securities trading to a lesser extent than in earlier years. 2 many large international financial conglomerates have streamlined and simplified their structures. 3 the use of complex, artificial financial instruments producing no real added value has declined. 4 the markets for financial derivatives are more transparent. many of these changes have gone a long way in the direction suggested in the high - level expert group ’ s report on banks ’ structural reform, but not all the way. too much of a good thing? the following question has also been raised : have post - financial crisis regulatory reforms gone too far in the sense that they have become an impediment to economic growth? a recent study argues that the recovery of bank stock valuations following the global financial crisis and the european sovereign debt crisis has been slow compared with previous crises ( in spite of the recent development ). the study suggests that the reason for this could be regulation. ( i ) the regulatory reforms have been considerable, but time has also been granted for adapting to them. meanwhile, the low interest rate environment may have presented challenges for profitability of some banks, depending on the interest rate linkages of their assets and the composition of their own funding. however, it is essential that banks ’ profitability cannot any longer be based on their own funding being supported by public safety nets, which enables high leverage and, through that channel, a seeming improvement in profitability. owners and investors need to be prepared for bearing the risks : both profits and losses. the new bank recovery and resolution legislation offers tools for a genuine transfer of risks to bank owners and investors in bank debt markets. this may lead to bank owners and investors requiring higher risk premia in the future. there is, however, no return to times of ineffective regulation and the practice of taxpayers ultimately bearing the risks involved. ‘ shadow banking ’ an important question in the assessment of post - crisis regulation is whether revised bank regulation drives banking and its risks increasingly to ‘ shadow banks ’. these are businesses that offer financial services and are engaged in activities resembling banking, but are subject to more relaxed regulation. shadow banks had a significant role to play in the build - up of the financial crisis, as part of banks ’ actual risks did not appear on their own balance sheets, being hidden as off - balance - sheet items. 5 / 7 bis central bankers'speeches various views on the management of risks in the shadow banking sector have been put forward since the crisis. significant regulation of shadow banks has not been introduced so far.

erkki liikanen : enhancing reliability and efficiency of future payments – five criteria speech by mr erkki liikanen, governor of the bank of finland, at the european central bank / bank of finland retail payment conference, helsinki, 4 june 2015. * 1. * * introduction traditionally retail payments were made only by notes and coins. cash - based payment process required a great deal of physical money transfers. the payment system was inefficient compared to what it is today. today we use more and more debit and credit cards to pay for shopping and online banking services to pay the bills. the efficiency of the system has increased, but still, it is not exploiting the full potential of digitalization. digitalization will shape the future payment landscape. but it is not necessarily the banks and other established financial institutions that will dominate this future. they are being challenged by new entrants and large established companies from non - financial industries. in finland, we remember how nokia became the biggest in mobile phones after it had challenged incumbents in the industry, such as motorola, ericsson, siemens and others. but nokia itself was challenged by new entrants : android from google and iphone from apple. therefore, the next big change in the payment industry may be more than just an evolution – maybe even a revolution. 1 what is the role of central banks in the development of the future payment methods? innovation and new development should naturally come from the private sector. but at the same time, retail payment systems are essential to efficient functioning of the economy. when we take into account the social costs related to payment systems, 2 central banks can have an important role as a catalyst to facilitate the socially best possible development. this is our task. 3 2. the five criteria for a payment system and the role of central banks we at the bank of finland have defined five criteria which should serve as guiding principles when assessing the present payment systems and the future developments. there criteria are : 1 ) technical efficiency, 2 ) accessibility and non - discrimination, 3 ) efficient and cost - based pricing, 4 ) operational stability with contingency plans in case of problems, and 5 ) international compatibility. this issue was briefly discussed in the final report of ec conference titled “ emerging challenges in retail finance and consumer policy ”, 18. 11. 2014, brussels. this document can be found here : http : / / ec. europa. eu / internal _ market / conferences / 2014 / 1118 -