economic downturn. recent years have also witnessed a dramatic increase in the issuance of collateralised loan obligations ( clos ). in this regard, there are growing concerns about the quality of the leveraged loans ( i. e. loans to highly leveraged firms ) that are pooled into these securities, an issue that is particularly relevant for their lower tranches. against this background, any negative surprise in terms of the macroeconomy or monetary policy expectations could have a sizable impact on market valuations and, more broadly, on global financial stability. what could be done to minimise the risks associated with these developments? certainly, the build - up of debt across different sectors needs to be monitored. also, the regulation and supervision of the non - bank financial sector needs to be revisited. despite some recent improvements, it is fair to say that, compared to the banking sector, we do not have enough information about the activities of non - bank financial intermediaries, nor sufficient understanding of their interconnectedness with other market players. we also lack consistently tested macroprudential policy tools that could be used to address the risks that have been already identified in this market segment. progress in this direction is of the utmost importance. “ new ” risks of course, the risks to global financial stability originating from low profitability in the banking sector and the search for yield by different market participants should be carefully monitored and addressed going forward. yet as i mentioned before, in a rapidly changing world and in an ever - evolving financial sector, regulators should likewise heed a set of emerging risks which could also be potentially dangerous for financial stability. and this because, in many cases, we do not have the data, or even the conceptual framework, to analyse their implications ( especially when compared to the more traditional risks ). - technology - related risks : cyber risks i will launch the discussion on these “ new ” risks by referring to those associated with the adoption of new technologies. clearly, new technologies are not just a risk, they are also an opportunity. in particular, as earlier mentioned, banks should harness the new technologies to achieve efficiency gains. naturally, that may require some large initial outlays, which could be difficult to achieve in an environment where banking sector revenues remain relatively subdued. but those institutions that fail to adopt the new technologies will find it harder to compete with their more technologically advanced peers. that said, new technological developments pose a significant challenge for financial stability. a recent study

new risks are emerging, ranging from cyber - risks and risks related to crypto - assets to misconduct and legal risks, physical and transition risks associated with climate change, and risks related to regulatory arbitrage. both regulators and market players are just starting to learn how to deal with and address all these new threats. let me now share some thoughts on some of the risks i have mentioned and then suggest some policy actions that policy makers could consider implementing in an effort to mitigate them. - low bank profitability starting with low bank profitability, i would like to highlight three messages. first, this is more a regional than a global issue. in fact, the profitability ratios of banks across countries show marked heterogeneity. for example, the return on equity of canadian, swedish and us banks is relatively high. in contrast, banks in japan and the euro area find themselves in the lower part of the distribution. moreover, in the case of european banks, their return on equity is not only well below that seen prior to the crisis ; their roe is also lower than their cost of equity. needless to say, this may have negative implications for financial stability. put simply, low profitability limits banks ’ capacity to generate capital buffers internally and therefore their ability to absorb negative shocks. at the same time, low returns may push entities towards risky search - for - yield strategies. my second message is that caution is required when drawing a simplistic and causal relationship between low profitability and monetary policy. take for instance the case of sweden, where the riksbank has pursued a negative interest rate policy from 2015 until very recently ; yet, banks ’ profitability ratios in that country are relatively high. more broadly, low or even ( mildly ) negative interest rates tend to have counteracting effects on bank profitability : while they may exert downward pressure on unit intermediation margins, they also promote loan demand, improve credit quality and produce capital gains in banks ’ securities portfolios. we may well appreciate the different channels through which low ( and even negative ) interest rates help boost economic growth and repair banks ’ balance sheets. but we cannot ignore the possibility that, if persistent enough, such a scenario may ultimately impair bank profitability and the bank - based transmission of monetary policy. precisely for this reason, the ecb introduced last september a two - tier system for the remuneration of bank reserves. looking forward, we should remain vigilant ahead of any