, for example, compliance with data protection laws and regulations. the assessment of whether to involve cloud services as part of preparedness solutions should probably be done on a case - by - case basis for the services and scenarios. the usefulness of cloud data may also depend on whether the data can be utilised for providing services to users. finding a balance between preparedness based on regulation and voluntary arrangements is also important. on the one hand, regulation enables a level playing field for all parties. on the other hand, regulation might be seen only as an enforcing factor that could hinder voluntary close cooperation and preparedness solutions in the market. this may apply especially to potential common or uniform preparedness solutions in the nordic countries. finally, let me conclude my remarks by referring to cbdcs as a potential future way to increase the resilience of our retail payment landscape. the ecb governing council should decide next month on moving to the next phase of the preparations for a digital euro. if we are to introduce a new retail payment method in europe, we need to design it so that it truly brings us new rails that are operationally separated from existing ones. moreover, i believe it is necessary to take resilience issues on board right from the beginning of the project. with careful planning, a digital euro could become a key feature of a secure, resilient and efficient european retail payment landscape. it could also become a major part of our preparedness in the future. thank you. 6 / 6 bis - central bankers'speeches

in the emergence of peer - to - peer lenders and technology firms offering banking services. there is also increasing competition in banking services more generally, as firms like paypal become well - established in markets like retail payments that were previously the preserve of high street banks. on top of this, the trend towards more capital market - based financing in europe – supported by the new initiative on capital markets union – will inevitably weaken banks ’ market power, especially for firms that can easily substitute bank and market finance. and though still relatively small in quantitative terms, we are also seeing a greater role of “ shadow banks ” in direct lending – asset managers, pension funds, private debt funds – that heralds a shift towards a less bank - dominated financing mix. taken together, this represents a uniquely challenging environment for european banks, and this is visible in their generally weak financial performance : price - to - book ratios are low and profitability is meagre. many banks have a cost of equity exceeding their return on equity. bis central bankers ’ speeches moreover, there is little chance of the economy coming to the rescue or of interest rates rising any time soon. banks will have to return to profitability in the context of a slow recovery with depressed net interest margins. so, should we be concerned about how banks will fare in this difficult climate? as i already intimated, in my view we need to take a nuanced stance here that balances principle and practice. in principle, the developments in the banking sector should be largely positive for society at large. many banks grew too quickly before the crisis and developed unsustainable business models, so a period of consolidation is both desirable and inevitable. the aim of the regulatory agenda, which is to make banks more resilient and reduce the burden of bank failure on society, is also fully justified. and the ongoing structural changes are welcome. if we believe in the benefits of creative destruction for normal firms, then we must also believe in it for financial firms. innovation that raises competition in retail lending, and leads to better and cheaper services for customers, is a net gain for the economy. so, a priori, i do not see any role for regulators in protecting banks from new operators – on the contrary, innovation should be nurtured and encouraged. equally, the objective of a capital markets union is clearly in the public interest. it would benefit, in various ways, financial stability, access to finance and entrepreneurship. in particular for equity risk capital