care. banks too are also seeking to apply these tools and techniques to the range of their activities, many of which used to be seen as the preserve of experts : from risk assessment, to financial crime prevention and trading in the financial markets. these trends are likely to accelerate. banking supervisors need to adapt to technology too. supervisors need to stay abreast of how technology is changing the risks the banks are running and how they are being controlled. and just as advanced analytics are opening an ever wider range of banks ’ activities to automation, so too are they creating new possibilities for us to supervise banks more efficiently and effectively. but until machines can fully replicate human cognition – a remote possibility for the foreseeable future – supervisory judgment will still have a central role to play. my central expectation is that over coming years the pra will develop a form of ‘ ’ cyborg supervision ’ ‘ involving humans and machines working ever more closely together and leveraging their comparative strengths. bholat, d., brookes, j., cai, c., grundy, k., and lund, j all speeches are available online at www. bankofengland. co. uk / speeches figures figure 1 : the quantity and cost of data source : financial stability board figure 2 : textual complexity of the pra rulebook source : amadxarif et al. ( n. d. ) all speeches are available online at www. bankofengland. co. uk / speeches references amadxarif, z., brookes, j., garbarino, n., patel, r., and walczak, e ( n. d ) textual complexity in uk prudential regulation. arnold, m ( 2018 ), hsbc brings in ai to help spot money laundering, ft available here : https : / / www. ft. com / content / b9d7daa6 - 3983 - 11e8 - 8b98 - 2f31af407cc8 bholat, d., brookes, j., cai, c., grundy, k., and lund, j ( 2017 ), sending firm messages : text mining letters from pra supervisors to banks and building societies they regulate. bank of england staff working paper 688, available here : https : / / www. bankofengland. co. uk / - / media / boe / files / working

made possible the creation, valuation, and exchange of these complex financial products on a global basis. at the end of the day, the benefits of new technologies can be realized only if they are embodied in capital investment, defined to include any outlay that increases the value of the firm. for these investments to be made, the prospective rate of return must exceed the cost of capital. technological synergies have enlarged the set of productive capital investments, while lofty equity values and declining prices of high - tech equipment have reduced the cost of capital. the result has been a veritable explosion of spending on high - tech equipment and software, which has raised the growth of the capital stock dramatically over the past five years. the fact that the capital spending boom is still going strong indicates that businesses continue to find a wide array of potential high - rate - of - return, productivity - enhancing investments. and i see nothing to suggest that these opportunities will peter out any time soon. indeed, many argue that the pace of innovation will continue to quicken in the next few years, as companies exploit the still largely untapped potential for e - commerce, especially in the businessto - business arena, where most observers expect the fastest growth. an electronic market that would automatically solicit bids from suppliers has the potential for substantially reducing search and transaction costs for individual firms and for the economy as a whole. this reduction would mean less unproductive search and fewer workhours more generally embodied in each unit of output, enhancing output per hour. already, major efforts have been announced in the auto industry to move purchasing operations to the internet. similar developments are planned or in operation in many other industries as well. it appears to be only a matter of time before the internet becomes the prime venue for the trillions of dollars of business - to - business commerce conducted every year. there can be little doubt that, on balance, the evolving surge in innovation is an unmitigated good for the large majority of the american people. yet, implicit in the very forces of change that are bringing us a panoply of goods and services considered unimaginable only a generation ago are potential financial imbalances and worker insecurities that need to be addressed if the full potential of our technological largesse is to be achieved. as i testified before the congress last month, accelerating productivity entails a matching acceleration in the potential output of goods and services and a corresponding rise in real incomes available to purchase the