napoleon –, as any incumbent, we need to adjust and adapt to the “ new world ”. in order to do so : we have adapted our organisation and governance with the creation of a fintech hub within our supervisory function ( which has supported more than 300 fintechs ), the appointments of a chief digital officer and a chief data officer, and the launch of a lab to foster innovation within the banque. we experiment with new technologies : the banque de france was the first central bank to implement a full - scale project based on dlt which is fully operational 4 and we successfully run eight artificial intelligence projects. we also host discussions between regulators, academics and the industry : the latest working group on artificial intelligence will deliver its conclusion by end of this year. but this call for action is addressed to everyone, and especially to you, the next generation. as students at the amse and as future economists, analysts and researchers, you will have a big role to play to ensure that, irrespective of the big changes to come in tomorrow ’ s financial intermediation, our compass continues to point toward the common good of financial stability. the road ahead, 1995 madre 9 / 9

some recent examples of the budgetary cost of systemic failures. it covers only recent episodes in oecd countries ; much higher figures could have been cited if the coverage had been extended to developing countries. ry systemic banking crises : cost of recapitalisation cost count eriod as % of gdp finlan d 8. 0 991 - 1993 norwa y 4. 0 987 - 1989 spain 16. 0 977 - 1985 swede n 6. 4 united states ( s & l ) 3. 2 984 - 1991 source : caprio and klingebiel, world bank, july 1996 the other reason for the recent emphasis on financial system stability is that economies appear to be more susceptible to instability as a result of the deregulated financial markets. australia ’ s experience in the late eighties points in this direction, but it is not an absolute rule. just as japan has shown that type ii episodes can occur without a lot of foreign capital flows ( in fact, there were net outflows ), there are many african and latin american examples of it happening in a heavily regulated environment. the asian countries, including japan, which are now going through these difficulties could not be characterised as possessing highly deregulated financial sectors. the two asian countries which most closely approximate the deregulated model are hong kong and, to a lesser extent, singapore. to date, these countries have fared reasonably well. the link between deregulation of financial markets and instability is obviously more complicated than meets the eye. it would probably be better to say that the transition phase from regulation to deregulation is a dangerous period. this will be especially so if the transition is rapid, and if it is not accompanied by increased transparency and the enhancement of other policies directed at system stability. 3. problems and remedies in essence, therefore, a type ii economic crisis is one which is centred around a failure of the financial intermediation process. the centrepiece of it is an environment which leads to excessive competition by banks to lend, resulting in a severe reduction in credit standards. the following features are normally present : • lending to related parties ; • excessive concentration of lending to particular borrowers or areas, e. g. property ; • excessively high loan to valuation ratios ; • inadequate covenants to restrict the activities of borrowers ; • lending based on asset values, rather than capacity to service from income ; • failure to recognise and provide for deterioration in loan quality ; • lending