leila matroos - lasten : central banks should emerge as innovation leaders opening speech delivered by mrs leila matroos - lasten, acting president of the central bank of curacao and sint maarten, on the occasion of the bridging financial innovation and regulation seminar, willemstad, 29 june 2018. * * * the minister of finance of curacao, mr. kenneth gijsbertha distinguished guests, ladies and gentlemen, good morning. it gives me great pleasure to welcome you all, and in particular, our guests coming from abroad, to the second day of the bridging financial innovation and regulation seminar, hosted by the centrale bank van curacao en sint maarten ( cbcs ). the topic of this seminar is one that most central bankers are currently struggling with nowadays : how is the digital revolution affecting the financial system? what is the impact on consumers, the economy, and on central banks themselves? as i noted yesterday, the central bank of the monetary union of curacao and sint maarten is responsible for, amongst other things, promoting a sound and efficient functioning of the financial system in curacao and sint maarten. this is why the main focus of today ’ s session is on financial innovation, the rise of fintechs, and the regulatory challenges that regulators are facing in this new era. fintechs are innovative financial technology firms with the capacity to provide a variety of financial services that can include enhanced benefits such as lower transaction costs, a more efficient financial intermediation process, and better access to financial services for a larger section of the society. however, fintechs also can present potential problems. recently, the general manager of the bank of international settlements ( bis ), agustin carstens 1, stated that ” financial authorities may not clearly understand the risks attached to some of the services being offered by fintechs, leading to unforeseen accidents and then delays in the adoption of financial innovations ”. therefore, the challenge for central banks is to ensure that the fintech industry progresses in a way that maximizes the opportunities and minimizes the risks for society. ladies and gentleman, regulators are currently searching for ways to safeguard their financial system while exploiting the benefits of fintechs. in fact, numerous agencies are piloting new approaches based on technological solutions developed by two subsets of fintech : regtech and suptech. important business opportunities arise for

risk – for example, the long - term interest - rate risk posed by 30 - year fixed - rate mortgages. it is also difficult for investors who do not do the underwriting themselves to take long - term idiosyncratic credit risk. securitization backed by a predictable level of government support has a useful function in facilitating the allocation of these different risks to different sets of investors through the to - be - announced or “ tba ” market. i think the tba market will be key to ensuring americans ’ continued widespread access to the 30 - year fixed - rate mortgage. the tba market is also important to the role of small banks and lending institutions in a competitive housing finance system. ensuring an easy, predictable path to securitization of standardized mortgage products is essential to making mortgage credit available throughout our country – in traditionally underserved rural areas and urban areas, and to all sorts of current and potential homeowners, provided by financial institutions of different sizes in different locations. a strong regulator whose primary focus is the housing finance system can also help ensure fair access to smaller institutions. in summary, it is my personal belief that housing finance reform must incorporate an explicit government backstop accompanied by significant sources of high - quality first - loss private capital. thank you for the opportunity to appear before you today. i look forward to your questions. bis central bankers ’ speeches