like to conclude with a reminder of the potential longer term challenges regarding productivity growth as well as the legacy of the recent crises that have contributed to the currently low long - term real interest rates. central banks ’ have responded with actions within their mandates to improve the overall economic situation. while we have some signs of improvement, at the same time we need to be aware of the risks that the low rates environment and the changes in the regulatory environment may result in. this necessitates in - depth supervision and analysis combined with good research. elements from all these fields need to be combined to identify possible risks and to guide the policy makers in making appropriate changes that are necessary to foster financial stability. [ slide 14 ] references acharya, v. v., t. eisert, c. eufinger, c. hirsch ( 2016 ) : whatever it takes : the real effects of unconventional monetary policy. available at ssrn. com / abstract = 2740338. adrian, t., shin, h. s. ( 2009 ) : the shadow banking system : implications for financial regulation, federal reserve bank of new york staff reports. available atwww. newyorkfed. org / research / staff _ reports / sr382. html adrian, t., ashcraft, a. b., cetorelli, n. ( 2013 ) : shadow bank monitoring, federal reserve bank of new york staff reports. available at www. newyorkfed. org / medialibrary / media / research / staff _ reports / sr638. pdf jobst, a. and h. lin ( 2016 ) : negative interest rate policy ( nirp ) : implications for monetary transmission and bank profitability in the euro area. imf working paper 16 / 172. kozlowski, j., l. veldkamp, v. venkateswaran ( 2016 ) : the tail that wags the economy : the origin of secular stagnation. voxeu, 11 september 2016. 5 / 5 bis central bankers'speeches

as the share of non - bank financial intermediation increases this fragility may expose the financial system to a risk of systemic disruption in case the run event results in contagion. hence we cannot afford complacency and we need to monitor financial innovation. this is one of the key lessons to be drawn from the previous crisis. financial innovation now takes new forms, and part of it is true technological progress. in evaluating the usefulness of digitalization in the provision of finance we need to consider the benefits against the potential risks. benefits include having a more diverse set of finance providers, more efficient use of algorithms and data bases with which credit decisions are made, and the improved access to finance for entities that would not have had the access otherwise. the potential risks stem from the possible flaws in these new lending algorithms and lack of experience with how they fare through the credit cycle. this is particularly relevant at this time as the new innovations are developed amid low interest rates. but we should not be naive either : part of financial innovation may still be motivated by evasion of regulation and taxes. new types of links between banks and shadow banks may form. to stay on top of things, we will need in - depth analysis, building of risk scenarios and counterfactuals, and out - of - box thinking. non - bank financial intermediation also has the potential to move quickly between jurisdictions, and the new low - cost business models make this fairly easy. hence, there is a need for international cooperation when it comes to regulation and macroprudential actions towards these entities. [ slide 13 ] let me also consider the question whether regulatory reforms have been excessive in the sense that they would be increasingly driving activity to the unregulated segments of the financial system. looking back, bank regulation before the global financial crisis was rather light, too light, at least in terms of banks ’ true loss absorbance capacity. yet, certain forms of shadow banking grew rapidly, motivated precisely by opportunities to increase banks ’ leverage to even 4 / 5 bis central bankers'speeches higher levels. hence, there is a certain irony in the current concerns that increased regulations, like higher capital requirements, are pushing activity to the shadow banking sector. the lesson of the past fifteen years is that there always seems to be this tendency, no matter how high or low the starting level of regulation is. against this backdrop, i would put in perspective the current concerns of excessive regulation. 4. conclusions i would