The European Central Bank published a welcome address by President Christine Lagarde for the 10th ECB Annual Research Conference, jointly organised with Stanford’s Hoover Institution, framed around the question “The Next Financial Crisis?”. Lagarde positioned the conference as a two-day inquiry into safeguarding financial stability amid rapid transformation, arguing that innovation often changes the form of risks rather than their substance. She highlighted the growing footprint of non-bank financial institutions in the euro area, noting their expansion from about 140% of GDP in 1999 to close to 400% and that they now account for over 60% of the euro area financial sector. Lagarde also pointed to technology-driven pressures on banks’ business models from fintechs and the potential traction of stablecoins, and cited the March 2023 collapse of three US banks in five days as an example of how social media can accelerate panic and contagion. Interconnections between banks and non-banks were underscored by banks’ asset exposures to non-banks averaging around 10% of significant institutions’ total assets, alongside familiar risk channels such as liquidity and leverage risks in non-banks, maturity transformation and run risk in banks, and redemption and reserve risks for stablecoin issuers. On the policy framing, Lagarde argued that supervision and regulation should contain risks without holding back innovation, and referenced Europe’s simplification agenda under the European Commission as aiming for a more effective and efficient framework rather than deregulation. The conference programme covers non-banks, banks, and supervision and regulation, and opens with a keynote by Raghuram Rajan on the relationship between monetary policy and financial stability.

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