to enable the financial system to absorb the failure of individual firms as others grow and prosper ; and ( d ) we are strengthening international cooperation arrangements necessary to be able to effectively regulate in a digital environment that may have little regard for national borders or jurisdictional reach. disruptive innovation and the global unbundling of traditional financial services models in banking, insurance, and funds management can also have implications for financial stability. international consolidation in the financial services market to maximise the scalability benefits of new technologies may create larger firms that are more difficult to resolve. greater specialisation may also foster the growth of mono - line firms that are more exposed to sectoral shocks. it is also important to assess the implications of new types of settlement systems and digital currencies for the role of central banks in the domestic and international monetary systems, including the pros and cons of digital base monies supplied by central banks. 10 conclusions in summary, the dual forces of globalisation and innovation are high on the research and policy agendas for financial regulators and central bankers. an immediate challenge relates to the postbrexit reconfiguration of the european financial sector. in managing the transition to the new post - brexit regime, it is essential for policymakers to take a global perspective in view of the importance of non - european investors and financial intermediaries to the functioning of the european financial system. equally, financial innovators will be looking for clarity about the new regulatory and trading arrangements between the uk and the eu, since uncertainty about institutional frameworks is an obvious inhibitor of investment plans. let me conclude by thanking the organisers of the european financial forum. the agenda and lineup of speakers for the rest of today looks fascinating. 1 philip r. lane ( 2011 ), “ innovation and financial globalisation, ” in lessons from east asia and the global financial crisis : annual world bank conference on development economics global ( justin yifu lin and boris pleskovic, editors ), 309 - 332. 2 philip r. lane and gian maria milesi - ferretti ( 2016 ), “ international financial integrationin the aftermath of the global financial crisis ”, presentation, imf annual research conference. 3 philip r. lane ( 2014 ), “ cross - border financial linkages : identifying and measuring vulnerabilities, ” cepr policy insight no. 77. 4 daniel carvalho and michael fidora ( 2015 ), “ capital inflows and euro area long

prism system is designed to provide a framework that prompts such action ; for example we closely track progress against risk mitigation plans. but at the heart of the approach there needs to be a robust regulatory philosophy that encourages challenge : we have described this as “ assertive risk based supervision underpinned by a credible enforcement deterrent ”. this is designed to put a few concepts front and centre : that we operate a risk - based approach, differentiating based on impact and probability ; that there are consequences and accountability for non - compliance ; and that our supervisors are empowered to insist upon actions to mitigate risk where we are not satisfied by the explanation from a firm ’ s management. as today ’ s session is, i understand, formally designed to help close off the committee ’ s review of the cag ’ s report into the lessons of the financial crisis, special report 72, let me note that there is one loose end in the recommendations that still needs to be concluded, relating to the introduction of auditor assurance statements. we have conducted some preliminary consultation with stakeholders and believe that a risk - based framework, with the obligation applied to the highest impact firms only, is the best and most proportionate way forward. the central bank supervision and enforcement bill provides a clear mandate to introduce such assurance requirements, so when the legislation is adopted this can be progressed to a conclusion. there is a lot more ground that we could cover and i am sure more areas the committee is interested in discussing. this short introduction was by way of highlighting some of the key areas from my perspective. i thank the committee for its attention and look forward to our discussion and to answering your questions. bis central bankers ’ speeches