The aim of such rules would be, in a crisis situation, to split off those units of a bank that are important for the functioning of the economy and wind down the rest. This does not mean, however, that this type of approach would question the universal bank model as such. The SNB is aware that rules governing the organisational structure of large financial institutions are not easy to draw up. Legal and operational aspects would therefore need to be analysed with the requisite care and any regulations drawn up in close collaboration with the banks affected. We are convinced that everything needs to be done to implement one of these approaches for facilitating the wind-down of large financial institutions. If significant progress is not achieved within a reasonable time frame, measures that address the size of the banks should also be examined. One way in which the size of a bank can be influenced is through capital regulations. Capital requirements that are dependent upon size reduce a bank’s incentive to inflate its balance sheet without restraint. Measures with a direct impact on the size of banks are also conceivable. A size restriction would of course be a major intervention in an institution’s corporate strategy. Naturally the SNB is aware that there are advantages to size. For this reason, the advantages and disadvantages of such a measure would have to be examined and weighed up very carefully.
In our supervisory processes, we spend quite a bit of resources and time in continuously monitoring individual institutions. By adopting Regtech, we can enhance the overall risk management and compliance quality of banks. And that in turn leads to better management of the overall risk in the financial system. The HKMA’s Regtech initiatives 1/6  BIS central bankers' speeches  10. So given the importance that we attach to promoting Regtech adoption here, what have we done so far? In the past few years, we have been facilitating the collective efforts by the banking industry, the technology community, and other stakeholders in pursuing their Regtech journey. Let me highlight a few initiatives here. 11. One example is that the HKMA is a pioneer in the introduction of Sandbox and Chatroom, and a number of Regtech projects and ideas have benefitted from those arrangements. Over the years, we have seen a surge in the popularity of Regtech in Hong Kong, as shown by the fact that the number of Sandbox and Chatroom cases focusing on Regtech has increased fivefold since we launched those arrangements several years ago. A growing number of Regtech firms are now showing interest in the Hong Kong market, and we have indeed met a wide range of Regtech firms in our Chatroom sessions. 12. We also complemented those efforts by regular publications such as our “Regtech Watch”. That newsletter is a useful channel for us to introduce banks to potential Regtech use cases. 13.