This results in an output potential that over time satisfies demand without generating pressures in the economy. The equilibrium interest rate is determined by long-term phenomena associated with the structure of the economy, while the neutral rate is defined on the basis of its influence on pressures in the economy and thereby on inflation. In the long term, the neutral interest rate will correspond to the longterm equilibrium interest rate in the economy. The long-term equilibrium interest rate is determined by fundamental structural relationships in the economy, such as consumer impatience and the economic growth rate. Rising population growth means that a larger labour force must be equipped with real capital. Fixed investment and saving must increase. Higher population growth will therefore require a higher equilibrium interest rate. The higher productivity growth is, the higher future gains from today’s investments will be. This also provides the basis for a higher equilibrium interest rate. The long-term equilibrium interest rate cannot deviate too much between countries over time. With liberalised capital markets, capital will move towards those countries that can provide the highest return. Substantial interest rate differentials between countries cause fluctuations in the exchange rate and will not be compatible with a long-term equilibrium. Thus, we may refer to a global equilibrium interest rate for open economies, although perhaps with an added national risk premium. The interest rate has thus several roles to play in the economy and these roles should be fairly closely linked.
As a result, although necessary and desirable, the digital transformation of financial intermediaries carries a significant execution risk. This is the first type of risk to which we are exposed, and one that is highly idiosyncratic, but we need to recognise it. Next, digitalisation is challenging existing business models and their profitability, which can have destabilising effects in a banking industry such as Europe’s where there are overcapacity issues and where profitability is rising but remains well below US levels. The third type of risk is that digitalisation gives operational risk a more systemic footprint. In a 2/7  BIS central bankers' speeches  largely dematerialised world where financial services can be accessed via multiple channels, cyber-risk poses an increasingly significant threat. Similarly, the use by financial intermediaries and their operational reliance on a small handful of providers of “suites” of technological solutions, and not just softwares, raises the risk that a service disruption might impact the entire system and not just a single entity. b. What are the priorities for microprudential supervisors? In light of these complex and interconnected risks, and the fact that a significant portion of them are new, financial intermediaries and supervisors need to exercise vigilance in order to understand the exact nature and impacts of the threats, and take appropriate steps to contain and manage them.