pablo hernandez de cos : signature of the banking protocol for the financial inclusion of the elderly speech by mr pablo hernandez de cos, governor of the bank of spain and chair of the basel committee on banking supervision, at the ministry of economic affairs and digital transformation, madrid, 21 february 2022. * * * first deputy prime minister, ladies and gentlemen. good morning everyone and many thanks to the ministry for inviting me to speak. the protocol presented here today concerns an issue that is affecting many aspects of our lives. i am of course referring to the accelerated digitalisation of our societies, a phenomenon which has clear benefits for citizens. indeed, national and european public authorities are firmly committed to accelerating this process and for example, the next generation eu funds are centred precisely on driving digitalisation. there are also clear benefits for the financial sector overall and the banking sector in particular. the new digital channels give instant and continued access to financial services, without the need to visit the bank. it is hardly surprising, then, that digitalisation is a key financial inclusion strategy in many emerging countries. from the standpoint of financial stability, which, as we all know, is essential for guaranteeing citizens ’ well - being, digitalisation also has important benefits. it leads to efficiency gains that help reinforce the soundness and resilience of the banking sector. however, as i have mentioned in the past when referring to public policies in general, the different social and economic transformations that we advocate and support have transitory costs and affect the public at large in different ways. the digitalisation phenomenon in banking is a good example of these adverse and uneven effects. something that will deliver great benefits for society overall in the medium term may, nevertheless, entail costs and lead to frustration, inconvenience or even exclusion for certain population groups, as a result of the difficulty or inability to adapt to these changes. these are real problems, as the testimonies we have received from many members of the public in recent months show. some of these individuals are here with us today and i would like to take this opportunity to thank them for putting together this information and bringing it to the attention of the authorities. as i say, these problems are real and, as such, require real solutions. the protocol that the banking sector is presenting here today must, of course, be part of the solution. it provides specific answers for individuals with fewer digital skills or difficulties in accessing these new channels and thus require more support

firms grew by around 14 % last year. this increase, which far outpaced the average for the euro area countries, led to a fresh increase in the private sector ’ s debt ratios which, in a few short years, have attained the average levels for the euro area. significantly, the ongoing resort by companies and, above all, by spanish households to debt in order to finance higher investment and consumption levels is principally a reflection of the favourable impact on agents ’ expectations of the new setting of macroeconomic stability, which provides for higher sustainable growth in income and employment. one of the clearest consequences of the recent trend of financial flows in the spanish economy has been the contribution made to curbing the scope of the recent cyclical downturn in spain. that has helped the private sector maintain buoyant expenditure on the basis not only of its current revenue but also of its expectations of future income. moreover, the downward course of interest rates in recent years, which continued in 2002, has meant that the gradual growth of spanish household and corporate liabilities has been accompanied by a less marked increase in the financial burden associated with these debts. relative to the sector ’ s income, this burden tended to stabilise last year around levels which may be qualified as normal on international comparisons. yet it cannot be ruled out that the volumes of debt built up may ultimately affect the pace of economic recovery, since they restrict the headroom available for firms and households to continue increasing their resort to borrowed funds. ideally, then, the growth rate of debt should moderate, so that the sector ’ s spending decisions may move more in line with current income, thereby maintaining the soundness of the financial position of spanish households and firms. it should further be borne in mind that the greater levels of debt attained have also tended to heighten the sensitivity of agents ’ spending decisions to changes in the variables determining the effective cost of financing. in the case of households, most of the financing received has been earmarked for house purchases, the main component of household wealth. that has strengthened residential investment and prompted rapid growth in property asset prices. a brief review of the past behaviour of the variables habitually considered as the basic determinants of property prices provides for a better understanding of their recent trajectory. changes in the population pyramid, increased immigration, the growth of the demand for second homes by residents and nonresidents and, above all, the continuous growth of income and the pronounced fall in interest rates are factors that help explain