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.

Bank Negara has also actively pursued initiatives to develop a viable regional cross currency market to support trade and investment by expanding the availability of multiple choices of currencies that businesses can use for trade and settlement. Malaysia and Thailand recently established the first cross-currency settlement and clearing arrangement between two ASEAN countries, following similar arrangements with China and South Korea. Moving forward, Malaysia remains committed to regional efforts to advance financial integration. This will be guided by the ASEAN Economic Community Blueprint 2025, which focuses on the three key pillars of financial integration, financial inclusion and financial stability in the region. Facilitating fintech developments I am pleased today to announce that Bank Negara will introduce a framework for fintech firms to test innovations in the financial services operational environment. Earlier this month at the Global Islamic Finance Forum, I spoke briefly about the work that Bank Negara Malaysia has undertaken with respect to fintech. Indeed, Bank Negara has long recognised  BIS central bankers’ speeches  3  the power of technology in driving the financial sector forward. Over the years, banks have harnessed the power of technology to reap significant benefits. Bank Negara has supported this development on many fronts including in the areas of payments, internet banking, agent banking, Islamic finance and money exchange and remittances. Fintech will be a new addition to the list. Fintech developments such as blockchain, artificial intelligence and biometric applications are now expanding the frontiers of banking.