Pablo Hernández de Cos: New digital technologies and the financial system - fintech, crypto and CBDCs Speech by Mr Pablo Hernández de Cos, Governor of the Bank of Spain, at the 20th Anniversary Conference of the BIS Representative Office for the Americas, Mexico City, 20 November 2022. *** Good morning. I am delighted to be here to celebrate the 20th anniversary of the BIS Representative Office for the Americas. This office was established, inter alia, to promote cooperation among central banks and to develop research activity. I believe these aims are just as relevant nowadays, if not more so, than they were back in 2002. In fact, the issues we have on the agenda today are a good illustration of this need to join forces in analysing and addressing common challenges. Financial innovation, the focus of this session, is certainly a case in point. For years, technology has been an important driver of change in the financial sector but the advent of the digital revolution and the restrictions imposed by the pandemic-related lockdown have certainly helped enhance its role on a much wider scale. It goes without saying that our behavioural patterns are far more digitalised than they were not long ago. And this trend is most surely here to stay. The landscape that lies ahead promises a wealth of benefits for both the financial system in general and for central banks in particular.
For instance, robotisation, alongside the use of AI and ML-related tools, allows increased efficiencies and, when properly conceived, can further help increase financial inclusion, thus fostering growth and employment alike. However, as with any innovation we should not only welcome the potential benefits but also set against them the new and traditional risks that could emerge with these tools. I would like to structure my address today into three interrelated fields: first, the European experience in regulating crypto-assets; second, the Eurosystem experience in developing and providing a digital euro; and third, the promotion of innovation and the Spanish experience with a sandbox. The European experience in regulating cryptoassets Over the last two years or so, cryptoassets have certainly attracted growing attention in the public debate. Their steady, exponential growth was the initial trigger, followed more recently by an equally impressive rapid decline. Yet, despite recent events, cryptoassets and their underlying infrastructure, are another good example of the potential of new technologies to help overcome certain shortcomings in the existing financial ecosystem and, perhaps, even to create new business opportunities. Take the potential possibility to fractionalise real-world assets (especially non-tradable ones), through  1/6  BIS - Central bankers' speeches  tokenisation, which opens a wide door to, among other things, an expansion of the investor base and broadening the range of collateral that is available and acceptable, beyond traditional items.