##ed. while these principles are general, we have found that they have been more acute with new and innovative firms, whose regulatory maturity and risk management capabilities 4 / 6 bis - central bankers'speeches have not always grown in line with their balance sheets ; and where the regulatory toolkit is not everywhere as developed as in other sectors. while it is not something i will focus on today, this has been particularly clear in ireland's large and growing payment and electronic money institutions sector, where at times significant deficiencies have been identified. i say this not just to criticise, but to make them better ; and indeed they must get better in order to secure their customers funds, and the integrity of the system. getting it right will also be a good for business ; and so addressing these issues should be seen as a key enabler for growth, rather than an afterthought in their commercial strategy. conclusion – innovation in the interests of us all to sum up, innovation and regulation go hand in hand. and while regulators need to adapt in the face of rapid financial innovation, innovators need to recognise that no matter how novel, innovative and ground breaking the product or initiative, the fundamental risks and their fundamental duty to manage those risks remain. and while some might say that regulators are anti - innovation – i say this couldn't be further from the truth. the job of regulators is not to be indiscriminately pro - innovation, but our mandate is to deliver in the public interest. and let me be clear that innovation done well is in the best interest of consumers and the wider economy. but not all innovation is good, and not all innovation is done well. so to protect trust in innovation and the system, risks must be managed – so that the bad doesn't drive out the good. this is in the interest of us all. 1 with thanks to cian o'laoide, steven cull, and mary - elizabeth mcmunn for their help preparing these remarks. 2 see " the travels of marco polo ", volume one chapter xxiv 3 see for example the beauty of uncertainty : the rise of insurance contracts and markets in medieval europe – botticini et al, journal of the european economic association december 2023 4 see central bank of ireland – our strategy september 2021 5 see for example perrazzelli : the visionary project of a single supervisory mechanism - where do we stand after 10 years? october 2023 6 see consultation paper 156 :

the benefits of innovation to accrue to the system, and so for it to advance. put simply, without trust innovation doesn't progress – because it doesn't take. innovation in the digital age – the balance of benefits and risks so if financial innovation is as old as finance itself, and the need for regulation to enable, frame and underpin that innovation has been a constant, what is new about the current phase of innovation in the financial sector – and why is there a need for regulators to take a different approach? stating the obvious, the main difference is that the current phase of innovation is primarily a digital one, with innovations in the financial sector taking place in the context of widespread technological advancements in our economy. this has led to different dynamics in terms of both the nature and pace of change – resulting in a wave of new entrants, new products and new ways of serving customers. such innovation is delivering some real benefits for consumers and society ; but it doesn't come without risks. for example, new entrants provide much needed competition in the interest of consumers ; this can also improve market functioning and is essential to a dynamic system and economy. but the market only functions when its parts do ; and from our own supervisory experience there have been growing pains with some of these new entities – with business models sometimes rushing ahead of control frameworks. new products are to be welcomed, and are essential to meet evolving consumer demands. with some of these however, there are questions of suitability – not to mention utility. in the digital age rapid adoption of new products by retail consumers can also pose a challenge, in particular for products with a risk profile that may not be suited for such investors. in this regard, some crypto - assets come to mind. while there is clear potential for distributed ledger technology and tokenisation to benefit the functioning of the financial system, given the volatility of some crypto - assets there are also clear risks to consumers and retail investors – which must of course be a focus for regulators. new ways of serving customers is not only beneficial but critical to keep pace with wider developments in society ; however for these benefits to endure it is essential that they are secure and resilient. as such financial services firms must invest in digitalising their operations, processes, and offerings while also ensuring they have adequate safeguards in place to limit 2 / 6 bis - central bankers'speeches potential risks. while always true, this is particularly important in a