##sing macroprudential policies to be put in place to prevent expansion of banks ’ balance sheets beyond a certain scale, putting the onus on authorities to determine what is the optimal size and structure of the country ’ s financial sector – not an enviable task. if large banking systems with access to foreign finance become involved in providing credit to the local economy they have the capacity to rapidly destabilise it. furthermore, it will be difficult or impossible for the national fiscal authorities to deal with the failure of such a bank, if it is providing systemically important payment or transactions balance services to the domestic economy. of course, these considerations are directed to the situation of a small country with a large banking system. more generally, the interpenetration of banking systems has been seen as an important contributor to limiting uncompetitive practices in terms of price and improving provision of services. the degree of segmentation of international finance along national borders that has been seen in the course of this crisis is surely an over - reaction which should, and will in time, be reversed. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches

lockdowns, many of us worked from home. central banks, including my own, mostly followed this trend. i must say that i was genuinely surprised, first, by the way we were able to engineer an almost instantaneous, seamless transition to remote working arrangements ; and second, by the fact that many tasks could in fact be performed remotely in such an efficient way. while there are pros and cons to remote working, and some degree of physical interaction is likely always to remain valuable for most tasks, the ‘ new normal ’ will surely see a different mix of home and office hours with respect to the old. • this was one clear instance where investment in digital technologies had not yet released all its potential. i should add in passing that certain society - level efficiency gains ( e. g. fewer hours wasted in commuting, less traffic congestion, less pollution ) may never show in productivity statistics at the firm level. • swift technological progress can have disruptive effects on market dynamics. new leaders emerge and incumbent firms are often displaced in a relentless process of creative destruction. • market leaders pave the way for progress by pushing the frontier. there are two ways for society as a whole to reap the full productivity benefits of innovation : diffusion from pioneers to followers, and resource reallocation from laggards to front - runners. both are likely to be necessary. regulation and public policies can make a lot of difference on both counts. i shall touch very briefly on some potentially policy - relevant issues, among the many for which today ’ s discussion will certainly provide valuable and thought - provoking material. • rapid innovation usually requires a certain amount of resource reallocation to deploy its potential. physical and financial capital, entrepreneurship and labour should therefore find ways to move across firms and industries without unjustified friction. rules and institutions are extremely important in this respect. • let me make first one comment on the capital market. given the vital role of business birth and growth for employment creation and innovation, institutions are needed that can efficiently channel resources towards promising, high - potential firms. as growthoriented finance requires specialised skills and contracts, the activity of dedicated financial intermediaries is important. it needs strengthening, especially in europe, where, despite some significant growth in the last decade, the presence of such intermediaries is still too thin. venture capital and private equity can sustain business dynamism by selecting valuable projects, financially supporting entrepreneurial activities and helping start - ups to