financial sector, accounting in terms of assets for approximately 85 % of the entire financial sector. the banking sector itself is characterized by relatively high concentration with the 5 largest banks controlling 65 % of the total assets of the banking sector. the bank of greece ’ s regulatory framework is essentially based on the relevant eu directives which are closely aligned to the basel i framework. in the greek context, credit risk is the main component of banking risks. overall the profitability and capital adequacy of greek banking groups is satisfactory. on a consolidated basis, the rate of return on equity and the rate of return on assets before taxes were respectively 16, 1 % and 1 % for 2004 and the capital adequacy ratio reached 12, 8 % at the end of 2004. in view of the dominance of the banking sector in the greek financial system, i will focus on this sector. first, let me outline the approach followed by the bank to assess the stability of the greek banking sector. on the one hand, this approach involves an evaluation of the information provided by a number of indicators relating to the risk profile of banks and the economic condition of households and firms, and an assessment from a stability perspective, of developments in key macroeconomic variables and markets. on the other hand, the bank seeks to determine the banking sector ’ s capacity to absorb negative shocks. for this purpose, it utilizes data on bank profitability and capital adequacy and also takes account of the results obtained from stress tests. to derive the main indicators, the bank makes use of information submitted by banks in their supervisory reports on exposures in default, provisions, concentration ratios and credit migrations of individual exposures. alongside ratios calculated from this source, data from household and firm surveys on both debt and income / profit levels provide information on the debt - bearing capacity of the household and business sectors. data from supervisory returns also provide information on market and liquidity risks. in its evaluation of the information provided by all these indicators, the bank takes into account the corresponding eu and eurozone average values of these indicators where available. as regards macroeconomic variables and markets that may affect the stability of the banking sector, the bank focuses on developments in the gdp growth rate, interest rates and exchange rates, and in the stock and real - estate markets. the direct impact on the financial condition of the banking sector of adverse developments in interest rates and exchange rates and in share and real - estate prices can be quantified using data on bank

. the widespread use of mobile phones can provide for a broader reach of these financial services. additionally, rapid development of peer - to - peer ( p2p ) lending could complement the role performed by traditional finance. provided such lending platforms are properly managed and regulated, this could lead to a more resilient network and positively contribute to the diversification of risk across the financial system. bsp ’ s response to fintech on its part, the bsp has established a regulatory environment that fosters innovations while ensuring that risks are effectively managed. it has continuously monitored fintech developments. it has developed a balanced regulatory approach anchored on three pillars : 1 ) risk - based and proportionate regulation ; 2 ) active multi - stakeholder collaboration ; and 3 ) consumer protection. these principles are pragmatically implemented through the bsp ’ s flexible “ test and learn ” approach to financial innovations. this is also referred to as “ regulatory sandbox ” which provides an opportunity for innovators to participate in the financial system as players in their own right or as partners of more traditional players like banks. this approach has been proven useful since it enables the bsp to strike the right balance between innovation and safety while providing economic benefits to the banking public. the bsp also continues its market surveillance on crowd funding activities in the country to determine if regulatory action is warranted. we are likewise regulating transactions in digital currencies. on 9 february 2017, we issued a circular that established a regulatory framework for virtual currency ( vc ) - based payments and remittance transactions. under this framework, vc exchanges are classified as remittance and transfer companies ( rtcs ). as such, they are subject to the basic requirements for rtcs. hence, this promotes a level regulatory playing field for financial service providers performing similar services. we have launched a major initiative called the national retail payment system or the nrps, a policy and regulatory framework for institutionalizing retail digital payments in the country. our goal is to drive the usage of electronic payments from around 1 percent to at least 20 percent by 2 / 3 bis central bankers'speeches 2020. we are working hand - in - hand with the industry to realize this. already we launched pesonet last november 2017. we will soon launch instapay on april 23, 2018. both pesonet and instapay are inter - operable payment systems that enable safe, efficient and affordable account - to - account payments transactions between and among businesses