 Ladies and gentlemen, a very good morning. It's a real pleasure to be with you at the fourth ECB Forum on Banking Supervision. And thank you to the ECB for inviting me to speak here today. During the last ten years, the agenda for banking regulation and supervision has been dominated by the global financial crisis. That financial crisis showed that financial regulation was too lax. So we've spent the past decade bringing in reforms to tighten that regulation. And this latest crisis prompted by the pandemic showed that those reforms have been effective. Our banks stayed resilient and they helped deliver some of the public supports to households and businesses. But we have not yet finished the job. We need to finalise the reforms we decided on after the financial crisis. And that will let us look towards preparing the banking system for the future. The reality is that our world is changing fast. If we want banking to benefit from change and not be overwhelmed by it, we need to take action. With the pandemic came an acceleration in the digitalisation of the financial world. Finance has also woken up to the urgency of the climate crisis. The financial system that we will see in ten years time, perhaps even in five years, could be very different to the one we have today. We will not be well prepared for the future if all we do is look towards the past. But to move beyond the post-financial crisis agenda, we must first finish what we started. EU banks are more resilient as a result of post-crisis reforms and of high-quality supervision. This year the European Banking Authority is celebrating its 10th anniversary and the single supervisory mechanism is turning seven. The EU's single rulebook made our bank regulatory framework more robust. We addressed many of the flaws the financial crisis brought to light. Now banks are much better capitalised. They have enough liquidity and they are not excessively leveraged. But there are still some gaps in the rules that we need to close. The Commission recently adopted a new banking package that addresses some of the deficiencies that remain in the provincial framework. The first part of this proposal implements the final Basel III reforms. The main element that remains to be implemented is to limit the ability of banks to excessively reduce capital requirements when using internal models. The proposal aims to increase the comparability of capital ratios across banks. The reforms avoid a significant increase in the overall capital requirements of EU banks and the reforms would be phased in over a long period, giving banks time to adopt. Our proposal is faithful to the Basel III agreement while using flexibility within the international standards. It includes targeted adjustments to reflect the specific features of the EU banking sector and the EU economy. In particular, it recognises the significant contribution of SMEs, most of which are not rated to the EU economy. We are taking into account the fact that European banks finance low-risk mortgages and keep them on their balance sheets. We are also taking into account that our banks have an important role in financing big projects and infrastructure. And EU banks' long-term equity holdings will not be treated as speculative investments. On top of that, the reforms are proportional and help reduce compliance costs, in particular for smaller banks, without losing prudential standards. The second part of this banking package is about making sure that banks are more resilient when it comes to sustainability. We are introducing requirements for banks to manage ESG risks systemically and consistently. Banks should also set out transition plans. And we are giving supervisors the tools they need to enforce those requirements. The third part of the package is a series of measures to strengthen supervision. One weak point addressed is the rules for non-EU banks with branches in the European Union. These third country branches have a substantial footprint in the EU and they provide important services. But right now, they are regulated at national level and there is a lack of consistency between the approaches applied by different member states. And that's why we are proposing minimum standards for the regulation and supervision of third country branches, moving to a more coordinated approach. And we are also taking this opportunity to respond to some of the lessons we learned in the Wirecard scandal. Notably, we're clarifying our rules on financial groups headed by a fintech company that have a bank as a subsidiary, so that they are properly regulated and supervised. We are also proposing minimum requirements on supervisory independence based on international best practices. So on the Progencial Regulations side, we are on track to achieve what we set out to do following the financial crisis. But after that financial crisis, we also decided to build the Banking Union. The Banking Union was a response to the Eurozone sovereign debt crisis. We realized we needed the Banking Union to back up the economic and monetary union, our common currency, the Euro. The Banking Union is vital to protect the European banking sector from a future crisis and to safeguard financial stability. The banking sector has remained stable during this crisis, but if we do not complete Banking Union, we have no guarantee of this stability in the future. So we need to live up to our promises as policy makers to do all we can to prevent another banking crisis