households ’ propensity to consume, particularly for the bis central bankers ’ speeches lower income households. secondly, with interest rate close to zero in the us, and the cost of current consumption already very low relative to future consumption, further interest rate cuts would have little effect in stimulating households to bring forward future consumption. thirdly, regulatory reform and economic uncertainty are restraining banks ’ ability and incentive to lend. and we must not forget there is a price to pay for implementing quantitative easing, the interest income of depositors, including investment funds and retirees, is greatly reduced. asset markets supported by an artificially low interest rate environment rather than economic fundamentals will skew resources allocation in society from expanding the productive sectors to pursuit of asset price appreciation. such a shift will easily lead to investment mismatch, thereby eroding medium to long term productivity growth as well as growth potential of the economy. in addition, the more sizable and prolonged quantitative easing becomes, the more difficult and riskier will be the exit plan. central banks should realise that there is not much they can do. in order to solve the structural imbalances built up in the past two decades, we must get to the bottom of the problem. ladies and gentlemen, up until 2008, the industrialised countries and various emerging economies had been enjoying a golden period of development which lasted for two to three decades. income levels and living standards continued to rise. some academics call this a period of “ great moderation ”. however, no one is sure why life during this period was so easy. some say that this is due to technological and financial innovation of modern society, the so - called “ paradigm shift ”. we should now be awakened to the reality that this golden period was probably underpinned by little more than excessive debts, and is in fact unsustainable. if the major industrialised countries will have to undergo deleveraging in the foreseeable future, how will the global economy evolve? i think it is highly probable that the following situations will emerge : the more a country is indebted, the more deleveraging it has to undergo. it is inevitable that economic growth and employment will be weak and the living standards in some places where the problem is more serious may even deteriorate. some advanced and many emerging economies do not need to bear the pain of deleveraging due to their low level of debt. however, as other advanced economies have to undergo deleveraging, it will

margarita delgado : digital transition in the banking business. lessons after covid - 19 webinar closing address by ms margarita delgado, deputy governor of the bank of spain, at the presentation of the report “ digital transition and transformation of the banking business in spain driven by covid - 19 ” / kpmg / ieaf, 16 june 2021. * * * i should like to thank kpmg, the instituto espanol de analistas financieros and its foundation for their kind invitation to participate in the presentation of the report “ digital transition and transformation of the banking business in spain driven by covid - 19 ”. one need only look at the title to understand just how relevant this report is in the current context. and having read it, i think it is also fair to emphasise the accuracy of its analysis and conclusions. the report takes as its starting point an established fact : the health crisis has catalysed, or accelerated, certain trends whose growing influence over the banking business model was evident even before the outbreak of the pandemic. what trends are these? i refer, of course, to the increased use of digital banking channels, particularly mobile phones ; the growth of digital payments to the detriment of cash ; and the entry of non - traditional competitors into the banking business. covid - 19 has probably advanced these trends by a decade, or at least half a decade, in just one year. but, as we all know, digitalisation has been a dominant factor in the transformation of the banking business for some time. of course, in tandem with this transformation, the sector had been implementing a difficult, but necessary, reduction of excess capacity. in addition to the need to eliminate redundancy, the efforts to streamline structures and costs have been spurred by declining margins and profitability in the sector, while the digital transformation of the business model has facilitated and fuelled the process. as i say, all of these trends were progressively taking place when the health crisis broke out early last year. as the report states, the growth in digital customers has accelerated in the past year. indeed, digital purchases of banking products have reached record highs during the pandemic ( although some of those customers may switch back to their branch once the health crisis is over ) while digital payments have simultaneously risen. evidently, such a large physical presence is no longer needed to provide banking services, at least for a certain customer type. all undertakings to create new credit