has not remained unnoticed by supervisory authorities which have taken already a number of steps to help the industry address the issue but in so doing face a number of difficult issues. i. indeed guidance from supervisory authorities, like the guidance on operational risk issued by the basel committee, published in 20112, point out that prevention and proper management of this risk is a financial stability issue to the extent that operational failures can be a source of systemic risk. internet security threat report 2014 http : / / www. symantec. com / content / en / us / enterprise / other _ resources / bistr _ main _ report _ v19 _ 21291018. en - us. pdf. “ principles for the sound management of operational risk ”, bcbs 2011. bis central bankers ’ speeches this systemic risk derives first from the dramatic development of interdependencies across financial intermediaries due to increased automation in financial activities, including in clearing and payment activities, which are a major vector of interconnection. the systemic risk also derives from the possible loss of confidence from the general public in electronic payments that would be triggered by a failure to protect the integrity and reliability of data processed by these payment systems. however, responses to cyber threats can conflict with other established priorities. this is particularly true for financial market infrastructures. for instance, the principle 17 of the cpss - iosco on operational risk clearly states the business continuity requirements for financial market infrastructures. business continuity plans should aim for the timely recovery of operations, resuming operations within two hours after disruption, and settlement should be ensured before the end of the day in extreme conditions. however, meeting this requirement is raising specific challenges in case of a cyber - attack or in case data is found to be corrupted, when the highest priority might no longer be a swift resumption of operations, but to first recover the quality and integrity of data in order to avoid any risk of contagion. this is also true for the access that could be granted to third parties for accessing online a payment account in order to assist in the initiation of payments. such an access could foster competition and innovation in the payment industry but would obviously multiply the risks of cyber - attacks. in addition, there is a need to strike the right balance between the requirement to adequately prevent and address the cyber threats and the need for financial players to implement solutions that are economically viable. for instance, implementing a dual contingency software may be an efficient answer to

risk measurement that not long ago were possible only in theory are now becoming integral parts of daily operating practice. by applying these theories and techniques, institutions today are more effectively pricing and hedging risk, allocating capital, evaluating risk - adjusted returns and identifying the optimum mix of financial products or services. i believe these enhanced management practices have contributed importantly to the economic growth and market gains seen in recent years. as competition has intensified, we have seen a growing overlap in the activities and product lines provided by both banks and other financial service providers that has diminished the past distinction between banks and many nonbank firms. that trend has raised public policy questions regarding bank powers and the appropriate organizational structure through which banking organizations should gain new powers. proposals recently introduced in congress to address those issues would fundamentally redefine the relationship of banks to other financial services companies and in some instances their relationship to commercial firms as well. banks have not only expanded their products and activities, but have also expanded their geographic reach, both domestically and globally. within the united states, banks have expanded nationwide as barriers to interstate banking have been removed. this expansion should continue as banks exercise their new power to branch across state lines. a related domestic trend is the rapid consolidation within and between banking organizations. although some consolidation is undoubtedly related to the removal of barriers to interstate branching, it is also spurred by improved technology, strong competition in banking markets, and the drive by banks to reduce costs. internationally, the globalization of banking has accelerated, driven by improved technology and the opening of economies in eastern europe, asia, latin america, and other regions. in particular, u. s. and other international financial institutions are forging a growing presence in lending, trading, and underwriting in these emerging markets. these efforts have created closer links among the world ’ s financial markets and have improved the efficiency and availability of capital. however, market integration has also increased the potential for systemic problems to transcend national borders, as the volume of international financial transactions has grown. last year, for example, an estimated $ 1. 5 trillion of foreign exchange contracts were settled daily in new york city alone. a default by a major u. s. or foreign participant in that market could disrupt financial markets worldwide. competitive pressures are intense to reduce the cost of financial services to the public. this is occurring against the need to improve the financial strength and competitiveness of the banking industry from the levels at the beginning of this decade. these factors have, in turn,