also a resource, a scarce resource. hence, the marketization of interest rate is very important, and the rmb interest rate, which is determined by the supply - demand relationship of the market, must not be distorted. only in this way can the resources be allocated in a marketbased manner. the interest rate shaped by the supply - demand relationship also reflects risk premium. if your risk is relatively high, then the market will require a higher interest rate. by contrast, if your risk is relatively low, then your risk premium will be low as well, which enables you to borrow at a lower interest rate. there is profound knowledge in market allocation of funds. regulation tools are necessary in achieving the goal of monetary policy. the tool system of china ’ s monetary policy is relatively simple. first of all, there is open market operations ( omo ) for injecting or withdrawing liquidity ; second, the pbc can adjust money supply with central bank lending and central bank discount ; third, depository financial institutions can be required to park deposit reserves in the pbc ; additionally, we can also supply liquidity to the market with the medium - term lending facility ( mlf ), the standing lending facility ( slf ) and other tools. just now i mentioned marketization of the interest rate. you may have heard a phrase called “ interest rate corridor ”. the central bank can adjust and control the interest rate between a floor and a ceiling level, which is called “ interest rate corridor ”. in the times of planned economy, loan quotas were set and resources allocated through administrative measures. after that, commercial banks came into existence, the planned economy was replaced by market economy, and the interest rate determined by market supply and demand came among. at this point, an important question is, “ what is the appropriate level of the interest rate? ” we can see that central banks in various countries all concentrate on the adjustment and control of the interest rate. the federal reserve mainly regulates the federal funds rate by adjusting it to a level deemed as appropriate, which will then affect the interest rates on deposits, loans and treasury bonds and thus forming market interest rates. at present, the focus of china ’ s monetary policy is gradually shifting from quantity control to price control. you may ask, “ currently what is on earth the focus of the pbc, quantity control or price control? ” my answer is, we are in a transition from quantity to price control, and both tools are employed

andreas dombret : statement at the workshop on " digital finance regulatory challenges " statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the g20 conference " digitising finance, financial inclusion and financial literacy ", wiesbaden, 26 january 2017. * * * mr von weizsacker, ladies and gentlemen, for a first approach when talking about regulatory challenges in the age if digitalisation in finance, i would like to consider three aspects of financial technology and regulation : first, i perceive no general need for separate regulation ; to me it seems even detrimental to treat comparable businesses with equal risks in a different way, second, regulators have to stand ready to propose solutions for emerging risks. we should initially concentrate on the basics, such as setting the right incentives, but – beyond that – should refrain from regulating “ theoretical risks ". we should closely monitor fintech evolution to be able to act swiftly, once risks become relevant in practice, third, international exchange about experience with fintechs is very fertile to set the right course for future regulation from the outset. the way we perceive financial technology has transformed over the last years. when the buzzword “ fintech ” emerged a few years ago, everybody was excited : is there a better way ahead for doing finance – maybe even without banks? i also remember regulators in a state of anxiety : is traditional financial regulation unsuitable for high - tech financial innovations? today and up to now, we have a far more relaxed view about business disruption and regulatory challenges. in germany, fintechs have not forced us to overhaul existing financial regulation or to consider a new framework. the reason for this lies in the setup of german financial regulation : the rules apply to specific business models and their associated risks – technology is, by and large, treated neutrally. this becomes apparent in our financial services landscape. some digital innovators that actually accept deposits or lend money need to be licensed as credit institutions. for some other business models, the rules for financial services institutions apply. other innovative businesses remain unregulated, but this is for a good reason : they are non - financial in character and only provide auxiliary services complementary to financial services. by treating financial innovations equally under the regulatory framework, german regulators follow the maxim of “ same business, same risk, same rules ". but the important strategic question is : does this principle offer enough orientation for the future – given that no one knows how financial innovations