The subsequent market movements as investors withdrew funds from EME investments were an abrupt shock for EMEs generally, especially after the long earlier period of abundant liquidity and ample inflows. From one perspective, the unconventional nature of recent U.S. monetary policy adds little that is fundamentally new to the challenges now facing EMEs. These policies simply represent a way of easing, driven by our coming up against the zero lower bound. Central bankers have managed differences across countries in cyclical positions and policy stances many times in the past. But, from another perspective, we have less experience operating with unconventional monetary policy and this creates more potential uncertainties. This puts a premium on continued dialogue among central bankers, between central bankers and the market, and keen listening skills on our part. In my view, the fact that our large scale asset purchase programs affect the size of term risk premia globally is important. This set of monetary policies affects financial asset prices in a different way compared to changes in short-term interest rates, and we should be humble about what we claim about understanding the importance of this distinction. For the period ahead, it seems likely that markets will remain focused on vulnerabilities they might have ignored a year ago. The greater premium on strong fundamentals, policy coherence and predictability will likely remain. There will be no one right answer in managing the trade-offs that come with the changed environment, and adjustment will sometimes be difficult. Moreover, we will undoubtedly experience further bumps in the road.

The belief that nonbank FinTech companies will play a significant role in the future financial landscape is well established if we look at investments in fintech industry. The cumulative investments globally have more than ten-doubled the last five years and are estimated to exceed $ the next 3-5 years. This, in addition to changed customer expectation and increased digitalisation, may be the reason why today we are witnessing a trend of stronger cooperation between banks and fintechs, including in the area of innovation labs. The new technologies, such as blockchain and distributed ledger technology, though young and still-evolving, show the potential of restructuring financial industry, even encouraging discussions for cashless society with central bank digital currencies replacing the fiat money and underpinning the proliferation of cryptocurrencies. The cryptocurrencies have registered a spectacular rise – in 2017 their market valuation increased from USD 30 billion to USD 400 billion, and widened, with the rapid increase of “initial coin offerings” – fundraising facility for startup investors. So, are the cryptocurrencies, although unregulated becoming a substitute for fiat money? Are they incorporating the basic features of the fiat money such as being a medium of exchange, store of value and unit of account? Despite the rising trend, they play a marginal role globally as a medium of exchange in comparison with standard payment options; as they are not backed by legal authority and are marked by high value volatility and rather illiquid non-regulated markets, they obviously cannot be treated as unit of account and store of value.