In order to ensure a level playing field, financial players must be regulated according to what they do and not what they are. Addressing the growing influence of borderless technology on the financial system will also require an international coordination effort. Such are the challenges that the public authorities will have to meet. *  *  *  To discuss these important issues, we are extremely fortunate to have an excellent panel today, including: •  Mrs Sarah Dalhgren, Partner at McKinsey, formerly Head of the Financial Institution Supervision at the Federal Reserve Bank of New York (FRBNY). Dear Sarah, your expertise in supervision, which you demonstrated through most of the financial crisis, will be extremely useful to assess the current situation of financial institutions in the context of financial innovation. •  We also have Mrs Sandie O’Connor, Manager Director and Chief Regulatory Affairs Officer at JPMorgan Chase & Co. Dear Sandie, you are deeply involved in your firm’s regulatory strategy and your views on how financial innovation should affect regulation from the industry’s point of view will be extremely valuable. •  I would also like to introduce Mr Alain Papiasse, Deputy Chief Operating Officer (COO) at BNP Paribas, representing the group in North America. Alain is a top market practitioner with extensive experience in both asset management and investment banking. So, dear Alain, I hope you will provide us with “insider” and complementary views on what the fintech industry can usefully bring to banks.

The normalization of global monetary policies has reversed the course of capital flows and led to the sizable depreciation of EM currencies against the dollar. This creates inflationary pressures due to the pass-through impact and impairs balance sheets due to tightening global financial conditions and worsening growth prospects. Furthermore, the sharp fall in oil prices exacerbates the deterioration in economic outlook for commodity exporting countries. Going forward, the normalization of US monetary policy, diverging monetary policies of AEs, uncertainty in commodity prices and the  8  Kenç, Turalay, Fatma Pınar Erdem and İbrahim Ünalmış (2016), Resilience of Emerging Market Economies to Global Financial Conditions, Central Bank Review, forthcoming. BIS central bankers’ speeches  5  risk of China’s economic hard-landing all will be likely to contribute to volatile global financial markets and widening spreads for EMEs. Large asset purchasing programs of the major central banks have depressed global bond markets with decreasing long-term yields as well as short-term yields and their negative nominal policy rates further destabilized bond markets and in general financial markets. Heightened volatility in global financial markets (Figures 10–11) can be associated with the presence of very low and even negative rates rather than the underlying macroeconomic and external imbalances. In these circumstances, any change in interest rate differential across countries will likely create greater impacts than otherwise. If this interest rate change takes place in the largest and most significant economy in the world, then the impact will expectedly be magnified further.