. let me now give you some concrete examples of why fintech is directly relevant to our tasks. a deep knowledge of the channels through which monetary policy affects the economy is of crucial importance to us. as fintech, and financial innovation more broadly, have the potential to impact the way the economy is financed, in the future they may affect the transmission mechanism of monetary policy and ultimately financing conditions. as the central bank for the euro area, we thus remain vigilant and make sure that changes in the financial landscape are closely tracked. as central bank of issue for the euro, the ecb and the eurosystem also have a statutory interest in the safety and efficiency of payment systems and market infrastructures. one of the most active fields of fintech innovation which might affect the processing of payments and securities is that of distributed ledger technologies ( dlts ), such as the blockchain. 2 given the rapid pace of development in this field, there is a need to constantly monitor and assess potential new or more pronounced risks resulting from the application of new technology such as dlts to payment, clearing and settlement infrastructures in particular. one such possible risk is an increase in market fragmentation if different dlt approaches were to become firmly established in parallel in different member states. moreover, the eurosystem oversight framework has to remain effective if we are to discharge our responsibility in this new environment. and the eurosystem will of course continue to act in accordance with its mandate to promote the smooth operation of payment systems. 3 fintech also gives the financial sector, more generally, a chance to provide more efficient and effective services to households and companies. fintech can, for instance, make it easier for 2 / 4 bis central bankers'speeches banks to adjust their business models, cut costs and exploit new business opportunities. fintech companies can also complement the lending capacity of banks by acting as an additional channel for accessing credit, for instance through peer - to - peer lending platforms. this may in turn help to reduce the macroeconomic fallout from disruptions in the provision of bank credit to households and firms, including smaller ones. 4 at the same time, the increasing relevance of non - banks and digital innovation in the provision of financial services may also harbour new risks. it is, for instance, essential to assess and adapt the prudential framework to cater for the increased role of non - banks and financial innovation, ensure the existence of a level playing field for both new and existing players and provide supervisors

bonds to cover losses in the financial system. today, the thai bond market is therefore much larger, at 38 % of the gdp. we have a much more active market. what does an active bond market mean to monetary policy? i will highlight three points. first is the implication on transmission mechanism. when the central bank wants to change stance in monetary policy, it changes interest rate up or down. but it does not directly change the interest rates along the whole spectrum of the yield curve. it only affects the key policy rate, which in the case of thailand is the very short - term 14 day rate in the repurchase market. however, to have an impact on the real economy, there must be a way to transmit this signal all the way to the financial activities that determine economic transactions, such as business capital formation, household consumption and savings. the traditional channel is through commercial banks. and now we have another channel through the corporate bond market. this channel is poised to grow more rapidly in the future. the second aspect is that central bank also operates in the government bond market in its conduct of monetary policy. it can sell and buy bonds to pump money in or out of the system, through their open market operations. an efficient, deep and liquid bond market therefore will not only help make the intermediation process competitive and active - but also allow the central bank to transact in the market more effectively. the third aspect is the function of the bond market in managing the capital flows. emerging market economies when they are successful tend to attract capital inflow very quickly, and in very large quantity. unfortunately, if things turn bad, the outflow of capital can also be equally quick and in as large a quantity. how can one better manage this volatile capital flow? to some extent, i think the risks can be mitigated with a well functioning bond market. if we can make it function as a temporary reservoir to store the incoming water, and more slowly releasing it to the various users of fund within the country, at the right pace for absorption - if the market selection process can be made such that only the projects with really viable, economic prospects are granted the fund - and, if the foreign owners of fund can be persuaded to hold the instruments denominated in borrowers ’ own currency, thereby shifting the position on the foreign exchange risks from the borrowers to the investors, then the bond market can be a safer channel for capital flows than the commercial banks. at this point