4. 11. 2019 digitalisation and investment in intangible capital : the spanish case within the eu banco de espana - european investment bank pablo hernandez de cos governor ladies and gentlemen, let me start by welcoming you to banco de espana for the conference digitalisation and investment in intangible capital : the spanish case within the eu, jointly organised with the european investment bank. for the banco de espana it is a great pleasure to collaborate with the european investment bank in co - organising a conference for the second time. before going any further with my intervention, i would like to thank all of you for your attendance here today. the topic of this conference is very timely and appropriate. digitalisation is a key development that is increasingly affecting all the sectors of the economy with the ability to significantly transform the functioning of companies and markets and the structure of the economy more generally. however, the final impact of digitalisation on various dimensions is highly uncertain. digitalisation digitalisation refers to the adoption of digital technologies such as big data, cloud computing, e - commerce, artificial intelligence, robotics, the internet of things and 3d printing. the impact of digitalisation on firms and the general economy comes through various factors. first, digitalisation reduces search, transportation and verification costs1. second, it leads to increased automation of routine operations. third, it enables new ways of organising production. fourth, it may change the structure of the market, potentially affecting competitive pressures in some sectors. there is an overall consensus that digitalisation can potentially boost firms ’ productivity through several channels. first, technical progress in the production of digital products leads to new, better and cheaper products generating productivity gains in the sectors producing these products. second, other sectors may benefit from cheaper inputs encouraging a higher use of those inputs as investment goods, resulting in productivity gains for the firms in these sectors. third, digital technologies enhance product and process innovations leading to new production and organisational processes, new business models and new or superior products. finally, information and communication technologies ( ict ) are seen as reducing the cost of sharing and acquiring knowledge, potentially increasing the diffusion of innovation and new knowledge. however, digitalisation may also entail some challenges. first, while some argue that digitalisation leads to more intense competition, others fear increasing market concentration in some sectors on the back of digitalisation2. second, some studies find evidence that ict and automation are related to labour market polarisation3, where mid - skilled jobs either lose value or disappear,

the most critical of respondents, one finds support for most of the new accord. there is support for its three pillars and its intentions to align capital more closely to risk ; to introduce greater consistency in the supervisory review of capital adequacy ; and to promote effective market discipline by enhancing transparency. it was, moreover, satisfying for us that most commentators acknowledged substantial improvements in the proposals since the release of the second consultative paper in early 2001. not unexpectedly, respondents have raised a large number of points worth closer consideration. some letters addressed fundamental concepts as well as several issues that have been debated throughout the entire process. in addition, some member jurisdictions will continue to receive responses through their national rule - making processes up until late autumn of this year, during which time we anticipate hearing additional thoughts. what are some of the themes emerging from the public ’ s reactions? certainly the complexity of the proposals continues to draw your attention. this is a matter we have discussed in the past and is a valid concern. it is important to remember that much of the complexity in the proposals stems from the concerns raised by banks earlier in the process. throughout the process, various banks have requested that the committee offer flexibility and a range of approaches to evaluate the particular risks and profiles of various businesses and specialisations. indeed, one needs only to read a handful of the letters on our website to discover that some recommendations from the industry would tend to increase further the degree of complexity of the accord. nonetheless, the committee is aware that it is easier to enforce a simpler rule than a complicated one. we have long sought ways to simplify those rules thought most complicated. those efforts will continue. another theme noted in the comments concerns the need to maintain a level playing field – or, at least, to avoid “ unleveling ” the playing field further. the committee is very conscious of this matter, and i will say something about our efforts in this respect a little later. a last important theme addressed the sense that the committee may have adopted an overly conservative approach to some aspects of the framework, resulting in much higher capital charges than banks feel are necessary. these concerns are important, as a key goal for the new accord is to align capital more closely to risk. this means that where the original accord treats exposures too harshly relative to the degree of risk that they entail, we expect to reduce the capital requirements. but where the risk is greater, and where the existing rules fail to assign adequate capital, it