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.
It is only now, ten years later, that they are taking steps to move away from these measures. What is everyone afraid of? That growth will remain rather low and unstable. Indeed, after a long period of crises and stagnation, the global economy is entering a new cycle. But what is the aftermath? First. A higher debt load than in 2007. In developed economies, the primary problem is government debt, whereas many countries with emerging markets struggle with corporate debt. Second. Developed economies are contending with exceedingly low inflation and even deflation. Moreover, there are bubbles in individual markets that threaten to grow owing, among other things, to the effects of long-term soft monetary policy. Fourth. Low growth rates in productivity and investment. This not only limits opportunities for development but also hampers growth due to increased debt burden. Fifth. Developed countries are seeing increased inequality in the face of stagnating middle-class incomes, a trend observed over the past 30–40 years and often labelled the result of globalisation. It is clear, however, that unequal access to the opportunities afforded by new technologies also played a role. In this regard, the digital revolution and the new wave of job automation, which changes the traditional profile of the labour market in a number of professions and sectors, bring about significant social risks. As a result, we are observing an upswing of populism in politics, which in itself generates new economic risks and harbours continued financial market volatility. Sixth. An important point for us.