central bank to effect payment is generally regarded as risk free, service is assured even in extraordinary times of global and domestic crises, while using the central bank as a hub ensures that payment systems ’ participants are not forced to rely on actual or potential competitors for payment. these arguments that were compelling at the dawn of central banking are most likely to ensure that modern payment systems continue to have a determined impact upon monetary policy and a positive influence upon the stability of the financial system as whole. thank you for your attention. bis central bankers ’ speeches

##s ’ ongoing deleveraging. low growth and elevated public sector debt also leave a number of euro area countries vulnerable to higher funding costs. furthermore, threats stemming from rising protectionism around the globe, and high political uncertainty within europe, may amplify potential corrections of sovereign bond risk premia. these risks notwithstanding, market - based indicators of stress in the euro area sovereign bond markets have remained relatively contained in 2019, and debt sustainability concerns have remained country - specific. looking ahead, as growth prospects moderate it is imperative that fiscal buffers are rebuilt in countries where government debt still is too high. a prolonged period of low economic growth also poses challenges for euro area banks. over the past ten years following the great financial crisis, funding strains and subsequently hampered bank intermediation capacity related to low bank profitability have figured prominently in our risk assessments. the low growth and inflation environment will probably exert downward pressure on the risk - free rate component of bonds across maturities. as a result, profitability stemming from the maturity transformation business may come under renewed pressure – not least as retail household deposits tend to be bound at zero. furthermore, should downside risks to the economic outlook materialise, higher loan loss provisions may further compress bank profitability. accommodative monetary policy has greatly supported bank profitability in past years. in fact, conventional and unconventional measures have improved the quality of credit overall, thereby 2 / 6 bis central bankers'speeches reducing provisioning needs. our measures have also increased the demand for loans, which has more than offset the negative effect of compressed margins. furthermore, structural factors are also weighing heavily on euro area banks ’ profitability. in an environment where cyclical factors may exert further downward pressure on bank profitability, banks would need to step up their efforts to overcome structural challenges. such measures may include cost reductions – including lower staffing costs and streamlining of branch networks, enhanced digitalisation – implying initial, one - off large - scale investments, revenue diversification and the reduction of the stock of non - performing loans in the six countries where levels are still high. a number of regulatory and policy measures could help to improve the institutional setting in which the banking sector operates and facilitate banks ’ efforts to adjust their business models. such measures should include completing the banking union ( in particular the establishment of a european deposit insurance scheme ), the subsequent removal of the remaining non - harmonised national options and discretions, and making progress with the capital markets union