security features of traditional financial instruments, such as banknotes, paper securities and ledgers, have been to a large extent based on paper - based and printing - related technologies. for example, the security of banknotes is reliant on paperbased anti - counterfeit features such as watermarks and holograms, and bill and check clearing houses were established to facilitate and reduce the burden of their physical delivery. given that the financial service industry has strong characteristics as an “ information industry, ” it is not surprising that innovations in information technology have a particularly large impact on financial services and infrastructures. fmis including payment and bis central bankers ’ speeches settlement systems have been all the more characterized as “ information infrastructures ” for recent developments in information technology. with “ fintech ” developments, which combine finance and information technology, financial services are expanding their frontiers, while new players are venturing into the financial services market. such dynamics are also evidenced by the rich variety of participants attending today ’ s conference. innovations in financial services and fintech have significant potential to bring wide - ranging benefits to the overall economy by expanding also the frontier of economic activities, including e - commerce, sharing economies, big data processing, smart contracts and iot ( internet of things ). at the same time, fintech may also have the potential of drastically reshaping the forms of financial services and financial architecture. traditional financial infrastructure is built around “ centralized ledgers, ” where banks have managed ledgers of deposits and other financial products. on the other hand, “ blockchain ” and “ distributed ledger ” – technologies underpinning digital currencies such as “ bitcoin ” – are considered as enabling to keep ledgers in a de - centralized manner without relying on a trusted third parties to manage ledgers. owing to such characteristics, blockchain and distributed ledger have attracted considerable attention, since international forums are focusing on their potential to be applied to wide - ranging businesses and practices. the application of those technologies would also change the structure of the financial infrastructure that has been built around centralized ledgers managed by trusted third parties. thus, central banks will and have to follow these issues closely and with great interest. fintech has also the potential to unbundle and reconstruct various financial services. for example, there may be payment - related services having substantial synergies with services provided by non - financial businesses such as e - commerce and big data processing. as a result of exploitation of

against fmis including payment and settlement systems, and playing a “ catalyst ” role to facilitate communication among wide - ranging players involved in fmis. under globalization of the economy and technological innovations, more and more transactions and payments are being made across borders and time zones, and more diverse players are now providing payment - related services. one of the challenges for private - sector entities to provide payment services related to global cash management and e - commerce is how to deal with unsettled exposures that arise from time - zone differences and payment operations at night hours and on weekends. central bank money is the solution that would ultimately erase these unsettled exposures through settlement with finality, but providing central bank infrastructure also involves costs. in taking both possible benefits and costs in account, the bank will continue to consider the most appropriate way to provide its central bank accounts and boj - net from both “ time ” ( i. e. operation hours of the boj - net ) and “ space ” ( i. e. eligibility criteria of the bank ’ s accounts ), so as to contribute to the overall economy. besides, banknotes are payment instruments that all the people can use 24 / 7, and under the innovation in information technology, there emerges an issue about whether central banks themselves should provide, in the future, digitalized payment tools that would substitute paper - based banknotes. indeed, some central banks have recently mentioned the possibility of central banks ’ issuing digital currencies, and there are arguments that central banks ’ digital currencies would be similar to the provision of central bank accounts not only to financial institutions but also to the general public. 2 the bank does not have a specific plan to issue digital currencies at this stage, but will deepen its research and analytical activities so as to understand the impact of technological innovations, fintech and distributed ledger on financial architectures and fmis while keeping all options open, including the possibility of the bank ’ s utilizing such advanced technologies in its own operations in future. moreover, taking into account the importance of the people ’ s “ trust ” towards financial services and fmis, the fact that the japanese financial system has maintained its stability during the recent global financial crisis could be a great advantage in developing innovative financial services in japan. on the other hand, as access to financial services expands through internet and mobile devices, new types of threats to financial systems and infrastructures, such as hacking and cyber - attacks, are gaining prominence. in order