Its subsidiary EnterNext, which is dedicated to the financing and promotion of small and mid-caps, in turn enabled 26 companies to carry out IPOs, raising EUR 6 billion over the period. You are thus helping to bring about two important reconciliations: between the worlds of business and finance, and between France and its appetite for risk. What’s more you are achieving this with a European dimension. I can’t stress this enough: having a strong position in market infrastructure is vital for the French economy. I would like to look beyond Euronext now, and focus on two more general avenues for promoting equity financing. First, the French public needs to adapt its savings behaviour to the current low interest rate environment. This is a chance to encourage a “riskier” and more long-term approach to investment, in the interest both of savers and our economy. Today, only 31% of households’ financial investments are made up of risky assets, compared with 45% in the euro area. This means taking action in two areas: first, the decrease in interest rates should be gradually passed on to risk-free investment returns – which is why I proposed lowering the rate on the PEL, the French housing savings plan, and why we must continue to lower the returns on life insurance savings invested in euro funds; second, we need to develop new products: less liquid, and with or without a long-term capital guarantee, and which allow savers to benefit from the higher returns offered by equities over the long term.
Our position, put simply, is that we do not believe that customers should be responsible for any security breach or system problem that is not due to negligence on their part, and we have requested that this should be reflected in the contractual agreements for internet banking services. Reputational risk Risk of damage to the bank’s reputation goes along with the other risks I have mentioned. It can arise, for example, from operational risk even if customers suffer no actual damage. If a hacker successfully 3  BIS Review 108/1999  breaks into a bank’s website and makes alterations, the bank concerned can suffer substantial damage to its reputation although customers’ balances are safe and the hacker has not obtained any financial benefit. This does not only affect the individual bank concerned but may also undermine confidence in the security of e-banking more generally and therefore slow down development in this area. Systems breakdown, even if only temporary, is another example of how banks may be affected by bad publicity. Given the fact that the element of trust is so fundamental to banks’ business, banks will find it increasingly important to adopt measures to manage reputational risk and incorporate public relations strategies into their overall risk management framework. Banking risks As I have already mentioned, an internet-based bank is faced with the same types of banking risk as its traditional counterparties. In some ways, the internet may heighten these risks.