4 Counter-examples emerged, with some simple eco-systems – savannas and grasslands – found to exhibit high robustness and some complex eco-systems proving vulnerable to attack. Perhaps tellingly, large-scale clearance of tropical rainforests highlighted their inherent fragility. Not for nothing did rainforests become known as a “nonrenewable” resource from the early 1970s. 3  For example, Voute (1946) and Elton (1958). 4  For example, May (1974). 4  BIS Review 53/2009  Finance appears to be following in ecologists’ footsteps, albeit with a generational lag. Until recently, mathematical models of finance pointed to the stabilising effects of financial network completeness. 5 Connectivity meant risk dispersion. Real-world experience appeared to confirm that logic. Between 1997 and 2007, buffeted by oil prices shocks, wars and dotcom mania, the financial system stood tall; it appeared self-regulating and self-repairing. Echoes of 1950s ecology were loud and long. The past 18 months have revealed a system which has shown itself to be neither selfregulating nor self-repairing. Like the rainforests, when faced with a big shock, the financial system has at times risked becoming non-renewable. Many of the reasons for this have a parallel in other disciplines. In particular, in making sense of recent financial network dynamics, four mechanisms appear to have been important: connectivity; feedback; uncertainty; and innovation. (a)  Connectivity and stability  Over the past 30 years, a great deal has been established about the links between network connectivity and robustness. These lessons span a range of disciplines including physics, biology, engineering and epidemiology.

We are then using our existing frameworks to respond where necessary. We are disciplined. Just because something is new doesn’t mean it should be treated differently. Similarly, just because it is outside the regulatory perimeter doesn’t mean it needs to be brought inside. We apply consistent approaches to activities that give rise to the same risks regardless of whether those are undertaken by old regulated or new FinTech firms. Some of the most important questions we are considering include: -  Which FinTech activities constitute traditional banking activities by another name and should be regulated as such? 7  -  How could developments change the safety and soundness of existing regulated firms? -  How could developments change potential macroeconomic and macrofinancial dynamics including disruptions to systemically important markets? And  5  For further details on the New Bank Start-Up Unit, see: http://www.bankofengland.co.uk/pra/nbsu/Pages/default.aspx For further detail on the work of our FinTech Accelerator see: http://www.bankofengland.co.uk/Pages/fintech/default.aspx Systemic risks associated with credit intermediation including maturity transformation, leverage and liquidity mismatch should be regulated consistently regardless of the delivery mechanism. 6 7  4  All speeches are available online at www.bankofengland.co.uk/speeches  4  -  What could be the implications for the level of cyber and operational risks faced by regulated firms and the financial system as a whole? To illustrate some of the issues, consider how FinTech is affecting the financial services value chain (Figure 1).