to promote the introduction of more efficient cross - sector procedures. market participants should not focus exclusively on the lucrative trading aspect of future innovations, but they must also speed up the development of convincing solutions for the processing of these new transactions. otherwise, financial stability will be jeopardised. financial market infrastructures and banks increasingly share roles differentiating between traditional financial market infrastructures and banks – which was straightforward 20 years ago – is becoming increasingly difficult. on the one hand, the major international banks, in particular, provide services that one would normally allocate to financial market infrastructures. for instance, their customer base is so large that it is possible for them to conclude and settle trade orders outside the stock exchange. the same holds true for the settlement of payment transactions : the larger a bank, the more payments it can settle directly through its own systems. these ‘ in - house systems ’ compete with the actual interbank payment system, especially if the banks ’ customers are banks themselves. on the other hand, operators of financial market infrastructures are expanding into the core business of banks. for example, a number of central securities depositories and their participants are providing loans and liquidity facilities. although this is done primarily to facilitate the settlement of securities transactions, the line of demarcation from traditional financial intermediation is becoming increasingly blurred. also, by granting remote access or by establishing more efficient connections between the individual central securities depositories, they are offering serious competition to the traditional custodians. technological progress has been the driving force behind this blurring of roles between financial market infrastructures and banks. technology has enabled large banks to break into the operational field of infrastructure operators without much additional expenditure. indeed, they have been virtually obliged to do so, in order to utilise their it platforms to full capacity and to run them efficiently. on the demand side, the smaller financial institutions also benefit. as they outsource their back office functions to larger banks or specialised institutions, they can better focus on their core business. the infrastructure operators, in turn, are finding themselves in a situation where hardly anyone is willing to pay for traditional transaction services that have taken on a commodity character. consequently, they are diversifying and providing services that generate a higher added value. those infrastructure operators that are organised as profit - oriented public companies, in particular, are likely to further intensify competition with the banks in the future. this development is confronting the regulators with new challenges. many supervisory and oversight

weighted heavily in all responses. active responsibility for it, and through intentional public policy to reduce the financial risk to the government. a philosophy which stresses that bahamian households should prudently manage their finances over a life time perspective is important — especially with mounting climate change vulnerabilities. just as in the case of the government, the household ’ s approach to savings should allow families to insure better against the setbacks from natural disasters. insurance has to factor into the cost of housing, just as should tax and other maintenance obligations. a part of the solution is accepting downsized housing, for which families can more fully afford the insurance. we must also be able to afford more resilient physical dwellings. aside, from being cautious about the coastline, it could mean more acceptance of multi - family condominium style structures, built more elevated and able to withstand higher winds forces than singlefamily housing. accepting the premise that some families are not going to be voluntarily disciplined then public policy would have to cause the insurance to be secured. this speaks to taxpayer funding on some direct level. having savings buffers also means that our families have to be more conservative about their debt levels in ordinary times. even with the relaxed position that local lending institutions are now taking to accommodate borrowers after the recent storm, there will be some families who are be unable to take on more debt to finance necessary home repairs or to replace lost assets. again, this means more scrutiny of the expenditure levels that families take on in ordinary times. the policy intervention from the central bank side would lean towards tighter lending standards for households that are not yet in distress. at the national level, regulation on lending standards will also need to reflect uniformity across entities that are not supervised by the central bank. it is a macroprudential concern — meaning that it could undermine the stability of the financial system in a general sense, if left untreated. in the extreme, it could affect how the economy in the aggregate is able bounce back from natural disasters. the central bank ’ s medium - term approach will be to also explore how the incidences of under - insurance on mortgaged properties could be suppressed. the financial distress from underinsurance can be particularly acute when debt survives that has to be repaid, despite major loss of the physical assets. for the business sector, affordable bridge financing will also have to be in greater abundance post - natural disasters. the central bank is already committed to studying this issue of how even