with all the impact that would have on lives, livelihoods and taxpayers' money. The Banking Union will also provide a strong regulatory framework that can accommodate change. Because the financial sector is changing and we need a system that fosters consolidation for scale matters, including across borders. And we need to ensure that banks that do not adopt can exit the market in an orderly way without threatening financial stability. But here we still have a lot of work to do. We want to strengthen the crisis management and deposit insurance framework. We know that the cost of a bank failure should be borne primarily by a bank itself. But when extra money is needed, the common safety net financed by industry should be used and not public funds. If a bank fails, taxpayers should not foot the bill. We also need to build the third pillar of the Banking Union, a European deposit insurance scheme. The Banking Union will only be complete when this EDIS is in place. Reforms by the EU in this area have already helped protect citizens' money and reduce the risk of bank runs. But of course national deposit guarantees schemes can only go so far. EDIS would make common safety nets stronger and more consistent across the EU. This would make national schemes more resilient to large local shocks. It would help to maintain the trust of depositors, regardless of where a bank is located. And banks in trouble would be less dependent on national governments. To start with, EDIS could provide liquidity to national deposit guarantees schemes in need, strengthening depositor confidence and making banks more robust in a crisis. But the Commission remains convinced that a more ambitious EDIS setup involving loss mutualisation is needed in the steady state of the Banking Union. Progress on the crisis management framework and EDIS should help increase market integration. We know that the home host debate is sensitive. Only when our banks are European in both their success and failure will we reap the full benefits of the Banking Union. And the Banking Union requires making hard choices and reaching difficult compromises, and so far we have not been able to do that. In short, if we want to successfully navigate a changing banking landscape, we first need to complete the post-financial crisis agenda. But if we want our banking sector to be well positioned to embrace the latest technology and support the green transition, we can and must go beyond it. As I mentioned, digitalisation is fundamentally changing the financial landscape. Technology companies, large and small, are increasingly offering financial services. This increases competition, but it also makes value chains more complex, making it harder for supervisors to have an overview of the risks. It can fundamentally change banking service supply chains, introducing new critical suppliers and a new category of risks that must be managed. It also has consequences for the business model of traditional banks. New fintechs unbundle the full service model of traditional banks and big tech companies enter financial services using data and extensive customer information. Last year the Commission put forward a digital finance strategy. We want financial institutions, capital markets, consumers and the economy as a whole to be able to make the most of new technology, such as blockchain or artificial intelligence, while addressing the risks. Today I want to focus on how the Commission is addressing cyber risk, which is key to banking supervision. According to research by the ECB, there was a 54% increase in the number of cyber incidents reported to the ECB last year, compared with 2019. Indeed, the financial sector is the sector that faces the most cyber attacks. A digital financial system needs to be resilient to these risks. The Commission's proposed regulation on digital operational resilience, or DORA, defines common rules for all parts of the financial system to ensure that they can withstand all types of ICT-related threats. The rules we want to put in place are robust, consistent across the financial sector and proportionate. The draft regulation also addresses the risks of large technology providers that offer ICT services, such as cloud computing to financial firms. Third-party providers of ICT services should be subject to EU-level oversight. We're working hard with the Member States and Parliament towards a swift agreement on the new rules. Making sure banks have the right procedures in place to be resilient to cyber risk must be a top priority for banking supervisors. And supervisors need to understand the technologies, such as artificial intelligence, that banks are using and monitor the risks they can create. Beyond these new risks, technology could fundamentally change the financial system. The very nature of money is changing. Money is increasingly digital, as cyber currency and stable coins gain in popularity. But for now, this digital money is private money. Also, central banks, including the ECB, have been thinking about central bank digital currencies, whether we need digital money backed by a central bank, in the way that cash is, and how that would be designed. According to the Atlantic Council, 87 countries, including the United States, China, Japan, the United Kingdom, are at various stages of looking into central bank digital currencies. Seven countries, mostly in the Caribbean, have already launched CBDCs. In the European Union, the ECB has begun the investigation