##x and hedging operations, and creating savings products. for all of these reasons, i do not fully understand the concept of separation, whereas i do understand that of stopping speculation. at the same time as bank failures are continuing, banks have obtained an easing of their liquidity constraints under basel iii. isn ’ t this a paradox? that's not what it ’ s about. we have always believed that a liquidity ratio was necessary – and, incidentally, we have applied our national rules for many years, which is not the case everywhere. but the draft agreement was finalised too quickly and we had to rework it. we need to strike the right balance between strict regulation and supporting the financing of the economy. but will the timetable be put back? yes, i am in favour of putting it back a bit, if necessary, in order to make these major tradeoffs and to give banks more time for the implementation phase so that they can adapt to the new standards. should banks carry less sovereign debt? banks should facilitate the financing of the economy ; from this point of view, they should not hold huge quantities of sovereign bonds, even if these constitute liquid assets that are precious in assets and liabilities management. but the excessive concentration of liquid assets on sovereign debt in the calculation of the liquidity ratio can run into difficulties – either when the sovereign has its rating substantially downgraded or, on the contrary, when the country has low levels of debt, such as australia or switzerland. will the long - term liquidity constraint, the nsfr, eventually be abandoned? we will work on it again as of next year. should the solvency ii standards for insurers also be delayed? we have a particular problem concerning long - term business lines ( i. e. life insurance, civil liability, construction ). designed before the crisis, this system of standards, which adjusts portfolio assets according to their market value, is not suited to a highly volatile environment like the one we have seen for the past five years. we need therefore to ask again the fundamental question : are the basic assumptions underlying solvency ii correct? and we need to seek to reduce volatility by getting closer to economic reality. here again, we should not set rules too quickly the impact of which may be very great but has not been fully assessed in times of crisis. i think that it would be fruitful to try out several different technical solutions over a number of years before laying down the

for release on delivery 4 : 00 p. m. edt ( 1 : 00 p. m. pdt ) april 11, 2019 community banking in the age of innovation remarks by michelle w. bowman member board of governors of the federal reserve system at the “ fed family ” luncheon at the federal reserve bank of san francisco san francisco, california april 11, 2019 today i would like to share a few observations on innovation as it relates to the business of community banking. in particular, i will focus on opportunities for community banks to innovate through collaboration with fintech firms. i ’ ll also discuss the role our regulatory structure plays in those relationships. 1 community banks, like just about every other industry, are learning to adapt to a new world of rapid innovation and shifting consumer expectations. consider the personal loan market. transunion estimates that, about a decade ago, fintech lenders generated less than 1 percent of personal loans. 2 today, fintech firms originate a larger share of personal loans than banks. 3 this is not all bad news for banks, though. and we should not simply assume that gains by fintech lenders are necessarily at the expense of banks. a large share of fintech lending is actually originated by bank partners working with fintech firms. similarly, the funds that flow between a fintech lender and borrowers almost always travel across the payment services of a bank. so, while the changes in the market pose potential competitive threats to banks, the changes also raise potential new opportunities for banks. this is especially true for community banks, which are frequently the banks working most closely with fintech lenders. these remarks represent my own views, which do not necessarily represent those of the federal reserve board or the federal open market committee. transunion, “ fintechs taking larger share of personal loan market while increasing portfolio risk - return performance, ” press release, november 2, 2017, https : / / newsroom. transunion. com / fintechs - taking - larger - share - of - personal - loan - market - while - increasing - portfolio - risk - return - performance /. transunion, “ fact versus fiction : fintech lenders, ” ( 2017 ) ( finding that fintech firms and banks originate 38 percent and 28 percent of personal loans, respectively ). see also kate rooney, “ fintechs help boost us personal loan surge to a record $ 138 billion, ” cnbc, february 24, 2019