financial technology the european commission has already launched a public consultation aiming at update and amendments of the settlement finality directive1. in addition, review of other basic legal acts related to payments as the payment services directive2 and the electronic money directive3 is expected to start by the end of 2021. i wish interesting and fruitful work to the participants in the video conference. directive 98 / 26 / ec of the european parliament and of the council of 19 may 1998 on settlement finality in payment and securities settlement systems 2 directive ( eu ) 2015 / 2366 of the european parliament and of the council of 25 november 2015 on payment services in the internal market, amending directives 2002 / 65 / ec, 2009 / 110 / ec and 2013 / 36 / eu and regulation ( eu ) no 1093 / 2010, and repealing directive 2007 / 64 / ec 3 directive 2009 / 110 / еc of the european parliament and of the council of 16 september 2009 on the taking up, pursuit and prudential supervision of the business of electronic money institutions amending directives 2005 / 60 / ec and 2006 / 48 / ec and repealing directive 2000 / 46 / ec 2 / 2 bis central bankers'speeches

but which in fact cannot truly absorb losses in a going concern – should become more or less a thing of the past. the bank of england would like it to be completely consigned to the past. only equity can absorb losses. for that reason, in calculating regulatory capital, deductions from capital should really be from equity. as part of the emerging compromise, there will be some derogations from that, but the derogations should be transparent. markets should learn to evaluate bank ’ s capital adequacy on the basis of what is made transparent about the makeup of that capital. the other really key change will come in stages – partly in the package this autumn and partly during next year and beyond – which is reducing the pernicious regulatory arbitrage that has existed between “ banking book ” capital requirements and “ trading book ” capital requirements. far too many instruments that were held in the trading book were subject to low capital requirements but actually could not be traded, leaving values exposed to big swings in liquidity premia. this was a fatal design flaw in the existing regime, and it is one which i hope should be fixed over the next year or so though the basel committee ’ s “ fundamental review of the trading book ”. 4. too big to fail at the centre of the reform effort in the fsb work is “ too big to fail. ” if one of the largest firms in the world got into trouble right now, in almost every country in the world we would not be able to cope with its demise other than through fiscal support. this is completely unacceptable. if there is one thing that i think unites the members of the g20 – at the political level and at the official level – it is that this will be consigned to the past. we will re - introduce market discipline back into the financial system, which really means re - introducing capitalism back into the heart of capitalism. the acid test has to be whether, for every financial institution in the world, it could be resolved if it faces distress in a way that does not disrupt the flow of essential financial services to the economy and without state solvency support. that is the single goal in this area. when achieved, it can transform the global financial system more than anything else. it ’ s not for me to set out the ideas today ( svein will do so later ), but there are ideas developing that i believe will, in at least some key centres, become concrete policies