, or unduly burdensome regulation and to consider how to reduce regulatory burden. see 12 u. s. c. § 3311. - 21 before understanding how regulators expect an activity to be conducted. a community banking regulatory framework that enables small banks to thrive must prioritize tailoring. closing thoughts thank you for your commitment to community banking, and conducting the important research that can inform the regulatory policy agenda. community banks may be small but their contributions to local communities are mighty. the importance of their role in providing credit to a broad range of customers and businesses that in their absence would have far fewer banking options cannot be overstated. there simply is no alternative or replacement for community banks and the relationship banking model. if regulators believe in a dynamic banking system, if we support financial inclusion and extending the availability of banking access, we must acknowledge the importance of community banks and ensure that our regulatory framework preserves their role for the future. to function effectively, the banking system requires the presence of banks of all sizes — larger, regional, and community banks. this diversity of our financial institutions is the greatest strength of our banking system, and it can easily be imperiled by insufficiently targeted regulation, supervision, and guidance. the discussions we will have over the next two days will include steps to further preserve and enhance the future of community banking. the presentations will enhance our understanding of the dynamics and pressures that shape the banking system, identify issues and concerns that may threaten different bank business models and activities, and develop policy approaches that consider the tradeoffs in our regulatory and supervisory approach.

. but ultimately, banks retain responsibility for any malfunctioning. as a supervisor, i am therefore calling on institutions to be fully aware of what ’ s at stake and to have a plan as to how they intend to tackle risks. finally, a security culture must be set up and pursued, anchoring the awareness and willingness to act responsibly in the digital bank, above and beyond individual business units. 4.... but not reinvent the wheel in light of the rapidly changing environmental conditions – and by these i mean new technologies, new behavioural patterns, new competitors and new dangers – the question arises for many as to whether the current regulatory approach will still be viable in future. in my opinion, this question is the logical consequence of a superficial perception of technology, on the one hand, and banking on the other. we associate technologies with positive characteristics such as the 24 - hour availability of the internet, the transparency of comparison websites, the convenience of smartphone apps and the seemingly free services of many online providers. however, i think it is very important that we also take a look at the downsides. indeed, technology remains error - prone and obeys economic incentives. indeed, the manipulated issuing practices of an american loan brokerage platform have come to light just recently. and then there are self - regulating or self - supervising financial technologies such as distributed ledgers, whereby genuine bookings are confirmed by countless numbers of computers carrying out thousands of crosschecks on the bookkeeping of other computers. while these technologies may significantly reduce the likelihood of errors and fraud, they do not eliminate it altogether. faith in a thoroughly better technology - based world therefore seems to me to be a further expression of the yearning for simple realities and narratives that i mentioned at the outset. technology does not, therefore, obviate the need for a critical view from the outside. it is my firm belief that the state cannot, and must not, withdraw from its surveillance function. moreover, technology does not in any way alter the fundamental tasks and risks that justify the existence of both banks and banking supervisors. the financial system needs monetary policy intermediaries, as well as agents that enable essential services such as lending, deposits and payments. the existence of banks is therefore intrinsically linked to the mechanics of our economic and financial system. and, what ’ s more, key aspects of the financial sector such as risk taking cannot be left to computers because financial decisions are, by their very nature, associated