vitas vasiliauskas : balancing fintech opportunities and risks welcome speech by mr vitas vasiliauskas, chairman of the board of the bank of lithuania, at the joint bank of lithuania - international monetary fund seminar " balancing fintech opportunities and risks ", rise, vilnius, 10 june 2019. * * * good afternoon, distinguished guests, innovators and leaders in financial technology, policy makers. welcome to the seminar, jointly organised by the imf and the bank of lithuania. over the years, we have successfully cooperated with the fund on a number of issues relevant to lithuania ’ s economy and financial sector. and, when it comes to fintech, we set a good precedent almost three months ago in end - march. back then, our member of the board mr marius jurgilas conducted an internal seminar on lithuania ’ s fintech experience at the imf ’ s offices in washington. today we find ourselves to be discussing financial technologies in vilnius – indeed, an appropriate follow - up. given the importance of the issue, we are deeply honoured to have imf deputy managing director mr tao zhang participating in the event. his presence is truly a recognition of lithuania ’ s achievements in the fintech domain. to help frame today ’ s debate, let me briefly depict lithuania ’ s fintech landscape from the perspective of a regulator. but first, i should perhaps explain why the bank of lithuania has put strategic emphasis on fintech. i will be frank and open : we have some very pragmatic reasons. the most important is the market concentration. the share of the three largest banks, as measured by assets, now exceeds 80 %. we also observe similar levels of concentration in key market segments, for instance, payments. this drives us to encourage new participants. in a truly competitive market, the incumbents can never feel at ease, because there ’ s always someone ready to take your slice of the pie. indeed, the free and dynamic market may be a harsh place. but it is best at providing the consumer with the highest quality services at a fair price. needless to say, for a public authority, promoting the benefit of consumers is one of our key goals. — being an integrated regulator, the bank of lithuania has developed a wide range of instruments to attract new players and stimulate competition. in fact, i find the recent guidance provided by the imf to well reflect our methods. this is particularly the case with the bali fintech agenda

by the harmonised index of consumer prices increased measurably at the beginning of this year, mostly due to temporary and technical factors. headline inflation is likely to increase in the coming months, but some volatility is expected throughout the year. due to weak demand and significant slack in labour and product markets, underlying price pressures remain subdued. our march staff projection exercise confirms that the medium - term inflation outlook remains below our inflation aim. 1 / 3 bis central bankers'speeches at its latest monetary policy meeting in march 2021, the governing council conducted a joint assessment of the inflation outlook and of the prevailing financing conditions, looking in particular at the recent increase in risk - free interest rates and sovereign bond yields. the governing council judged that, if left unchecked, this increase could cause a tightening of the wider set of financing conditions that we monitor, as banks use those rates as key reference points for determining credit conditions for households and firms. such a tightening would have been premature, given the still fragile state of our economy, and inconsistent with the ecb ’ s commitment to counter the downward impact of the pandemic on the projected path for inflation. as a result, we decided that purchases under the pandemic emergency purchase programme ( pepp ) over the next quarter would be conducted at a significantly higher pace than during the first quarter of this year. we also confirmed to conduct net asset purchases under the pepp with a total envelope of €1, 850 billion until at least the end of march 2022 and, in any case, until the governing council judges that the coronavirus crisis phase is over. at the same time, we continue to stand ready to adjust all our instruments as appropriate to ensure that inflation moves towards our aim in a sustained manner, in line with our commitment to symmetry. the impact of the covid - 19 pandemic on the european financial sector let me take this opportunity to discuss in more detail the impact of the pandemic on the financial sector – which is one of the key topics of the ecb annual report this year – and the challenges europe will face in the recovery phase. the spread of the covid - 19 pandemic during 2020 led to a sharp increase in financial stability vulnerabilities across markets and sectors. confronted with these challenges, governments deployed crucial measures to support firms and households. micro - and macroprudential authorities complemented these efforts3, sending a strong signal to banks that they should make use of their existing