, there are also risks involved in continued low interest rates. if the continuation of low interest rates leads to a substantial rise in long - term interest rates by raising inflation expectations or by generating expectations for a weak dollar, this may give rise to another problem, namely that the fiscal burden increases and in turn the need for adjustments in the government's balance - sheet arises. effects resulting from different sectors making balance - sheet adjustments the difference between the united states and japan in terms of what sectors have to or had to make balance - sheet adjustments can result in considerable differences not only in income transfer effects, but also in the adjustment process. in the case of japan, since it was mainly the corporate sector that had to make balance - sheet adjustments, progress in the adjustment process for the economy overall was achieved through an increase in exports owing to high global economic growth. however, at present, it is difficult for the united states to expect similar help from a substantial rise in its exports, because other advanced economies are also, to a greater or lesser extent, undergoing balance - sheet adjustments. an additional problem is that employees'income has declined more substantially than in previous recessions in the united states. while this may help the recovery in corporate profits, it at the same time entails the risk of a delay in balance - sheet adjustments by households. having said that, i must hastily add that there are elements in the structure of the u. s. economy that will encourage rapid progress in balance - sheet adjustments. the size of necessary balance - sheet adjustments depends on the size of the excess in supply capacity in the overall economy relative to the long - term equilibrium growth rate – that is, the potential growth rate. if expectations for economic growth are high, pressures for balance - sheet adjustments will be small. in this context, the united states has the significant advantage of having a flexible economic structure. if labor and capital shift swiftly from low - productivity sectors to high - productivity sectors, this should sustain high productivity growth in the economy overall. in contrast, reflecting population aging and a falling birth rate, the growth rate of japan's working - age population first declined and then turned negative during the 1990s. moreover, labor and capital mobility was relatively low, which was partly responsible for the gradual decline in productivity growth in the economy overall. as a result, japan's potential growth rate after the bubble burst declined, which protracted the duration of balance sheet adjustments. iii. balance - sheet adjustments and the global economy lastly

non - conforming disruptors. for too long, banks thought their competitors are their fellow bankers ; then they accepted the other financial institutions as their competitors. they always thought the technology companies are their enablers ; with their help, the banks have been differentiating themselves from the rest of the crowd. the banks never thought the technology companies will be their direct competitors. i have been sounding way back in early 2000s itself about this possibility ; i used to say in this very platform that banking knowledge is no longer with the bankers and it is with the techies. the techies have now grown as fin - tech companies and are emerging as the direct competitors in the identified chunks of banking businesses ; technology has today dissected the entire value chain of banking and finance and bundled out the chunks in innovative ways that it is they who intermediate between savers and investors, or between sender and receiver of funds. banks need to handle them carefully without inhibiting innovations ; banks have to find ways to cooperate, co - opt and compete with the fin - tech companies. 9. actually, these fin - tech innovations are knocking at the doors of competition for central banks as well. we have all along been maintaining that there is no competitor to central banks for issuing currency. but this is being challenged by the developments with regard to e - currency. however, i still maintain, as i did way back in 2001, that e - currency is no substitute for currency ; if at all, it can only be a better alternative to any other payment instrument. but, researchers and innovators on the field are and will be continuing their attempt to develop an e - currency. despite my misgiving about is success, i do support research on this subject. 10. fourth is the payment revolution engineered by technology. one of the major beneficiaries of the large scale use of it in the banking industry is payment systems. india can now boast of having perhaps the world ’ s best and state - of - the - art payment and settlement systems ; and it is handling ever increasing volumes. while it is satisfying to note that there are new initiatives in payment systems aimed at providing better customer comfort, it is also essential to ensure that these systems are safe and result in overall efficiencies including reduced costs to the common man. how to take full advantage the payment revolution is a challenge. 11. fifth are the varied choices of technology for financial inclusion. financial inclusion is an achievable reality, and