for risk management professionals. and i will offer some perspectives on how these challenges should affect the hierarchy of priorities of central banks, and of those who have responsibility for supervision and oversight of the financial system. a characteristic feature of periods of financial innovation is that growth in new instruments and changes in the structure of those markets can outpace the development of the risk management and processing and settlement infrastructure. this gap, the gap between the speed at which markets move to capture the benefits of new opportunities and the pace of development in the supporting control and execution infrastructure, is inevitable. the size and duration of the gap and the risks it presents to the financial system are a function both of will and of ability. they are determined, in part, by the scale of investments that firms make in the infrastructure - investments in people, in technology and in control processes - and they are determined in part by knowledge and experience, which are functions of the environment surrounding innovation. market discipline exercised by counterparties should create incentives to close these gaps relatively quickly, but competition among financial intermediaries can, at least for some period of time, create offsetting incentives and may make individual institutions less willing to move ahead of the pace of improvement of average practice among market participants. this can take the form of what economists call a collective action problem, leaving individual institutions and the systems as a whole with more risk than would be desirable. and when innovation, such as we are now seeing in credit derivatives, takes place in a period of generally favorable economic and financial conditions, we are necessarily left with more uncertainty about how exposures will evolve and markets will function in less favorable circumstances. the past several years of exceptionally rapid growth in credit derivatives and the larger role played by nonbank financial institutions, including hedge funds, has occurred in a context of very low realized credit losses, low expectations of future default risk, a high degree of confidence in the financial strength of the major banks and investment banks, relatively strong and significantly more stable economic growth, less concern about the level and volatility in future inflation, and low expected volatility in many asset prices. even if a substantial part of these changes prove durable, we know less about how these markets will function in conditions of stress, and the most sophisticated tools available for measuring potential losses have less to offer than they will with the benefit of experience with adversity. several aspects of the present context are worth highlighting. • the scale of the over - the - counter derivatives markets is very large.

13. 12. 2019 session : “ central banks, financial inclusion and digitalization : harnessing technology for inclusive growth ” conference “ financial integration and inclusive development : a view from the mediterranean countries ” / banco de espana e instituto del mediterraneo ( iemed ) pablo hernandez de cos governor good morning. it is a privilege for me to chair this panel on the importance of financial inclusion and how digitalisation can contribute to it. it ’ s all the more a privilege given that the panel includes governors from four countries with broad experience in promoting financial inclusion, where significant initiatives in this area have been launched with the central bank taking the lead. access to financial services continues to be a primary problem globally. on the latest world bank estimates, almost 1. 7 billion adults do not have access to an account offering basic functionalities and, therefore, they are excluded from basic services such as payments, credit and saving. this has obvious repercussions for economic and social development, as there is a positive correlation both with growth and employment1, and it is thus essential to understand the causes behind it. in this respect, most studies have highlighted the fact that, although there may in specific cases be voluntary factors relating mainly to cultural or religious aspects, the explanation for this lack of access to financial services is usually to be found in involuntary factors. these include most notably a lack of funds for saving, cost, distance from the nearest branch, a lack of education and the absence of the financial infrastructures needed to improve the availability of financial services. it is indeed here where new technologies can contribute decisively to overcoming or lowering these barriers. technology can reduce many fixed costs, traditionally associated with the development of financial services, while providing for a greater adaptation of supply on the basis of each society ’ s idiosyncratic characteristics. unsurprisingly, then, the technological proposals linked to financial inclusion hail from different areas. we can find them in traditional financial institutions, in the new fintech companies, in telecommunications corporations and in the large technology consortiums known as bigtech. as to scope, one of the activities concentrating the bulk of the initiatives is payments. thus, in the past decade we have seen so - called mobile money – i. e. transactional services offered mainly by mobile operators – become commonplace. adding to these, more recently digital wallet solutions have emerged with multiple functionalities and specific proposals for international remittances. aside from the progress in payment solutions, developments on