to - distribute models can lead to information asymmetries, incentive problems and financial instability – as we painfully learned from the mortgage lending that led to the subprime crisis. another type of fintech is the so - called peer - to - peer lender, which offers credit services in a fundamentally different way to banks in that the services are unbundled. electronic platforms typically match borrowers and investors without taking on balance sheet risks and generate fee revenue rather than net interest. technological innovation may enable lending platforms to become more efficient and more targeted in terms of how they intermediate between borrowers and lenders and thus put pressure on incumbent banks. still, i would argue that, until lending platforms can replicate the benefits of intermediation, they will not meaningfully challenge the role of banks in the economy. i see two main reasons for this : 1. lending platforms are unable to perform liquidity transformation on a significant scale – that is, to provide short - term liquidity services for depositors and long - term loans for borrowers. 2. lending platforms are less resilient during shocks, being more prone to funding freezes and swings in credit risk appetite than banks, as at this stage they are small and not diversified. 7 also, banks have both insured deposits, which contain depositor runs, and higher levels of capital, which supports lending during downturns. 2 / 4 bis central bankers'speeches for these reasons, lending platforms are currently unlikely to threaten banks ’ market position in lending. still, these developments should be continuously monitored. fintechs are changing the payments landscape fintech has had a more pronounced impact in the payments market, where firms have expanded their presence in non - capital intensive business such as cross - border transfers, micropayments and card payments because those are the areas where the incumbents have accumulated the most glaring shortcomings, often resulting in inefficient and overpriced products. this is affecting the payments landscape. in a european banking authority survey, a majority of incumbent banks indicated that payments is the business area most affected by fintech competition, eroding fees and commission income. 8 in response, many banks have begun to adjust their strategies by investing more in technology and partnering up with fintechs. the emerging competition is welcome and may bring lasting social benefits to customers in terms of efficiency gains, increased choice and more resilient payment systems. but our role is to ensure not only efficiency, but

since fy01 and tariff bands have been reduced from 42 to 4. almost half of the imports enjoy zero to 5 % tariff and the simple average tariff is now only 8. 5 % on dutiable & exempt imports taken together and the sro regime has been reduced to a bare minimum. the trade policy aims to promote exports, which despite reaching $ 16. 5 billion in fy06 relative to averages of $ 7 - 8 billion over early fy00, have to make more inroads to raise their share in world markets. pakistan is launching a stronger drive to revive its exports which can only grow on a sustainable basis if there is ( i ) sufficient surplus to export, ( ii ) if there is product, sector and geographical diversification combined with value addition through capacity building and enhancement, ( iii ) textile industry which contributes close to 60 % of export earnings positions, repositions itself to withstand new competitive forces emerging in the post quota regime, and ( iv ) the cost of infrastructure, which is still suffering from bottlenecks, is improved. medium term economic prospects and challenges high growth rates can be sustained. pakistan being at the crossroads of one of the ancient trade routes of the world and being richly endowed with natural resources has enormous potential and has shown increased resilience to withstand economic shocks both domestic and external. the economy is set to grow at around 7 % in fy07. in fy06, despite set backs to agriculture and the industrial sector, the buoyancy in the services sector helped real gdp to grow by 6. 6 %. structural changes underlying the real sectors, albeit slow, are emerging. in agriculture, it is worth mentioning that pakistan attained self sufficiency in major crops a long time back. notwithstanding, disruptions in production are inevitable given the uncertain weather conditions as well as low yields which require far reaching efforts in research and extension and appropriate use of inputs that have benefited from the rise in agriculture credit and fertilizer input use. more exploitation of water resources is critical to ensure timely supplies of water. in agriculture, significance of livestock, poultry and dairy products is visible and encouraging. the former accounts for 46. 8 % ( fy05 ) of agricultural value added and about 10. 7 % of the gdp, while providing livelihood to one third of the population, and the latter produces 28 billion liters of milk a year, whose value is more than that of the combined value of wheat and cotton.