and that is globalization. travelling or shipping goods around the world now takes hours, not days. information and ideas are available simultaneously to anyone who has access to the internet. wireless technology has brought telecommunication to places where phone lines cannot reach. in short, technological advances have allowed markets to expand as never before. in many ways, technology is the enabler of many of the trends leading to globalization, by slashing the costs and the time it takes to reach across borders and continents. today, we ’ re all shopping in the same global village market. consumers and businesses around the world have become the target customers of canadian firms. at the same time, our firms are exposed to new sources of competition and new pressures to innovate. perhaps the most preoccupying element of this trend towards globalization is the emergence of china as an economic powerhouse. and india is not far behind. when you consider that china and india account for 40 per cent of the world ’ s population - and that their economies are growing at annual rates of 9 and 7 per cent, respectively - it is not hard to see why they have such an impact on the global economy. china and india are now major global competitors in labour - intensive industries. increasingly, they ’ re also flexing their muscles in skill - intensive industries. asia ’ s highly efficient production capacity is prompting a transformation of manufacturing and distribution processes around the world. and the skills - based software industry in india is transforming that sector globally. so we ’ re seeing tremendous competitive pressure on industries that are the traditional mainstays of the canadian economy in general and of ontario in particular - such as automobiles and parts, steel, and other manufacturing industries. we ’ re also seeing competitive pressures transform canada ’ s high - tech sector, which has only recently emerged as an engine of growth. but the income and wealth created in china and india are increasing the ability of these countries to buy goods and services from abroad. so, their integration into the global economy represents both a competitive challenge and a tremendous opportunity. these emerging markets are just that - markets. china is already one of the world ’ s largest importers. this growing demand can provide a real boost to the canadian economy, if we gear up to meet the challenge. so, how do we meet those challenges? one way is to integrate low - cost components from other regions of the world into our own production processes, through direct investment or joint ventures. this can help to keep costs down and free up our

##ness, posing a threat to safety and soundness just as innovating recklessly can. the fed supports responsible innovation in a variety of ways, and i will mention a few of them in this discussion. for the past few years, i have been working to assist banks to address the challenges brought by the process of partnering with a third - party service provider. last year, the fed, along with the office of the comptroller of the currency and the federal deposit insurance corporation, proposed interagency guidance to assist in the management of risks involved in third - party engagement. the agencies received over 80 comment letters and are reviewing those comments as we move toward finalizing the guidance. in my view, it is especially helpful to provide clarity for banks in these kinds of relationships and to help them establish a solid 1 / 4 bis central bankers'speeches foundation as banks and fintechs continue to engage in partnerships. last year at this time, the federal banking agencies released a guide designed to assist community banks to assess risks in constructing and considering relationships with fintech companies. and lastly, this past september, the federal reserve published a paper detailing industry perspectives and experiences on the different types of partnerships between community banks and fintech companies. 2 we conducted extensive outreach with community banks, fintechs, and other stakeholders and incorporated real world experiences of the strategic and tactical decisions that led to effective partnerships. for the remainder of my remarks, i will focus on several issues that are likely top of mind for those who are engaged in financial services innovation. crypto - assets let's start with digital and crypto - assets. i am hearing more discussions involving banks'interest in offering services involving crypto - assets. the chatter seems to originate more from those outside the banking industry, but i'll put that aside for now. there seem to be a number of reasons for this interest and why customers might seek to engage in this type of activity. first, although the interest seemed to have cooled lately, given recent developments in the crypto industry, we have seen significant consumer demand for engagement in these types of services. it seems reasonable that because bank customers are aware of crypto and have discussed these assets with their banks, banks want to better understand this type of engagement and potentially provide those services to their customers. second, we have also been told that banks have observed their deposits flowing to nonbank crypto - asset firms and, understandably, would like to stem that outflow by offering the