##prudential approach to supervision. what does this mean? in our discussions in the basel committee, we have emphasised the need to focus supervision not just on the soundness of individual banks but on broader financial stability objectives. this should inform where we focus our limited supervisory resources and how we develop our supervisory and regulatory tools. transparency one of the main amplifiers of the crisis was the lack of transparency regarding the risk profile of institutions and structured products. moreover, the process by which these products are valued often lacks rigour. lack of transparency about the risk profile of products and financial institutions caused a massive retrenchment by investors and counterparties further amplifying the deleveraging process. to help mitigate this behaviour, the third pillar of the basel ii framework – market discipline – sets out a series of required disclosures that are intended to complement the other two pillars of the basel ii framework. this should allow market participants to assess capital adequacy of a bank through key pieces of information on the scope of application, capital, risk exposure and the risk assessment process. the committee ’ s january proposals for enhancing pillar 3 are focused on disclosures related to securitisation, off - balance - sheet exposures and trading activities. we believe that these proposed enhanced disclosure requirements will help to avoid a recurrence of market uncertainties about the strength of banks'balance sheets related to their capital market activities. conclusion taken together, the recent and planned initiatives of the basel committee should promote a more robust banking sector and limit the risk that weaknesses in banks amplify shocks between the financial and real sectors. because our measures are far reaching and ambitious, they will need to be phased in over a reasonable timeframe. i should also note the invitation to join the basel committee that we have extended recently to the bric countries – brazil, russia, india and china – as well as australia, korea and mexico. the expansion of our membership will help enhance the global reach and acceptance of our standards. the efforts of the basel committee need to occur in a broader context of achieving the right balance between the scope and depth of regulation. failure to produce adequate regulation for other " bank like " activities means that we in the banking sector will just be “ pushing on a string ”, and the activity will simply migrate elsewhere. i therefore strongly welcome the activities of other bodies like the g20, the financial stability forum and the joint forum to ensure that all sectors are subject to an appropriate degree of regulation,

in the current environment : is our operational resilience keeping up with the faster pace of digital developments? when it comes to fintech, i think covid - 19 has also accelerated existing trends there too. the future development of fintech is a function of technological innovation and changing consumer preferences. covid - 19 did not immediately bring new technology, but it may have moved consumer preferences more towards digital. people kept contact with each other via zoom and face time and skype. school children all over the world followed online lessons. online retail went through the roof. from there, it may only be a small step to paying with whatsapp, or getting a mortgage from quicken loans. so covid - 19 may have influenced digitalization in many different ways. if there is anything the covid - 19 pandemic has taught us here, it is that adoption of new technology is non - linear. when technology is already available, sometimes it takes only one event to cause a sudden and decisive shift in consumer preferences. this adds all the more urgency to the big questions already on the table before the pandemic. 1 / 3 bis central bankers'speeches how will fintech impact the business model of traditional banks? what role will bigtech firms play? when the lines between banks and technology firms become more and more blurred, who is responsible for security and financial stability? do we understand the algorithms that are being applied increasingly in banking? how do new technologies influence cyber and financial crime? are supervisors sufficiently equipped, in terms of knowledge and staff, to keep up with developments? where are the holes and obstacles in regulation? what does it mean for the level playing field when regulated and unregulated entities compete on the same markets? how can supervisors themselves use the new technologies to improve supervisory practices? and last but not least, there are social issues involved in digitalization. not everyone can keep pace with the current tempo of digitization. digital exclusion of vulnerable groups of consumers, like the elderly or people on a low income, is a serious issue nowadays. this is only a subset of a vast area of questions that are relevant to the stability of the financial system. but i have total confidence this panel of eminent experts will be able to answer these questions shortly. this brings me to the last issue i would like to raise. how should supervisors respond to these changes? there used to be a time when financial supervision was viewed as basically reactive. the idea was that, by nature,