That said, given the severity and duration of the recent crisis, this trend does not deviate particularly from the empirical regularities observed for previous economic cycles. Third, the survey on SMEs indicates that, despite having been less successful than large companies as regards their applications for bank loans in the first half of 2009, the majority of SMEs received some or all of the amount applied for. Fourth, it is probable that loans to non-financial corporations will remain modest over the coming months; this would be in line with past evidence, which suggests that the trend of such loans tends to lag developments in GDP by a few quarters. Fifth, the ECB has introduced numerous measures, both ordinary and extraordinary, to support the euro area economy in general and the banking sector in particular. It would be difficult to do more. It is now time for the banking sector to implement the necessary process of recapitalisation in order to restore confidence and support growth. The importance of SMEs in the euro area Let me start by pointing out the importance of SMEs in the euro area. SMEs – which are usually defined as firms with less than 250 employees – play a very important role: over 99% of firms are SMEs and, in the non-financial corporate sector, they produce 60% of total turnover and employ 70% of employees. Their activities are essential to fostering entrepreneurship, competition, innovation and growth.
We expect to start granting licences to virtual banks around the end of this year or early next year. I believe establishment of virtual banks will provide further traction to the growth of the Smart Banking ecosystem in Hong Kong. 7.Fourthly, the Smart Banking ecosystem is not complete without support from the general public and customers. I am glad to see that a large number of bank customers have signed up with the Faster Payment System (FPS) since the launch of customer registration on 17 September for registration. Growing significance of Regtech in the Smart Banking Era 8.As we watch the positive development of the Smart Banking ecosystem, it is also important that we maintain momentum. This year, the conference’s theme, “Banking for a Smart Society”, reminds us not to be complacent. We should continue to work collectively to further develop the ecosystem. 9.While we naturally pay more attention to new or innovative digital financial services that become available to bank customers as a result of the Smart Banking initiatives, let’s not forget that Fintech is not only about the interface between banks and customers. The importance of a key Fintech segment, Regtech – regulatory technology – in supporting and facilitating the interface between banks and the regulators, should not be understated nor overlooked. I would like to therefore provide a supervisor’s perspective on Regtech in the Smart Banking era. 10.When we look at Regtech, some may immediately start to envisage the substitution of us, banking supervisors, with technologies such as artificial intelligence (AI) or “robo-regulators”.