Because new financial technologies are presenting significant opportunities, but also enormous challenges for central banks and financial regulators. 1/4  BIS central bankers' speeches  They hold out the promise for achieving broader and more inclusive access to financial services, characterised by greater speed and convenience, and lower costs. The emergence of new financial institutions and multiple payment systems could dramatically improve financial intermediation and reduce concentration risks. Greater access to data also carries tremendous value for better surveillance and policymaking. However, these developments also carry with them new risks and challenges – from more interconnected systems through which risks can transmit in and across organisations and financial systems; to concerns associated with privacy, misinformation, security and criminal abuse. Moreover, as financial systems continue to undergo major technological transformations, their resilience remains largely untested during periods of crisis. Technological disruptions will continue to push the limits of our ability to identify and pre-empt risks. This will also increasingly place authorities who are responsible for financial stability, at odds with a desire to encourage and not stifle innovation. Managing this balance will require us to approach governance, risk and controls with fresh lenses. For Bank Negara Malaysia, this has entailed a number of strategic imperatives. The first has been a sharper focus on strengthening regulation and supervision to promote resilience. The Bank recently published new standards on risk management in technology for financial institutions and strengthened our expectations on the management of outsourcing risks by firms.

In any event, the final calibration of the minimum ratio should be completed in 2017, with a view to its definitive inclusion in the solvency rules in 2018. This calibration will define the interrelatedness of the ratio to the other solvency measures and, specifically, the conditions under which it will act as a binding constraint. We are still, therefore, at the analysis and calibration phase. Next year, banks will be required to publish the ratio as a transparency measure, which will be conducive to the final design of the new regulatory requirement attaining a sufficient degree of consistency and homogeneity. Evidently, the introduction of new prudential control measures entails an additional effort for banks, at a time when the sluggishness of economic activity is exerting significant pressure on their margins. Undoubtedly, however, adopting these measures while observing a prudent implementation calendar will have an appreciably positive effect on the industry’s soundness and resilience and, consequently, on the economy as a whole. Banking union That said, as experience categorically shows, the harmonisation of solvency rules is not a sufficient guarantee to ensure homogenous control of the financial position of banks located in different jurisdictions. As important as having similar rules is the application of a common supervisory approach. And the homogeneity of the prudential control exerted over financial institutions is particularly important in economic areas that share an integrated banking market and a common currency. Hence the importance for Europe of setting up a single supervisory mechanism.