The message I wish to convey is that banks should persist with their early recognition policy, as this will enable them to continue to fulfil their task of providing funding to the economy. It is important that banks analyse situations individually, distinguishing between temporary and more permanent effects. Automatic reclassifications that result in excessively procyclical behaviour should be avoided. However, above all, banks must be prudent, assessing provisioning needs in accordance with plausible and conservative scenarios for the coming years. In short, especially should the crisis be prolonged, banks must ensure timely and proper recognition of the effective quality impairment of their credit exposures in compliance with the supervisory guidelines. Secondly, I wish to refer to the capital buffers built up and their use during this crisis. As I mentioned earlier, solvency levels are now significantly higher than in the run-up to the global financial crisis. At the start of this crisis, prudential supervisors decided to release many macroprudential buffers – the capital, countercyclical and systemic risk buffers – and, at the same time, the microprudential authority temporarily allowed banks to operate below the level set for certain structural requirements. These decisions sought to help banks continue to provide the financing that households and firms need in such an adverse environment as the present one. Our empirical analysis shows that the use of these buffers will enable banks to provide more funding to the real economy. This in turn has a positive impact on economic growth, encouraging its recovery or moderating its decline.

I prefer to talk of “gradualism” rather than the “sandbox” approach, which is another frequently mentioned solution: when precisely should fintechs be placed inside or outside of a regulatory sandbox? Segregation may be less manageable than a process of proportionate adaptation. That said, both approaches may be combined. Moreover, fintech companies, which mainly operate on the Internet, are not bound by borders. This raises questions as to the efficacy of regulations which are still largely domestic or based on residency criteria. The cross-border nature of technological innovation in the area of banking and financial services is a strong incentive for the regulatory authorities to coordinate their policies at the international level. Constructing the possible trinity between innovation, stability and regulation for digital finance requires the regulator to improve vulnerability analysis, enhance the security of transactions, adapt regulations and relax supervision, while all the time remaining vigilant. More precisely, the need to adapt supervision to the specific features of fintech companies will require setting up dedicated teams to assist them in obtaining the necessary authorisations and to organise their supervision: this will be the case in France thanks to the creation of a Joint Unit by the ACPR (the French regulator for banks and payment institutions) and the AMF (the French market regulator). However, this is only the first stage. In the long run, it will be necessary to  2  BIS central bankers’ speeches  ensure that the same rules apply to the same activities, irrespective of the players performing them.