This is an extraordinarily bold and radical step, not attempted on anything like this scale in any other developed financial centre, and the experiment is being watched with great interest by other central banks and regulators from around the world. But there are very strong reasons for moving away from the traditional model of a separate regulator for each different type of activity - banking, securities, insurance and so on. Financial innovation and globalisation, driven by an interactive process of new information technology, competition and deregulation, are, unquestionably, progressively blurring the traditional boundaries between different forms of financial intermediation. So regulation based on particular categories of institution has increasingly become overlaid by functional regulation. That has made the whole regulatory structure increasingly complex, both for the regulated firms and for the consuming public at large. It has made it increasingly complex, too, for the regulators! There are no fewer than nine separate regulators joining the FSA. The new organisation may look big and complex, but I have to tell you that the task of co-ordinating the interests and responsibilities of all those separate regulators, across the business of an increasing number of multi-functional groups, was threatening to become bigger still. Firms with complex financial services activities here in the UK welcome the idea of a one-stop regulatory shop where at present they have to deal with a bewildering array of different regulators for different purposes.

Across various sectors, disruptive technologies are rapidly expanding the horizon of economic opportunities while challenging existing business models. In the case of banking for instance, we have already seen greater competition from new entrants amid the emergence of fintech. Rapid urbanisation, which is more pronounced in emerging markets, and demographic changes such as an ageing population are other key trends which have major implications on economic and socio-political conditions. At the same time, there is a growing appreciation for the far-reaching impact of climate change, giving rise to calls for more sustainable growth models and innovation. All these developments that are taking place in the banking industry today have created an environment much different from the one prior to the crisis. And together with the implementation of the post-crisis global regulatory reforms, which remains a key priority, their implications require careful and deep thinking as banks plan for the future. Domestic policy continuity and priorities Our banking industry is facing the current rapidly changing and challenging economic environment from a position of strength, following the successful reform measures that were implemented. Given the high degree of openness of the Malaysian economy and the increased integration with the international financial system, external developments have continuously affected our domestic economy. But the economy has been able to weather these challenges and have remained on a steady growth path of 4 to 6% over the past five years. In recent quarters, economic growth, however, has moderated.