First, the question of strategic independence of incumbents. If incumbents depend on BigTechs for key infrastructure such as cloud computing, if they rely on the same BigTech to 2/4  BIS central bankers' speeches  distribute their products through their platforms and then compete with BigTechs on certain segments, they see their strategic independence challenged in the same way as hotels and retailers did. This process of commoditization of incumbents may lower credit standards to compensate for higher pressure on margin and exacerbate the funding gap because of lower customer stickiness. Second, the question of cyber-risk. With greater interconnections between technologies and the financial system, cyber-risk is moving from an idiosyncratic risk to a potential source of systemic risk. Whether and how to address the type of issues I just mentioned is a challenging task from a regulatory and supervisory standpoint, as it involves an assessment of both the potential risks and benefits brought to the financial system and the economy more largely, which are by nature uncertain. It may give rise to a significant array of alternative courses of actions to  meet two key imperatives: ensure an adequate level of protection for participants and preserve the potential benefits brought by innovation. Let me illustrate this with crypto-assets. Because of incomplete information, a lack of data and the novelty of these monetary and financial objects, four options to tackle them from a public policy standpoint can be considered and have actually been under consideration to drive action: monitoring, isolating, regulating or banning.

1/3  BIS central bankers' speeches  To help us achieve this balance, we emulated the Financial Technology Regulatory Sandbox introduced in some other countries to provide an avenue for industry players to pilot or test new solutions within a safe space. Here, industry players have the opportunity to trial new financial technologies that support sustainable goals. At the same time, we are able to better understand and observe market impacts and tailor our regulatory and supervisory response accordingly. To date, 19 solutions have been tested in the sandbox. Of this, over 60% have been successfully rolled out into full-scale production. The Bank has also introduced new digital bank licences and implemented a series of changes to existing regulations applicable to agent banks, microinsurance, and payment and remittance services to enhance financial inclusion and consumer protection. Secondly, we continue to support a meaningful role of the financial sector in helping households and businesses meet transition challenges. While we are encouraged by a number of financial institutions in Malaysia that have announced net-zero or carbon neutral goals, it is imperative for financial institutions to do more to support transition. We expect this to gain momentum with the implementation of the Climate Change and Principle-based Taxonomy for financial institutions that was issued by Bank Negara Malaysia in April this year. By shining a light on climate risk mitigation and adaptation activities, the taxonomy will strengthen incentives for both financial institutions and businesses to adopt practices that are aligned to climate goals.