I strongly disagree with the idea that confidence in rules and public institutions can be replaced by some form of “algorithmic confidence” once and for all. Preserving confidence in money and financial stability thus requires a clear, fair and balanced “technology-neutral” regulatory framework with a simple principle: “same activities, same risks, same rules” in order to prevent both excessive and hidden risks and regulatory arbitrage. But 1/3  BIS central bankers' speeches  this is easier said than done! In the European Union, the proposal for a “Markets in CryptoAssets” (MiCA) legislation aims at finding the appropriate balance between innovation and security when regulating crypto-assets issuers and service providers. It needs to be adopted rapidly but we also have to make sure the European rulebook leaves no gaps open in view of most recent trends. Another important issue to maintain trust is that of cybersecurity. Digitalization increases the exposure – and therefore the vulnerabilities – to cyber-threats, for financial institutions as well as for their customers, and their service providers. Cyber-risk is not only a major operational risk at the entity level, but also a systemic one for the financial system as a whole. In that area, the European proposal for a Digital Operational Resilience Act (DORA) is exploring how to strengthen and upgrade IT security throughout the financial sector. I would also like to mention artificial intelligence. Because trust is about not only the financial system working well, but also making sure that algorithms do not lead to outcomes that are unduly biased or unfair.

I will focus on how these principles can be put into practice, first through how regulation can address new risks, and then how central banks can foster innovation, with the example of central bank digital currencies. I. New risks, new rules? No corner of the financial system is left untouched by digital technologies, a look at the agenda of this Fintech Festival tells it all: payments, decentralized finance and open banking, crypto-assets, central bank digital currency, quantum computing, etc… These technologies bring competitive pressure and such innovative pressure is healthy: it challenges inefficiencies, helps improving services, brings down costs. Fintechs are key players in the modernisation of the financial sector and I expect banks in particular to seize more systematically the opportunity to participate to this transformation. Can I quote Joseph Schumpeter? He wrote that “most of the creations of the intellect or fancy pass away for good after a time that varies between an after-dinner hour and a generation. Some, however, do not.” Fintech has clearly made it pass the after-dinner hour; it is getting close to the generation mark. I am convinced central banks are instrumental in making sure digital innovation can bring long-lasting benefits. Here, the emergence of decentralised finance raises new challenges for usual regulatory frameworks. Left unchecked, it could result in increased volatility, lack of traceability or clear accountability, concentration risk on certain technical infrastructures, insufficient customer and investor protection, to name a few.