Productive financial sector allows for more efficient resource allocation among different segments of the economy. Maintaining a resilience financial system allows for smooth functioning of the financial markets and keeps systemic risks at bay. And, an inclusive financial system ensures that benefits from economic growth can be shared fairly across the whole society, fostering stable social and economic environment conducive for sustainable growth. Ladies and gentlemen, 3-7  Amidst the rapidly changing technology, fintech can be and must be an instrumental driver of financial sector policy to fulfill the three key imperatives of productivity, immunity, and inclusivity. On productivity front, fintech can enhance efficiency in financial services. Rise of new electronic payment ecosystem can enable more efficient transfer of funds and significantly lower transaction costs for customers. Adoption of fintech platforms will allow banks to scale down on the high cost brick-and-mortar delivery model and shift to less costly and more efficient digital services. Lending process can be made much more efficient through usage of transactional data from e-commerce and payment platforms, and banks’ business model could change from collateral-based lending to information-based lending. Meanwhile, blockchain has advanced technology behind many aspects of the financial services, especially back-office operations and fund transfers. All of these help lower cost of financial transactions and improve ease of doing business for banks and customers, thereby improving productivity of the economy as a whole. On immunity front, prudent application of fintech can help banks and businesses improve their risk management.

10 Board of Governors of the Federal Reserve System, FOMC transcript and presentation materials, January 29-30,  2002. 11 Board of Governors of the Federal Reserve System, FOMC transcript and presentation materials, June 24-25,  2003. 12 See, for example, Lars E. O. Svensson, The Zero Bound in an Open Economy: A Foolproof Way of Escaping  from a Liquidity Trap, Monetary and Economic Studies, Volume 19, Issue S1, pp. 277-312, February 2001; Günter Coenen, Athanasios Orphanides, and Volker Wieland; , Price Stability and Monetary Policy Effectiveness When Nominal Interest Rates Are Bounded at Zero, Advances in Macroeconomics, Volume 4, Issue 1, 2004; Ben S. Bernanke and Vincent R. Reinhart. 2004. Conducting Monetary Policy at Very Low Short-Term Interest Rates, American Economic Review, Volume 94, No. 2, pp. 85-90, May 2004; Klaus Adam and Roberto M. Billi, Optimal Monetary Policy under Commitment with a Zero Bound on Nominal Interest Rates, Journal of Money, Credit and Banking, Volume 38, No. 7, pp. 1877-1905, October 2006. 13 Reifschneider and Williams 2000; Board of Governors 2002. 14 Gauti B. Eggertsson and Michael Woodford, The Zero Bound on Interest Rates and Optimal Monetary Policy,  Brookings Papers on Economic Activity, Volume 34, No. 1, pp. 139-211, 2003; Reifschneider and Williams 2000. 15 Ben S. Bernanke, Vincent R. Reinhart, and Brian P. Sack, Monetary Policy Alternatives at the Zero Bound: An  Empirical Assessment, Brookings Papers on Economic Activity, The Brookings Institution, Volume 35, No. 2, pp. 1–100, 2004.