This has resulted in an extension of the clearing obligation to all standardised OTC derivatives; (ii) improve their resilience by further strengthening their risk management framework, as the concentration of clearing among a small number of entities requires a particularly robust framework. The principles applicable to financial market infrastructures have also been strengthened, with the publication in 2012 of the Principles for Financial Market Infrastructure (PFMI). This is still the reference text for market infrastructure regulation today. In Europe, these PFMI were translated into hard law through the European market infrastructure regulation (EMIR), which was adopted in 2014 and is applicable to CCPs and central trade repositories. (d) Better regulate the non-bank financial system to enable sound market financing: the aim is to strengthen supervision of shadow banking as the financial crisis showed that the accumulation of risks on the periphery of the banking system, sometimes without effective oversight, could have devastating effects. We now have a better understanding of the non-bank financial system, thanks to the FSB’s mapping work, which makes it possible to measure its developments and the risks associated with it. The FSB has also worked to strengthen investment fund regulations to better manage liquidity risk – recent episodes of massive capital outflows by UK and French funds have demonstrated the importance of managing this risk well – and leverage risk.
What is more, monetary policy and low rates also have positive effects for banks, such as a reduction in their cost of risk and increase in their lending volumes. However, the fact remains that the current environment is compressing net interest margins for retail banks, which finance themselves with deposits – and not at variable rates in the markets – and is lowering returns on insurers’ investments. The second risk, which is more structural, is the digital transformation of finance, which is revolutionising modes of use and bringing significant benefits to customers. However, adapting to this change requires huge investment by banks, to adjust their information systems and develop new, personalised service offerings. The digital transformation is also putting downward pressure on revenues due to increased competition from new market entrants (neobanks, GAFA, etc.). In response to this, financial institutions need to unleash new productivity gains, by exploring even further the possibilities of automation and artificial intelligence (AI), and adapting their branch networks on all levels (size, , density). The digital transition is also leading to a rising threat of cyber risk and, more broadly, operational risks (large-scale theft, data corruption), to which financial institutions are more than ever exposed. 4/7  BIS central bankers' speeches  Last, financial intermediaries also have to adapt to a new imperative – the need to take account of the risks linked to climate change, which I shall come back to later.