1 And third stress testing, to assess capital against the impact of macro-economic scenarios of current concern to policymakers, in the UK modelled partly using firms’ internal models and  1  http://www.bankofengland.co.uk/financialstability/Documents/fpc/fs_lrr.pdf. BIS central bankers’ speeches  1  partly our models. The results of our first concurrent stress tests of major UK banks and building societies will be announced next month. The new bank capital framework will cause banks to hold significantly more capital than the pre-crisis regime. Major UK bank capital requirements and buffers have increased around seven-fold once you take account of tougher definitions of capital, regulatory adjustments to asset valuations and higher risk weights as well as the more obvious increases in headline ratio requirements and buffers. But, to use the language of micro-economics, this significant change in regulatory capital requirements – the “relative prices” of different risks – will lead to substitution as well as income effects. Over time, banks will adjust their portfolios to changed capital requirements. The overall extent to which banks are better capitalised and the financial system is more stable will depend on the scale and nature of these adjustments. Any substitution effects are likely to be stronger if regulation is introduced inconsistently across countries. It is important that we continue to seek consistency in implementing internationally-agreed standards. One adjustment may be a shift in activity from banks to non-banks. That could be beneficial for financial stability: for example, where long-term market-based finance provides an alternative to bank credit.

The state will find difficulty financing the increased public expenditure on healthcare and pension systems given shrinking populations of working adults, falling tax revenues and high dependency ratios. In order to remain competitive, these advanced economies have 2 options. They can choose to augment their population through the import of young labour or global talent. This path leads to challenges in cultural integration. The alternative is for these countries to compensate for a stagnant and aging workforce with the deployment of technology. Japan and Korea are the best examples, relying on an increasing level of automation and sophisticated robotics. As demographics change, so too will consumer demands. Singapore is positioning itself to attract companies to monitor and understand these changes within Asia. The Singaporebased Asian Consumer Insights Institute, launched in 2011, is helping companies to develop and test-bed Asian-specific products and business strategies. In 2012, Nielsen, a global provider of consumer insights, chose Singapore to launch an innovation hub. This hub, the first of its kind in Asia, will develop new technologies and methodologies in neuroscience, shopper technology, and measurement science to enhance consumer and market insights for companies working to reach consumers in Asia. Technology The final trend I’d like to talk about is that of technology. Technology, especially information technology, continues to change the world and is reshaping the social compact between states and citizens. According to IMS Research, the number of internet-connected devices has reached 9.6 billion. That is more than the number of people in the world today.