lanka ’ s financial system is resilient and it is capable of absorbing shocks from within or outside. we should be happy to note that like the sri lankan economy, the financial system has also displayed its resilience under trying circumstances in the recent past. we hope it will continue to be so in the future. from a regulatory point of view, we will continue to support markets and financial intermediaries to maintain the required robustness of the financial system. thank y ou.

##kits, aligning them with the new generation of business models and technological solutions brought about by fintech. in recent years, similar formats for regulator engagement with the industry have sprung up widely – from canada to australia. arguably, these developments mark a shift in authorities ’ thinking – facilitating innovation instead of aiming to restrict it. in this regard, the idea of developing a central bank digital currency has recently been gaining traction. the task of issuing a central bank digital currency is indeed complex and requires extensive long - term efforts. yet it also offers substantial gains. these include increased transparency, more efficient payment and settlement systems and enhanced instruments for financial risk monitoring. with more flexibility come new responsibilities nevertheless – and here i have to put the strongest emphasis – with more flexibility come new responsibilities. while becoming more open to innovations, we – i mean both industry and regulators – cannot turn a blind eye on the associated risks. first of all – cyber risks, which, under intensifying digitalisation processes, attract elevated regulator attention. financial institutions increasingly base their operations on novel technological solutions, such as cloud computing. this certainly brings efficiency gains. but also makes financial firms more vulnerable to hacking and malware, placing vast amounts of data and critical ict infrastructure in a potential danger zone. today this challenge is particularly relevant in europe due to the ongoing regulatory shift towards ‘ open banking ’. it is therefore no surprise that international standard setters, such as the bank for international settlements, have recently become more active in this domain. as a result, today financial institutions and regulators are offered guidance – including the recent steps taken by the european central bank – that they can implement to enhance the level of cyber resilience. to strengthen these efforts, the international monetary fund has lately been putting more emphasis 2 / 4 bis central bankers'speeches on cyber risks within its surveillance and policy advice frameworks. nevertheless, digitalisation - induced risks for the financial system stem beyond cyber threats. financial innovations also tend to create additional room for ‘ shadow banking ’ to expand. it takes time to identify and fully understand these new and often obscure financial services, sometimes revealing regulatory and supervisory loopholes. through interlinkages with other financial institutions, this may eventually lead to a build - up of hidden systemic risk. in other words, in absence of adequate regulation, ‘ shadow banking ’ operations risk putting the whole financial system under threat. in the last several years, we have witnessed an increase in scrutiny towards ‘ shadow banking ’ activities on a global scale