will feel more comfortable with a name that they know and trust, and perhaps one whose name they see everyday in the street on signs above physical bricks and mortar. so banks with an existing brand name still have some advantage, but it is not something that can be wholly taken for granted. the banks will have to work hard to maintain and build their brand image, and to offer products which differentiate themselves from their competitors. this is a tough challenge, but it is one which the boards and senior management of banks in hong kong will have to confront. operational risk operational risk, including security risk, is of course one of the more frequently mentioned risks in connection with electronic banking. security is not a new risk. we are all familiar with the various security issues that banks are facing on a day - to - day basis, e. g. robberies, thefts of atm machines, frauds. however, banking transactions over the internet do pose new issues. a major concern about the internet is its open nature. in relation to banking on the internet, this translates into increased risk of unauthorised access to, and alteration of, information. accordingly, the fundamental objectives that internet security arrangements should try to achieve are to : • restrict access to the system to those users who are authorised ; • authenticate the identity and authority of the parties concerned to ensure the enforceability of transactions conducted through the internet ; • maintain the secrecy of information while it is in passage over the communications network ; • ensure that the data has not been modified either accidentally or fraudulently while in passage over the network ; and • prevent unauthorised access to the bank ’ s central computer system and database. the security of transactions over the internet was one of the issues that was considered by a study group on electronic banking formed by the hkma in july 1997. the results of this exercise were published as an article in our quarterly bulletin in november of the same year. based on the work of the study group, the hkma takes the view that developments in internet security technology have generally reached a point where adequate security for banking transactions is obtainable in a commercially viable manner. the use of sophisticated cryptographic techniques, firewalls and other security tools can provide security that is comparable to that offered in physical transactions. however, as with a physical transaction, the effectiveness of such measures is largely dependent on their proper implementation and the establishment of a set of comprehensive policies and procedures that are rigorously enforced. however, it should be

##te the recessionary effects of the high interest rates and slow the fall of the debt - to - gdp ratio. to conclude, in the euro area the markets do not typically influence the propensity of governments to carry out structural reforms ; when this happens, because the governments have delayed the reforms for too long, and owing to the deterioration in the general conditions, the resulting economic policy action does not foster growth. can banking union be considered complete without a common deposit guarantee system, which some countries are opposed to? banking union should be completed. agreements have been drawn up both on the composition of a deposit guarantee system and on a single resolution fund. these measures should be implemented, also because, in this way, one of the problems that characterised the crisis – the two - way relationship between banks and sovereign states – would be weakened by these two measures. speaking of greece, you have acknowledged that even with the implementation of the programme, athens will need debt restructuring. do you think that this should be done gradually, so as to preserve the incentive for the greek government to comply with its obligations? greek debt is sustainable if, first, the government complies with the obligations under the programme that it has agreed to, taking responsibility for or ownership of the programme. second, for the debt to be sustainable a certain degree of relief is required ; the latter should be such as to remove any doubt as to the future sustainability of the debt itself, once the first condition has been met. what type of “ debt relief ” to provide and how to calibrate it so that incentives for compliance with the programme are not distorted are decisions for the member states, namely for those whose balance sheets will be affected by the decision. the ecb has nothing to say in this regard. the past four years have been extremely stressful for all involved – and for you in particular, i imagine, especially given your level of responsibility. what helped you through the worst times? the power of convictions, and the certainty or hope that the decisions we take ease hardship for europeans. bis central bankers ’ speeches