phase for a digital euro. The Commission is working closely with the ECB to explore what a digital euro could look like, and we are carefully considering the potential impact. A digital euro could bring benefits for citizens. We already face situations where cash cannot be used, like when making online purchases, though a digital euro would be a complement to cash and not a replacement for it. A digital euro would give consumers more choice about how to pay, and therefore increase financial inclusion. People who currently don't have a bank account, or have difficulty accessing cash due to bank branches closing, could be brought into the financial system. Beyond the benefits for individuals, the digital euro could also support our ambitions for the EU retail payments market. It could help private intermediaries develop truly European payment solutions, using European infrastructures and standards, and it could support instant payments. It could also help us achieve some of the political goals of the European Union, such as support for innovation, supporting the digitalisation of the economy, and strengthening the international role of the euro. But there are big questions to address as well. Like what would the impact be on banks? How do we ensure that privacy is protected? How would we keep this digital system secure? Introducing a digital euro would be a big decision, and one that we would have to get right. And if we decide to go ahead, then the digital euro will have to be well designed. So I look forward to continuing our close collaboration with the ECB on the next steps in this project. The other fundamental transformation confronting us is the transition to climate neutrality. Economy, society, politics all will need to change. And to meet our sustainability targets, all of our policies must contribute, including in the area of financial services. I mentioned earlier that we use the opportunity of the new banking package to ensure that banks take account of ESG risks. This transformation will not be easy, and that's why the Commission's sustainable finance strategy is so important. It helps all sectors, whatever stage in the journey that they're at, to reduce their negative impact on the climate and environment while managing climate risks. The ECB's economy-wide climate stress test released this September shows just how important addressing climate risk is. If we do nothing to tackle the climate crisis, we risk knocking 10% off European GDP. The climate stress test by the ECB, as well as those that we in the Commission have mandated, the European supervisory authorities to carry out, are a key way to figure out where the vulnerabilities in the financial system lie. We want to know how climate change affects financial institutions, the exposure of banks to biodiversity loss, environmental degradation or extreme weather events. At the same time, we want to know the impact that financial institutions themselves have on the climate and environment through their financing decisions. Looking at climate risks from both these perspectives will help us make the financial system more resilient to climate change, and enable it to make a full contribution to the climate transition. In conclusion, we have not yet finished implementing the post-financial crisis agenda, but we must complete the process for the sake of financial stability, and we must finish implementing the reforms for another reason, to allow us to move on from the past and look to the future. There are many challenges ahead. Cyber risks and climate risks are just two, but there are also huge opportunities to build a financial system that delivers for both people and the planet. As regulators and supervisors, we must help the financial system navigate these choppy waters as we safeguard financial stability. Thank you for your attention. Thank you very much, Commissioner, for your insightful contribution. Let's follow up with a few questions. You analyzed how ESG risks are implemented in the bank's risk management. How do you plan to advance risk management practices and prudential supervision in that regard? Well, this is a work in progress. The 2019 banking package already integrated certain ESB elements into the prudential framework, so large listed banks will have to publicly disclose ESG risks from June of next year. And we have an EBA mandated study into whether differentiated capital requirements are needed to better capture environmental and social risks, and the results of this will be hugely important. You know, the Commission already had a public consultation on potential further measures aimed at better integrating these ESG considerations into the overall prudential framework, and this came after the adoption of the European Green Deal. I think the importance of holding on to the risk-based approach was certainly something that was stressed, so that we have to take account of ESG risks, but that this shouldn't lead, for example, to a decrease of requirements where there's no evidence that the green nature of the assets leads to a reduction of financial risks. So it's a complex discussion. Our latest proposal takes a step further towards the inclusion of ESG considerations into the prudential framework. We're introducing specific requirements for banks to implement this systemic management of ESG risks, and we're also giving supervisors the tools they will need to enforce these requirements. You know that we've asked the EBA