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...So projects like Capital Markets Union and Banking Union – these are big, landmark projects for European financial stability and integration.
And I think everyone supports them in principle. And I'm putting a big full stop after that.
Because when the time comes to put that support in principle into practice, and to dig into the detail of what we need to do to reach these landmarks – well, things get a little bit more difficult.
So I want to talk about what the economic and financial system looks like, and why we need to step up our work on Banking Union and Capital Markets Union.
And I want to have this conversation with the backdrop of a global environment that is changing, and changing rapidly.
Covid-19 gave rise to macroeconomic uncertainty.
And yet the financial system in Europe remained resilient when the pandemic hit, and this was thanks to post-financial crisis reforms.
My concerns, and indeed all our concerns, about non-performing loans did not pan out, because of unprecedented public support.
Our banks kept their NPL ratio level low.
The illegal invasion of Ukraine by Russia in February last year triggered an energy price shock.
And that led to central banks tightening monetary policy to try and contain inflation.
Higher inflation and rising interest rates present very different challenges to those we've known over the past decade or so.
Although people of my vintage remember very high interest rates – and I see John Berrigan nodding in agreement, so we must be of a similar vintage! I will check Wikipedia.
But alongside all of those, we have financial stability risks which increased over those years of 2022 and indeed right into 2023.
The financial sector also faced adapting to the impacts of digitalisation and continues to deal with climate change and its impacts.
The big topic that everyone talks about is artificial intelligence. It is the topic of the day, every day we read and see more discussions and more concerns around it.
And this will impact all sectors, and I think in particular the financial sector, and we're not sure exactly how.
So big question marks over that.
It's already being used, and I think we need to wake up to the reality that artificial intelligence is here.
It's probably here to stay.
Today our banks use it to support their risk management, and to provide financial advice.
So these developments bring opportunities but also big risks.
People can move money very quickly through digital channels.
‘Digital bank runs' happen at a much faster pace than bank runs of the past...
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