We are also looking into how to better capture risks associated with banks’ trading book positions in credit derivatives and highly structured and complex products. The AIG has established a working group that is following up on the Committee’s July 2005 trading book guidance. This working group, in consultation with the industry, is in the process of identifying possible principles for the implementation of so-called incremental default risk charge for trading book capital, and will be exploring other issues related to the measurement and modelling of risk in the trading book. And work is also going on outside the auspices of the Basel Committee. Many of you are probably aware that the Federal Reserve Bank of New York and the UK Financial Services Authority, in conjunction with other supervisors of major credit derivative dealers, have encouraged the industry to focus greater attention on sound risk management practices and the infrastructure of the credit derivatives markets by improving controls around assignments, reducing confirmation backlogs and increasing the use of electronic matching platforms. Other supervisors are reviewing bank stress testing practices and potential risks arising from banks’ private equity activities and exposures to hedge funds. The Basel Committee supports these efforts, and members will continue to keep each other informed on the results of their reviews. Private sector initiatives The public good of financial stability is not just of interest to supervisors and public authorities, but also to the financial sector.
These developments, however, have raised various issues related to the requirements for bank openness, customer security, transparency and trust in the payment services market as well as consumer rights protection. Consequently, the regulators have to adopt appropriate legislative framework that supports digitalization, innovation and competition, but also take care of security and protection. In this context, it can be noticed that the European Union is a global leader in this domain. By revising the Payment Services Directive (PSD2), the European Union enables stronger competition and 1/3  BIS central bankers' speeches  innovation by allowing entrance of FinTech payment service providers that will eventually lead to greater choice and better prices for consumers, it will fosters cyber resilience of the payment service providers as well as enhance protection of payment services users. In this way, the European Union created a sound legal framework for digitalized payments landscape that enhances the integration of the single payment. At the same time, it sets an example for other countries around the world how to support digitalization trends by balancing between innovation and competition, on the one hand, and security and protection, on the other hand. The new regulatory framework implies that banks will no longer only be competing against banks, but everyone offering financial services, i.e. the customers will be able to create a set of providers of different financial services instead of relining on one bank for all services.