Per Callesen: Can banking be sustainable in the future? A perspective from Danmarks Nationalbank

Speech by Mr Per Callesen, Governor of the National Bank of Denmark, at CBS' (Copenhagen Business School) 100 years celebration event, Copenhagen, 30 October 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Key messages

Thank you for the invitation. Congratulations with the 100 years!

I will focus on three issues and set of conclusions:

First, banks will likely face stronger future competition from several sources. This is to be welcomed from the perspective of consumers and business. Such competition will drive further innovation and productivity in both the financial and non-financial sectors. Some banks will cope well with stronger competition. Others will fail. The most important regulatory challenge in this respect is to enable orderly resolution of failing banks.

Second, digitisation of financial services will likely continue to grow. Pay-ments and other financial services are already highly digitised in Denmark and other countries. Sound digital currencies exist in the form of private bank deposits. A couple of side issues are under debate and need clarifi-cation. Crypto-currencies are unhealthy for consumers and business, and potentially, down the line, for financial stability. At the other end of the spectrum central banks - which are the banks of the banks - should not offer digital currencies to the general public.

Third, digitisation poses new risks, not only in financial services, but also in financial services. Risks include vulnerable or unstable equipment, human error and outright crime, such as cyberattacks. Coping with such risk is costly, and a continuous struggle or arms race, but is indispensable for financial stability and the credibility of financial institutions.