##rs can be perceived as opportunities or threats, and both the number and the frequency are likely to increase in the future. no country can afford to have a myopic view and narrow national focus when it considers the game changers in financial market developments. equally, regulators cannot afford to be left behind and only react to the changes in financial markets. regulators must work alongside all stakeholders and not only the incumbents to try to understand the disruptive innovations and the policy implications thereof. it is important to emphasise the point of incumbents, as rajan and zingales eloquently set out the role that incumbent coalitions play in financial system developments but also underline how such coalitions may hold back financial sector development. 3 lastly, regulators need to be agile and forward thinkers and appreciate that their role extends beyond simply regulating. their role is to help facilitate progress with the ultimate objective of improving the quality of peoples ’ lives. thank you. rajan, r. and zingales, l., 2003, ‘ the great reversals : the politics of financial development in the twentieth century ’, journal of financial economics 69, p. 5 – 50. bis central bankers ’ speeches

a hindrance or frustrate innovation as it supports economic development and growth. in this regard, the oecd opines : one of the important lessons of the past two decades has been the pivotal role of innovation in economic development. the build - up of innovation capacities has played a central role in the growth dynamics of successful developing countries. these countries have recognised that innovation is not just about high - technology products and that innovation capacity has to be built early in the development merriam - webster dictionary. bis central bankers ’ speeches process in order to possess the learning capacities that will allow “ catch - up ” to happen … ultimately a successful development strategy has to build extensive innovation capacities to foster growth. 2 1. regulatory developments affecting financial markets the most recent global financial crisis has impacted negatively on the global economy and financial markets, and has revealed significant deficiencies in the policy frameworks of many countries. in an attempt to address these deficiencies, the g - 20 has called for financial markets and regulation to be reformed, with the objective of making financial systems more resilient. this initiative has accelerated the rate of reform, with governments putting increasing pressure on regulatory authorities to adhere to and implement international best practice and standards. activities offered by financial service providers in the financial system are highly interconnected, and these services are inseparably integrated into both the domestic and the international economy, which means that regulatory authorities had to take note of the way in which these markets are developing and the role they play within the broader global context. the magnitude of the financial system and regulatory reform has been unprecedented. the reforms have focused mainly on the banking, insurance and financial markets and providers of financial services, as well as on the infrastructure supporting these sectors. as regulatory frameworks develop and reforms are implemented, new aspects to financial regulation come to the fore. previously, regulators were mainly concerned with the supervision of banks and the oversight of payment systems. now they have to contend with a much broader universe ( which includes non - bank participants in the financial markets ) and consider shadow - banking, how it affects the financial system and financial stability, and how to regulate these activities. the focus, however, is no longer narrowly on prudential regulation. in this age where we are confronted with a society that is well informed and digitally connected, that proactively engages in consumer activism and that places great emphasis on values such as fairness, the spotlight shines brightly on issues such as market conduct, transparency and calls to “