The global economy is entering its new cycle at a low phase of the commodity (primarily oil) super cycle. So far, there has been no truth to the predictions that low commodity prices will have a positive impact on global growth thanks to the positive 1 / 11  BIS central bankers' speeches  momentum enjoyed by raw material-importing countries exceeding the negative impact on exporting countries. However, it is important to note the technological progress in the oil industry both in terms of supply (e.g. the development of shale technologies; incidentally, the decreased investment in shale oil in the face of low oil prices has once again begun to grow) and in terms of demand (the development of the electric car and alternative green energy markets). In fact, in the medium term the balance of these factors remains highly uncertain. Therefore, the markets are constantly shifting their expectations about medium-term trends (almost every quarter) and thus the oil market remains relatively volatile. Lastly. The global economy is entering a new cycle with growing cyber-risks capable of threatening both the stability of financial systems and economic growth. Positive developments include the financial technological revolution (fintech and the cost cutting, increased financial service penetration, and the improvements to their quality it entails), and the financial markets’ increased stability in the face of various shocks. This stability has been repeatedly tested over the past year and a half, a period not lacking in political surprises.
Meanwhile, our economy requires more lending for companies’ operations and investment. Moving forward, we must understand which issues can be solved through regulation and for which it would be the way. This should never, under any circumstances, be pursued by reducing risk protection. We need to strike a balance between limiting risk in some sectors and stimulating others. This is a major conceptual challenge with no unambiguous answer. We will be discussing it here at the congress. Before addressing the objectives we set ourselves in individual sectors, I would like to say a few words about the most fundamental prerequisite for development – healthy competition. Encouraging competition is our unequivocal priority. What are we doing to promote competition? 4 / 11  BIS central bankers' speeches  First. Thorough market cleansing. In our opinion, low-quality competition is just as bad as none at all. Honest business should not have to compete with fraudulent market players. Our duty as the financial market’s supervisory body is providing an environment where effective and stable financial institutions reap the benefit. This means ridding the market of dishonest players. Second. Proportional regulation. It levels out the competitive playing field for players of different sizes, and helps the market cultivate niches where different types of financial institutions tie in with different types of clients and their needs. A year ago, in this hall we announced that we were planning to transition to proportional regulation in the banking sector.