risks. the interaction between regulation and innovation is a two - way street. it is not just that change in the financial sector will impact the way regulatory bodies implement regulations, but also that the regulatory framework will affect the speed and direction of transformation in the financial sector. thus, a sound regulatory framework is imperative for private services providers to develop secure and efficient financial services and for authorities to keep the confidence of user in the regular functioning of the financial system. regulators who are not willing to embrace ( regulatory ) innovation are at risk of being left out of the potential advantages and benefits of the current financial revolution. if that happens, then the emerging fintech financial services sector may not be able to develop its technology further, and businesses and households will be deprived of the benefit of the technological revolution. furthermore, financial services can migrate to the less - regulated parts of the financial system. allowing risk to build up in an unregulated sector may impair financial stability in the long run and reverse all the progress that has been achieved in the past. closing remarks ladies and gentlemen, to bridge regulation with financial innovation, we first need to understand innovation and how technological advances can aid regulation and vice versa. regulation should not stifle creativity, innovation, and technological advances that can aid our markets and market participants. new technologies entail new types of risks. although risk related to cyberattacks and data theft is what first comes to mind, authorities also have to recognize the risks that financial innovations pose to the stability of the financial system as a whole. finding the right balance between facilitating innovation and ensuring financial stability and consumer protection is an inherently difficult task. unfortunately, no quick fix exists. innovation and technology are transforming and reshaping the existing financial system in a way we still do not fully comprehend. therefore, bridging regulation with financial innovation requires central banks to emerge as innovation leaders. ladies and gentlemen, let me conclude by emphasizing that the main asset of a central bank 2 / 3 bis central bankers'speeches today is not the cash stored in the vaults, but the trust of the public. recognizing the fintech revolution and adapting to continue to meet regulatory objectives, ensures that financial innovation can contribute to economic stability and social welfare. only by doing can central banks remain worthy of the public ’ s trust. i thank you for your attention and wish you a fruitful second day at the conference. 1 banker to central bankers – interview with mr agustin carstens, general manager of the bis, conducted by

be used by the supervised institutions to identify and report unusual transactions to the financial intelligence unit ( mot ). our commitment to deter and detect money laundering and terrorist financing amongst supervised institutions, has also been recognized and highlighted by the imf. in its final report issued in february 2004 on the former netherlands antilles, the imf concluded on page 7 of its report that : ( quote ) “ overall the legal and institutional framework for financial supervision meets high standards. it is comprehensive, effective, and to a great extent in line with international standards. the central bank ’ s staff is highly capable, well trained and dedicated, … ….. to perform its functions ” ( end quote ). nonetheless, the central bank realized the importance of not becoming complacent. the bank has continued to intensify its efforts by taking the necessary measures to further strengthen its supervisory regime by continuously upgrade the aml & cft requirements in line with international standards. you will certainly hear more about these efforts during your visit. bis central bankers ’ speeches to conclude, i would to say that significant progress has been made in our jurisdiction over the past years in the fight against money laundering and terrorist financing. it is therefore imperative for the market participants to continue to work closely with us and other competent authorities to combat money laundering and terrorist financing. the central bank is in that respect striving to constantly promote a compliance framework that ensures the soundness and stability of our financial sector and to promote an effective compliance environment that not only deter problems, but also detect problems at an early stage. we are committed to continue to promote an aml & cft regime that is dynamic and constantly adapting to international standards. we wish you all the best with your assessment and want you to know that our staff is available to provide you with any information you need concerning our activities and to answer any inquiry you may have. once again thank you for your support and your commitment to combating money laundering and terrorist financing in the caribbean region. bis central bankers ’ speeches