regard, work to make sure that the public pays close attention to what the bank says. and such authority is not bestowed from the outside, but must be built up from within ourselves. it can be established only when we cultivate our abilities. our words and our will alone do not suffice. it also goes without saying that credibility must be underpinned by true ability. dear friends and colleagues, the crisis that the world economy is now undergoing is an abnormal situation. what is clear, however, is that overcoming it does not mean a return to the pre - crisis situation. the economy has a tendency to change dynamically, a characteristic that has been further reinforced by the modern trends of rapid globalization and informatization. there is a likelihood of risk and uncertainty growing greater the more dynamic the economy is, and at the same time spreading rapidly the more informatized it is. as the world moves closer to forming a single economy, we have learned the hard way that sectors have become much more inter - connected. we must redouble our efforts to adapt to changes, so as not to become estranged or left behind in this process of global transformation. efforts for policy adjustment between the united states and china to resolve the global imbalances, overcoming the challenges to euro system stability posed by the fiscal crises in some eurozone countries, the global wealth shift following the emergence of the g20 and the rapid expansion of asian economic powers, fixing the financial system so as to rein in economic risk and uncertainty, and redefining the roles of the international financial institutions : those are just a few of the core elements that will shape our drive to establish a new global economic framework. an appropriate solution to our country ’ s domestic problems can only be derived from the understanding of all these challenges. regrettably, however, we must bear in mind that there is no textbook solution to guide us in the future. we will be unable to find the correct prescription through approaches based upon our previous understandings of the economy. the current state of affairs requires that we respond wisely by thinking deeply and mustering all our wits to grasp the natures of the problems. international policy coordination may, on the one hand, currently be emphasized because the effects of particular policies adopted by any one country are limited in an open economy. this means that individual countries must cooperate with one another to maximize their policies ’ impacts. on the other hand, the current international policy cooperation may also have the positive result of reducing

is part of the minimum capital pillar 1, and is directly reflected in the solvency ratio. elsewhere, reputational aspects, which are very important for the banking sector, are also evaluated as part of pillar 2. both pillars of the capital framework repeatedly mention the concept of “ risk ”. a quick search of the text of the european solvency regulation will bear this out : the word risk appears no fewer than 1, 500 times. however, there are clear differences between so - called financial risks ( such as credit and market risk ) and non - financial risks, which by their nature are more difficult for credit institutions and supervisors to address. non - financial risk is directly related to malpractice or non - compliance proper to conduct risk ; but going beyond this conference ’ s theme, it also refers to it events, reputation, governance and cyber security. unlike credit or market risks, non - financial risk is unconnected to specific financial decisions, is much more difficult to quantify than traditional risks and can only be reduced or mitigated. despite all these difficulties, or perhaps precisely because of them, non - financial risk has been firmly on regulators ’ and supervisors ’ radar screen since at least 2004. this followed the approval of basel ii which, as i indicated earlier, included a capital requirement for operational risk. today, the measurement and management of these risks remains equally complicated, but their importance for banking business has in fact increased. evidence of this is the map of risks and vulnerabilities annually published by the single supervisory mechanism ( ssm ). viewing the snapshot for 2021, we can see how a large portion of the sector ’ s weaknesses are related to non - financial risk. this is not really anything new. in previous exercises the ssm has also included these components. and logically so. allow me a few examples : ( i ) reporting systems and technological platforms have become essential, and as any banker can confirm, they have become a key component of any viable business model ; ( ii ) the prevention of money laundering has taken on a most significant dimension in europe, following various scandals and cases of fraud. indeed, an overhaul of the attendant regulatory and supervisory framework is on the table ; ( iii ) finally, given what has been discussed in this conference, i need not convince you that the nature of the retail banking business calls for great care as regards conduct towards customers. on this last point, there have been many scandals in recent years. in fact, calculating all