a grinding halt, leaving governments and businesses scrambling to stay afloat. central banks in the region had to take swift action to ensure liquidity in the financial system, lower interest rates, and support government stimulus efforts. but the pandemic highlighted an ongoing challenge : our financial systems are vulnerable to global crises, and the lack of diversified economies in the region makes recovery more difficult. regulators must therefore constantly balance the need to maintain stability, while responding to these shocks in an agile and effective manner. navigating the new financial landscape but this is not the only challenge facing us as regulators, as the financial landscape is also evolving rapidly. the rise of fintech, digital currencies, and shadow banking, has created new opportunities for financial inclusion and innovation. however, it also presents new risks. digital currencies, while offering the potential for greater financial inclusion, bring concerns about regulatory oversight, cybersecurity, and monetary policy 2 / 6 bis - central bankers'speeches transmission. caribbean countries have been the pioneers in developing digital currency frameworks, but it still requires careful consideration of the impact on financial stability. shadow banks – non - bank financial intermediaries that provide similar services as traditional banks – such as payday lenders or firms offering " buy now, pay later " options for buyers, are another concern. given that these entities generally operate outside the regular regulatory framework, they are often opaque, and central banks may lack the tools to properly oversee their activities. they can, therefore, pose systemic risks without the safeguards that apply to the formal financial sector. if these institutions fail, the resulting financial contagion could spread quickly throughout the economy. developing effective regulatory frameworks for shadow banks is therefore critical to ensuring financial stability in our region. the value of financial stability reports it is against this backdrop that caribbean central banks face the herculean task of monitoring, assessing, and mitigating these risks. one of the key tools at their disposal is macroprudential policy, which is still in its initial stage of implementation in most caribbean economies. however, central banks have made significant improvements in communicating the risks to the public via their financial stability reports ( fsr ). these fsrs, as you all know, provide a comprehensive assessment of the financial system's health and highlight any emerging vulnerabilities. however, preparing a comprehensive fsr is a very challenging exercise, especially in the caribbean context. one of the most significant challenges is the lack of

developed new guidelines for economic interaction within a market environment. new trends in regulation are seeing a shift from prescribing detailed rules and regulations to a focus on identifying risks at the system level, and on ensuring that individual banking institutions have the necessary capacity in terms of internal controls and systems to undertake and manage risks. this was further emphasised by international regulators who pushed greater oversight of the non - banking sector and more anti - money laundering vigilance. while there has been increased financial consolidation, up to now this has not affected the conduct nor the effectiveness of monetary policy. however, the central bank remains alert to the possibility that consolidation can affect the competitiveness of financial markets, and is conscious of the need to continuously monitor the transmission mechanisms with a view to evaluating their impact on policy effectiveness. traditional banks face increased competition from new financial service providers as well as new foreign entrants and new technologies for conducting traditional operations in more efficient and effective ways also drive change. a number of firms have sought to increase the use of technologically assisted modes of transacting business, such as internet and telephone banking. there is widespread acceptance of credit and debit cards and many merchants now have point - of - sale outlets to facilitate the use of varying types of cards. in addition, new technologies, along with the demand for ebusiness, continue to lead to important changes in financial support systems. the major domestic banks and financial institutions have made significant investments in technology and the cost of keeping up has become quite onerous. some have entered into alliances with hightechnology firms to control the cost of information technology data - processing and this pooling may be a trend which we may continue to observe. at the level of marketing, some banks have also targeted growth areas, such as corporate and investment banking and have made inroads to the bond market. changes have also been driven by the new emerging regional economic opportunities and changing customer demands. high performance of the industry requires that the banking institutions increasingly offer greater product differentiation and value - added services. i expect that in the very near future such demands will require resources to be directed to new areas of research and development in the search for a wider range of structured and customised products. indeed, there has been evidence of growing consumer involvement in product development and delivery as customers are demanding greater service quality and product offerings. the central bank itself started in 2004 a series of seminars on new financial instruments and proposes to continue this in 2005. capacity building and infrast