denmark's first banking inspector – mr green – wrote a diary from his inspections of the bank. several of the banks'problems were attributable to management. as professor per h. hansen writes in his book on the 13 - year banking crisis from 1920 to 1933 : " it is the individual bank management that, through day - today operations and the strategy laid down for the bank, determines the structural conditions that are of significance to its risk exposure ". that sounds familiar in relation to the most recent financial crisis. and – regrettably – it is topical in relation to the headings which the financial sector is attracting in the media. * * * * * * * * * at the time when the first commercial banking act was introduced, the banks'solvency ratio declined. their solvency ratio in the original meaning of the word – net worth as a fraction of total assets – was 11. 8 per cent in 1919, only half the 1908 ratio. this development may challenge the conventional wisdom that regulation limits the banks'scope to operate. page 2 of 7 in the current age of open economies, financial business is transacted across borders. that was not always the case. in fact, foreign banks were not able to set up business in denmark until the 1970s. at first, their effect was very modest. after 11 years, foreign banks had a share of just 1 per cent of the aggregate banking balance sheet. it was simply too cumbersome to enter the danish market, partly because the banks would be subject to danish supervision. the amendments to the danish banking legislation were part of the harmonisation of the financial sector in the european community. the aim was to create a single market for financial services by ensuring a level playing field and uniform framework conditions. the single market for financial services was a means of reaching the actual goal – to enhance competition to the benefit of consumers and firms. the next phase of harmonisation followed in the 1980s, when it became easier to set up business in other ec member states. with a banking licence from the home country, it was possible to conduct banking activities in all member states : the bank was subject to supervision by the home authorities only. at the same time, a european framework for equity and solvency was introduced. as a result, the danish rules were amended so that the required solvency ratio for banks was calculated as a percentage of risk - weighted assets. until then, the solvency ratio had been calculated relative to total debt and

firms due to mismanagement and breakneck expansion. we will keep a close eye on all these problems so that they do not evolve to become systemic risks. we have maintained a prudent monetary policy. the pboc cut the reserve requirement ratio by half percentage point in july, and recently added additional 300 billion yuan special central bank lending to support small and micro firms. fiscal policy is also trying to be more effective and sustainable. direct fiscal expenditure to key areas, such as supporting the unemployed people and social benefits, is now secured at all levels. to fend off financial risks, the pboc is working on keeping macro - leverage ratio basically stable, resolving the risks of a handful of financial institutions, such as the baoshang bank, and 1 / 2 bis central bankers'speeches replenishing capital, for small and medium - sized banks in particular. apart from the above policy responses, we are also moving ahead on the following two fronts. first, green finance. we are working to promote china ’ s green transition. we have revised the green bond endorsed project catalogue. in line with suggestions made by the task force on climate - related financial disclosures, we have released guidelines for financial institutions on disclosing environment information. monetary policy tools for reducing carbon emission are in the pipeline for the pboc. we are also actively engaging in international cooperation and helping with the green transition in the developing world. second, fintech. fintech has made financial services more accessible, efficient and inclusive. at the same time, we should not neglect its side effects such as abuse of monopoly power, and excessive collection and exploitation of clients ’ data. therefore, while promoting healthy development of the fintech industry, we have also worked hard to level the playing field, improve financial inclusion and protect privacy. hopefully, such efforts will improve anti - monopoly regulation and make our policies more transparent. the pboc stands ready to work more closely with the international community to jointly usher in a strong, sustainable, balanced and inclusive recovery of the global economy. thank you! 2 / 2 bis central bankers'speeches