including the major oil exporters, has broader consequences for the world economy as a whole. insufficiently flexible exchange rate regimes have the potential to alter the pattern of capital flows and the price of financial assets. so do the increase in the mobility of saving and investment ; the increase in the desired exposure to foreign assets ( the reduction in home bias ) ; the financial market innovation that allows for better diversification and risk sharing ; and the differentials in the pace of technology adoption or workplace practices that give rise to varying productivity trends across countries. these all contribute to the patterns of capital flows and imbalances that we observe in the world today, and it is very hard to disentangle their effects from those of exchange rate and monetary policy arrangements. that some of the forces governing capital flows and asset values are driven not by market - determined expected return but by policy measures directed at, for example, an exchange rate objective means that at least some of what we observe in global capital markets may be attributed to these distortions. the fact that official purchases of financial assets are determined by different factors than those influencing private investors suggests that we would probably see a somewhat different combination of capital flows, exchange rates and interest rates in the absence of official intervention. to the extent that the factors affecting capital flows act to raise asset prices, lower interest rates and reduce risk premiums, it is harder for the markets to assess how much of the currently very favorable conditions are likely to reflect fundamentals and prove more durable. if the prevailing patterns of capital flows were to exert downward pressure on interest rates and upward pressure on other asset prices, they would contribute to more expansionary financial conditions than would otherwise be the case. among other things, this outcome complicates our ability to assess the present stance of monetary policy. it can change how monetary policy affects overall financial conditions and the economy as a whole. such complications can mask the effect of other forces that might otherwise find expression in risk premiums or interest rates : forces, for example, associated with the concern about fiscal sustainability in the united states or the sustainability of our external imbalances. moreover, the policies that have played an important role in this pattern of global capital flows are already in the process of evolution, thus adding still further to the considerable degree of uncertainty we face about the longer - term outlook for the economy. in today ’ s rapidly evolving global economy, monetary policy makers cannot ignore the international dimension. as economies become more open, external developments inevitably affect

financial innovation on the one hand and addressing challenges to market and financial integrity, consumer protection, and financial stability on the other. this balance is critical to deliver the welfare benefits of financial innovation and avoid stalling the development of digital finance with the risk of leaving someone behind. i look forward to the presentations and discussions by the participants at the conference that i am sure will provide interesting reflections on the abovementioned challenges casting light on the fast changing financial innovation landscape, especially in the payments area. i wish all of you an enjoyable and rewarding conference in ohrid, our charming city, protected by unesco for its natural and cultural heritage. thank you! 1 the pulse of fintech 2018 : biannual global analysis of investment in fintech, 2019, kpmg, assets. kpmg / content / dam / kpmg / xx / pdf / 2019 / 02 / the - pulse - of - fintech - 2018. pdf 2 the future of banking is open : how to seize the open banking opportunity, 2018, pricewaterhousecoopers llp, retailbankinginnovation. fintecnet. com / uploads / 2 / 4 / 3 / 8 / 24384857 / the _ future _ of _ banking _ is _ open. pdf 4 / 4 bis central bankers'speeches