated, ultimately, a general deterioration of the economic outlook with, for example, one-year ahead recession probabilities having increased markedly, in both the euro area and other major advanced economies. This challenging financial stability outlook is well laid out in the Warning on vulnerabilities in the EU financial system that the European Systemic Risk Board issued last September. Indeed, the ESRB has alerted of the heightened uncertainty and the increased probability of tail-risk scenarios materialising. In particular, the ESRB has warned of three severe systemic risks :  1/3  BIS - Central bankers' speeches  (i) first, the deterioration in the macroeconomic outlook combined with the tightening of financing conditions, leading to negative consequences in terms of balance sheet stress for non-financial corporations and households, especially in sectors and Member States that are most affected by rapidly increasing energy prices. (ii) second, a possible sharp fall in asset prices, leading to large mark-to-market losses, amplified market volatility and liquidity strains. In addition, the increase in the level and volatility of energy and commodity prices has generated large margin calls for participants in these markets and this has created liquidity strains for some participants. (iii) and third, the potential deterioration of asset quality and the profitability outlook of credit institutions.