asset : its reputation. in 2014, rumours about a bank being illiquid were distributed through emails and social networks – and out of this, an actual bank run happened. in conclusion, the financial sector is not only a major target but is also vulnerable to almost every conceivable type of cyber risk. pity for the financial sector, but good for the other industries because this makes it a repository of best practices which are also applicable to other parts of the economy. my fellow banking supervisors at the bundesbank and i have gained insights into cyber incidents, risk cultures and institutional preparedness across financial institutions. we are witnessing growing concerns about cyber risks, not only nationally but also on a european scale and as part of the international financial stability community. but you should not be surprised that the bundesbank is also a target of cyber attacks : as a central bank, we provide critical infrastructure for the banking system and for payment services, and therefore we are a potential target ourselves. all of this together helps us to accumulate knowledge about the status quo and developments in cyber defence in the financial sector. 3. what have we learned? let me share with you what i think might be some important lessons we have learned thus far. first, there is no free lunch in the cyber world. we are able to make thousands of transactions in a second and transmit huge amounts of data across the globe at the click of a mouse, but at the same time we are exposed to the risk of high - speed and high - volume losses. there is a trade - off for every innovation. but before you can assess the trade - off, you have to know what elements are being traded off against each other. for example, at the bundesbank, we have identified a trade - off between the need to use mobile devices and the need to use data sparingly ; we now ask our staff to use mobile data only when necessary. second, there simply is no such thing as 100 % cyber security. as a measure of defence, twofactor authentication is considered as best practice for online banking applications. not because it is undefeatable – but because it seems to be a sound compromise between customer convenience and it security ; it requires only a little additional effort on the part of figure refers to cyber liability total limits purchased by companies with revenue of $ 1 billion or more. source : marsh ( 2015 ) – benchmarking trends : as cyber concerns broaden, insurance purchases rise. available online [ most

entities, the basel minimum standards create a reasonably level playing field between all competitors worldwide. because they are implemented differently from one country to the next, the playing field might not be perceived as being fully level. but it is at least much more even than it would be without the bcbs. arbitrage is significantly supressed. a second benefit is that for entities operating internationally, the rules are more consistent across the countries in which they conduct business. thus, the rules are more easily understood and implemented. 2 / 4 bis central bankers'speeches for supervisors, the benefits are quite obvious. by working together, we help establish good regulation. the basel standards are drafted by experts from all around the globe. if every member state were to start designing their own regulation from scratch, i am sure that basically none of them would match the quality of the committee ’ s work. and what is good for supervisors is also good for the financial system as a whole. safeguarding financial stability is not something we can do at the national level alone if the entities we supervise are acting internationally. but i do not want to play down the downsides. international standards follow a one - size - fits - all approach. some rules are not fit for purpose in every jurisdiction. national specificities may not be addressed. the standards are intended for banks that operate internationally. in germany, however, small and medium - sized banks make up more than two - thirds of the market share, and these banks are not the target of these standards. the large volume of bank loans as a ratio of funding via capital markets makes the impact of the standards on the financial economy much bigger. and the widespread use of internal models for risk calculation is seen as a circumvention of the standards. 4 a way forward for global standards for digital innovation having spoken about the fundamentals of international cooperation in banking regulation, i would now like to widen my focus. as you are digital experts, i am very much interested in your views on the standardisation of regulation of digital innovation. in banking, just like in many other industries, we see a lot of benefits stemming from new technologies. let me make three points in this regard : 1. there is a clear case for international digital innovation standards. digital innovation is global by nature. regulatory arbitrage is a common feature in the world of today. digital innovation needs scaling up. otherwise, the huge investments will not pay off. divergence in the legal environment is costly and could ultimately