cannot predict how banking will look in ten or twenty years ’ time, we can be almost certain that risks of fraud, theft and manipulation in banks through cyberspace will continue to rise. the reason is straightforward : digital channels can be used to steal a lot of assets with comparatively little effort today. nowadays, a large proportion of banks ’ assets and value - generating capability is stored on hard drives and servers. the technical infrastructure facilitates the managing of bank accounts and grants access to money. but it also provides access to vast sources of data. there have been several incidents recently of truly large - scale data theft. company secrets, too, are at stake. if, for example, the trading algorithms of your bank became known to others through illegal activities, they could be exploited in the market, causing huge losses to banks. in the same way, politically motivated acts of sabotage jeopardise trust in financial functions and integrity. looking at those on the other side of cybercrime, the potential attackers – they often have access to far more powerful weapons than before and convenient access through the internet. targeted attacks on it systems can originate from anywhere in the world. hackers often need little more than a laptop with internet access. why do we have to expect a continuous evolution in this field? attack vehicles like computer viruses differ widely and may target any chink in a bank ’ s defence, rather as human viruses attack biological systems. its logic follows the arms race between criminals and law enforcers that can be traced down through human history, but is now taking place with digital weapons. what makes this evolution more dangerous still is that we now face a highly complex digital world where progress is constantly being made in technologies and innovations. but, crucially, you cannot risk a trial - and - error process here. once an easy point of attack is identified in the it infrastructure, the word will quickly spread and criminals from all over the world will try to exploit the weakness. on top of this, we need to bear in mind that cyber and general it risks are not only of a technical nature. the human factor often plays a crucial part. employees may act in gross negligence, or they may be tricked by a trojan horse or a phishing mail. in complex it systems, even small system errors can quickly cause enormous damage. the error - prone human factor can only be eliminated by installing an appropriate system of controls and incentives. in today ’ s world, this is an important management task. 4. adaptation as

. macroprudential policy uses more targeted instruments, which makes it better suited to addressing growing imbalances in financial markets. the question is whether or not a clear separation of responsibilities – in terms of " macroprudential policy takes care of financial stability " while " monetary policy only pays attention to price stability " – actually makes sense. 7 in other words, is monetary policy out of the woods? i don ’ t think so. while i am not in favour of a dual monetary policy mandate, i am convinced that monetary policy cannot stand on the sidelines when financial imbalances build up. first, we cannot be sure that macroprudential policies will eliminate financial imbalances. the experience with macroprudential instruments is still limited, and the toolkit is still incomplete. second, the crisis has vividly demonstrated how financial instability affects inflation developments and the capacity of the central bank to safeguard price stability. therefore, monetary policy would be wise to take the implications of financial imbalances for price stability into account. as the financial cycle is longer than the business cycle this comes down to extending the policy horizon. to quote from the latest bis annual report, " shifting the focus from the short to the longer term is more important than ever. " in any case, a more symmetrical monetary policy stance over the financial cycle seems to be warranted. on the one hand, the monetary policy stance should be eased aggressively during a marked downturn. on the other hand, monetary policy should be aware of its implications for financial stability, and so it should tend, in upswings, to be stricter than shortterm inflationary developments would suggest. claudio borio, the current chief economist of the bis, said : " the more you concentrate on the long - term perspective, the more price stability and financial stability complement each other and the less they contradict each other ". 3. 2 monetary policy and price stability this brings me to the second lead question : should the monetary policy target be changed? some academics 8 have suggested higher inflation targets, given that central banks have reached the zero lower bound ( zlb ) in response to the crisis, and they see the need for further expansionary impulses, and more generally the need for a greater distance from the zlb. as the economist once wrote, " asking a central banker to accept higher inflation may seem like asking a cardinal to accept more sin ". but on a more serious note, the issue is about