arab # fintex symposium – h. e. governor opening remarks honored guests, ladies and gentlemen, good morning, and welcome to this symposium on blockchain and financial inclusion. i think we can all agree that fintech is radically changing the financial sector. rapid advances in digital technology, from artificial intelligence, cryptography to distributed legder technology are already revolutionizing the way financial services are provided. this ranges from the ( 1 ) collection and processing of financial information, ( 2 ) the way saving and borrowing is executed, ( 3 ) the channels for payment of goods, and ( 4 ) money transfers between wallets and accounts, both domestically and across borders. fintech companies are increasingly offering technology - enabled solutions that can better address customer needs and preferences by offering enhanced accessibility, convenience and tailored products. by responding to consumer needs for security, trust, privacy and lower cost services, the fintech industry is poised to affect an array of financial services in a big way. more widely, i believe that fintech has the potential to enhance financial inclusion and unlocking smes and microenterprise ’ access to financing. this is a critical aspect in driving private sector growth and further economic diversification across many countries, including the uae. however, as exciting as these developments are, as a central bank we must always be mindful of our primary goal of maintaining both the safety and soundness of the banking system, and adequate levels of consumer protection. and to that end fintech presents both challenges and opportunities for consumers, financial service providers and regulators alike. the central bank ( cbuae ) is currently in the process of developing a fintech roadmap that aims to build upon the many successes of the uae fintech ecosystem, and to cohesively deploy more balanced regulatory and development initiatives to ensure a healthy and sustainable fintech ecosystem in the long term. this roadmap will be underpinned by a balanced regulatory framework that protects consumers and maintains institutional safety and soundness on the one hand, but does not stifle innovation on the other. at the same time, we must find 1 | page ways to ensure that supporting public and financial infrastructures are put in place within the ecosystem for sustainable innovation to flourish. as a strong advocate towards the uae ’ s innovation and fintech agenda, the cbuae has developed and launched multiple initiatives to help advance applications of technological innovation that will collectively benefit every stakeholder in the uae economy. allow me to name a few :

changed in a significant way drawing lessons from the crisis. before i expound on the revamped approach to regulation and supervision in the post crisis world, let me step back a little and briefly touch upon the genesis of crisis. this not only helps in putting things in perspective, but as we deliberate on the reasons underlying the crisis, the solutions would automatically flow. the genesis several factors were responsible for the crisis. however, at the core of the crisis was the inadequate understanding and measurement of risks and funding of assets with shorter term liabilities on a large scale. there was aggressive easing of monetary policy in the us after the bursting of dotcom bubble leading to very low interest rates. the long term yields in the us were also depressed on the back of global imbalances as the huge reserves built by bis central bankers ’ speeches countries, specifically china, found their way back to the us treasuries. an era of great moderation followed : there was steady growth in advanced economies and accelerated growth in emerging market economies along with low and stable inflation. this resulted in policy makers believing that they had found the holy grail of high growth with low inflation. underlying this belief was the notion that markets had become mature and sophisticated and had the wherewithal to distribute risks and provide efficient hedging instruments to those who needed. low interest rates triggered a massive search for yield which led to financial innovation that was socially suboptimal. the innovation was aided by the progress in quantitative finance and modelling and technological developments. while we cannot disregard the utility of financial models – they are certainly very useful – overreliance on such models proved to be disastrous. the financial models, in contrast with the models used in physics, are not governed by immutable laws of nature but by the human behaviour – the herd mentality, irrational exuberance and pessimism, greed and fear, which cannot be modelled with any accuracy. hence, these limitations need to be factored in while using the models. low interest rates prior to the crisis enabled build up of leverage. in fact, if we observe closely, leverage happens to be the major contributing factor to most crises. let me explain in brief. when times are good, there is a feel good factor, there is plenty of liquidity which is cheap, the asset values and collateral values are high and the banking system losses are low, leading to lower provisioning and lower capital requirements. these factors lead to higher demand for credit from the households