Many other “known” areas still require further refinement:  from understanding the impacts of deepening adoption of digital technology on productions, labor markets, inflation dynamics, and hence conduct of monetary policy;  2/4   to the emergence of cryptocurrencies and associated payment technologies that may improve financial inclusion and incorporate ‘smart-contracts’, but may have implications on financial stability, consumer protection and even the environment; and  to the various proof-of-concept initiatives using DLT or Blockchain on wholesale Central Bank Digital Currency (CBDC), where design and technology choices are being explored. Meanwhile, there remain many puzzles and unknowns, where the costs and benefits are unclear and require much more research, study, and debate to identify potential impacts or to assess whether a particular development should be pursued. These include unknowns such as introduction of retail CBDC, which can have implications on the business model of banks and the financial sector and on transmission mechanism of monetary policy. Or, broader issues such as the autonomy of central bank’s policy, which will be challenged by BigTechs and cross-border technologies, as much of central banking has been designed based on a world with national borders. Other unknowns will arise in the future; all of which dictate that we have to be nimble and forward looking. Ultimately, when facing the challenges from the knowns and unknowns, the role of central banks is not only to understand key issues and provide stewardship in the right direction but also to ensure that benefits and costs are well balanced and unintended consequences minimized.

This means that it must offer suitable, cost-effective and quality financial products and services for all segments of society. It must also respond to the changing demographics and structure of the economy. For example, as we move towards becoming a digital economy, the financial sector must accord adequate support to innovative SMEs, such as those involved in e-commerce. Equally important, we must remember that this imperative is not only for banks, but extends to the other parts of the financial sector. Non-banks such as venture capital and private equity firms, as well as alternative financiers such as factoring and leasing companies, have an equal stake in this and should also play a more active role in financing the needs of businesses. The need to bridge the gaps between 20th century finance and the 21st century economy is both compelling and urgent for the whole financial sector as conditions remain challenging for the economy domestically and abroad. This is also certainly not the only time that we will face such challenges. To be safe, finance must not sow the seeds of its own destruction and not serve as an amplifier of risk to the economy. The ability of finance to mobilise capital, create leverage and distribute risk allows it to be a powerful force for good. But excessive and unbridled risk taking creates instability which is harmful not only for the particular firm, but the economy and society at large. There is also a greater need for finance to be socially responsible.