management framework, using the experience of 2013 and the first half of 2014 as an illustration. but the events of the last six months have illustrated these points even more vividly. the bank has been setting policy with a view to balancing the risks facing both the outlook for returning inflation sustainably to its target, and the risks to financial stability such as those posed by the indebtedness of canadian households. the sudden drop in global oil prices has increased both risks. the oil - price shock is an important setback in our progress toward full capacity, full employment and stable inflation because it is a net negative for economic growth. and because lower oil prices mean lower canadian income, the shock will worsen the debt - to - income ratio of canadian households, thereby increasing financial stability risks. our decision to lower the policy interest rate last month was intended to take out some insurance against both sets of risks. it gives us greater confidence that we can get back to full capacity and stable inflation by the end of 2016, instead of sometime in 2017, and it will cushion the decline in income and employment, as well as the rise in the debt - to - income ratio, that lower oil prices will bring. using the term “ insurance ” underscores that we are in a very uncertain setting, and what we are trying to do is to manage the risks we face, not eliminate them – we are not in a position to engineer the perfect outcome. the negative effects of lower oil prices hit the economy right away, and the various positives – more exports because of a stronger u. s. economy and a lower dollar, and more consumption spending as households spend less on fuel – will arrive only gradually, and are of uncertain size. plus, the oil price shock itself is of uncertain bis central bankers ’ speeches size. so, the downside risk insurance from the interest rate cut buys us some time to see how the economy actually responds. as you can tell, it ’ s an exciting time to be a central banker. monetary policy - making is evolving in real time and, as i have argued, is deserving of true reinvention. we need to develop a monetary policy framework that integrates inflation risks and financial stability risks, both statically and dynamically, and captures much more accurately the uncertainties we face – in short, a true synthesis that takes full account of the lessons of the past, both new and old. let ’ s get to it. bis central bankers ’ speeches

of work in this area. today i will explore three points with you that frame our thinking on the issues. first, fintech has the potential to transform the financial system across a broad range of services. and that is a good thing, because there is a lot of inefficiency that can be shed. second, although some of the technology may be revolutionary, its overall effect on the financial system is likely to be evolutionary. financial institutions that adapt will survive, and see, for example, d. tapscott and a. tapscott, blockchain revolution : how the technology behind bitcoin is changing money, business, and the world ( new york : portfolio, 2016 ) ; mark walport, distributed ledger technology : beyond block chain ( london : government office for science, 2016 ). omers ventures, “ canadian next - gen financial technologies & services, ” september 2015. this is about five times the $ 4 billion that was invested two years earlier. see r. ghose et al., “ digital disruption – how fintech is forcing banking to a tipping point, ” citigroup inc., march 2016. bis central bankers ’ speeches new service providers will become part of the financial ecosystem. in some areas, this evolution is happening fast, while in others, the most transformative technologies still have developmental hurdles to clear. finally, now is the time for financial institutions, new entrants and policy - makers to work together. that is the best way to create the right environment for modernizing the financial sector and sensibly managing the risks that arise. this applies to many areas. for the bank, the focus is on preserving financial stability and maintaining the safe and sound operation of core payment systems in canada. change is in the air my first point is that change is definitely in the air. in many cases, financial innovations are simply interesting twists on existing technologies and business models. they promise to lower costs, improve services and broaden access. peer - to - peer lending is one example. as we have already seen with the taxi and hotel industries, peer - to - peer services challenge traditional intermediaries. this new competition could fundamentally change the relationship that traditional financial institutions have with their customers. from a regulatory perspective, the main issues relate to consumer protection, market integrity and rules that guard against money laundering and terrorism financing. authorities are working to close significant gaps in these areas and are monitoring implications for financial stability. then we have financial services enabled