the financial system. after all, the financial sector is not only a part of the economy with a distinct value added – although this value added can be quite significant, as in the united kingdom. even more importantly, the financial system also plays a crucial role in capital accumulation. however, especially in highly developed economies that typically boast sizeable and sophisticated financial sectors, the role of the financial system goes far beyond that of mere capital accumulation. in such economies, the financial system plays a key role in identifying and funding innovations, thus helping to advance the state of technical knowledge and promoting technological progress. for these reasons alone, an efficient financial system is indispensable for growth. in a sense, even the crisis with its massive repercussions for the real economy and its enormous costs illustrates how important the financial system and its stability are for economic performance and welfare. with that in mind, it becomes obvious that the reform of financial regulation will not only have a profound impact on the financial system itself but will also influence the real economy. the question at issue is whether the reforms strike the right balance between financial stability and economic growth. in fact, the development of basel iii has been accompanied by concerns that tighter regulation might have a negative impact on economic performance by severely restricting access to credit. however, a comprehensive cost - benefit analysis by the basel committee on banking supervision has revealed that fears of a significant negative impact on growth are unfounded. this is all the more the case given that there will be an adequate transition period before the new requirements enter fully into force, which will give bis central bankers ’ speeches banks sufficient time to strengthen their capital base. this favourable overall assessment of the macroeconomic impact of well - designed regulatory reform highlights the fact that there is no inherent conflict between the objectives of a more stable financial system and of ensuring strong and sustainable growth. 4. conclusion ladies and gentlemen, the crisis has certainly been a devastating event. but it has also presented the chance to make the financial system more resilient. trimmed down, where necessary, to activities with an unquestionable positive net social value added, it can once again be an important driver and catalyst for economic growth. and, in terms of the general future outlook for growth, we should bear in mind that the financial crisis has not impaired major growth drivers. emerging markets, for instance, will still make great efforts to catch up, and technical progress will continue. thus, the crisis certainly does not mark the end of economic growth

current processes will be formalised over time, the nature of our open engagement means there should not be surprises. we want to continue our open dialogue with the industry, allowing mutual goals to be achieved in a low key and non - prescriptive manner. the rapidly changing payments landscape provides challenges and opportunities. competition in payments is important but collaboration is also needed between financial institutions, new entrants and policy - makers. this is necessary to create the right environment for modernising the payments system and sensibly managing the risks that arise. effective innovation is often best achieved through collaboration and we encourage the industry to move in this direction. for the bank, the main focus is on preserving financial stability while also facilitating innovation and improved efficiency. to do this, we need to keep abreast of the changing technology environment and continue to assess the level of preparedness of the system to handle adverse shocks. the challenge for the reserve bank, and for all of us, is to understand the evolving financial services landscape, including its opportunities and vulnerabilities. as we move forward in this rapidly changing environment, it serves all our interests to first ensure the safety of the system. this is the foundation for achieving innovation and growth in the industry. 1 watson, a ( 2016 ), “ disruption or distraction? how digitisation is changing new zealand banks and core banking systems ’, rbnz bulletin, 78 ( 8 ). 2 based on microsoft ’ s malware infection index 2016. 4 / 5 bis central bankers'speeches 3 bank for international settlements ( bis ) - principles for financial market infrastructures ( pfmi ). 4 financial stability board ( fsb ) - key attributes of effective resolution regimes for financial institutions. 5 bank for international settlements ( bis ) - cpmi - iosco release guidance on cyber resilience for financial market infrastructures. 5 / 5 bis central bankers'speeches