to bring forward their work on dedicated capital rules and ESG risks to June 2023. That's two years earlier than planned, because we need evidence to assess the implications of introducing, for example, a brown or a green or a social factor into all of our planning. And as we expand the scope of ESG disclosures to all banks, so not only large enlisted ones, while ensuring proportionality for the smaller banks. You pushed for expanding AML CFT rules to the entire crypto sector. How do you walk the tightrope of mitigating the risk without stifling innovation? Well, I suppose the overall comment I'd make is that innovation and regulation are not enemies. They should actually be friends. So if we have smart forward-looking regulation, this can create the conditions where innovation flourishes. Regulation, in my view, is the key to provide legal certainty. And the legal certainty is needed by market players, both the new and established market players. And we need to confidently develop and offer new innovative products and services. Regulation, I think, is also vital to manage risks, and therefore to build the trust that investors and consumers need to fully buy into these new offerings. And I suppose that's the rationale behind our approach to crypto assets. Our framework for markets and crypto assets will introduce a bespoke regime for previously unregulated crypto assets, including stablecoins. And I think this will provide legal clarity. It will help to boost innovation. And at the same time, solid rules for issuers and service providers will prevent abuse, fraud and theft, protecting investors and safeguarding market stability. And already the Member States and the European Parliament are making progress in their negotiations on the draft regulation for markets in crypto assets, and we're urging them to keep up the tempo so we can get agreement on these new rules this autumn. Because crypto assets are evolving fast, enabling innovation, homegrown firms to enter the market, while also attracting retail investors. It is our policy and our duty as policymakers to put sound rules in place as quickly as possible. And then closely linked to this proposal is a pilot project for market infrastructures based on distributed ledger technology, DLT. This pilot will create a safe space for market players to experiment with issuing, trading and settling securities using blockchain technology. And again, the trial negotiations are proceeding well, and I'm hopeful of an agreement by the end of this year. The technology has the potential to increase efficiency, but we need to be clear about how it works in practice. So the pilot will allow us to test this in a setting that balances innovation and safety. It will run for five years, and at the end of that period, we will decide on whether to adopt our existing legislation to ensure that it's effective in fostering responsible innovation. So as of next year, market participants will be able to test the use of DLT on a large scale in asset classes such as shares and bonds. And this is a great opportunity, not only to give our capital markets a much needed push, but also in particular for smaller firms to attract new business. Thank you, Commissioner. And one last question on the Banking Union. The European Parliament just discussed the Sixth Report on Banking Union, which stressed the need for progress. Will the Banking Union ever be completed, or will it be work in progress forever? Well, look, it is work in progress, and we believe it has to be completed. The Parliament's annual report on Banking Union comes at a time where the sense of urgency to complete the Banking Union has eroded. And we've seen political stalemate over the last years. What we need to do is highlight that we cannot wait for another banking crisis to continue this work. And the Commission very much shares the commitment on the need to complete the Banking Union. And we appreciate the work of the European Parliament in calling for increased efforts to achieve our common goals. We want to strengthen the second pillar of the Banking Union and review the crisis management and deposit insurance framework. And also to build a third pillar of the Banking Union, a European deposit insurance scheme, and a solution for liquidity in resolution. The Commission has, you know, repeatedly stressed the importance of the Banking Union completion for the achievement and the progress of several other flagship initiatives because the benefits of a more integrated Banking Union are widely recognized, both to promote financial stability but also to look ahead and finance the necessary transitions, digital and climate change. So again, the Commission supports the efforts to create this ambitious work plan towards a steady-state Banking Union. And we're ready to take our responsibility with concrete legislative proposals. It is really vital that discussions continue with the aim of reaching an agreement. And I would say to the point of your question, while the negotiations are difficult and the sense of urgency may have been eroded somewhat, our determination to complete the Banking Union is as strong today as it was when we made a decision that we needed the Banking Union. And frankly, we needed more now than ever because of the rapid change in the entire banking system and the financial world. So while it's difficult, we're determined to achieve it. Thank you very much for your time, Commissioner. Thank you very much.