Capital adequacy is therefore the foundation of the financial system and a prerequisite for cushioning risks – akin to the ability of a bridge to bear a certain load provided it is built out of stable materials. At the same time, a bridge cannot be too stiff, and it must be supple enough to offset heavy loads.
By the same token, financial stability considerations make it necessary to bolster resilience and at the same time maintain the ability to respond to change. One type of change addressed in this report is the growing importance of fintechs, new technologies which, for instance, facilitate direct lending through platform-based brokerage or investment advice.