setting of narrowing but still yawning gulf between the macroeconomic conditions of india and the financially developed, capital - surplus nations. i am reminded of what fisher black is reported to have once remarked, “ the markets look more rational from the banks of charles than from the banks of hudson. ” the rise, fall and fate of principles based regulation - julia black lse law, society and economy working papers 17 / 2010 london school of economics and political science law department. bis central bankers ’ speeches 31. this brings me to my last and the most important point. the role of authorised dealers and fedai in times to come. the authorised dealers led a very protected life in the fera regime and never had to apply their mind to the permissibility of a foreign exchange transaction because it had to be based on an rbi permit or some other permit, for example, an import license. today, it is not so. when fedai was formed in the 1950 ’ s its role mostly evolved round computation of various forex rates and mostly interbank transactions. in the times to come, both authorised dealers and fedai will have to play an active role in ensuring that customer transactions are compliant with the regulations. the more we move towards a principle based framework, the more arduous will be the responsibility of the authorised dealers. this includes the issue of fair pricing as well. indeed, our success in moving to a principle based framework will depend on the involvement of ads. you will have to gear up for that responsibility. 32. finally, let me briefly recapitulate some of more important issues. a. in foreign exchange market, as in any other market, freedom is the default and any restraint by way of regulation has to justify itself. the regulation has to be based on sound economic principles and not on dogmas or evangelism. b. though the superiority of free markets as a way of organising economic activity is well recognised, there are many areas where the limitations of market have been widely discussed in the literature and are well accepted. there is no accepted standard for optimum regulation which is often idiosyncratic. the regulation of forex markets has to be seen in that context. as chesterton remarked, “ don ’ t ever take a fence down until you know the reason it was put up. ” c. more products go towards market completion and enable better hedging against risks, but are limited by the wisdom of the participants to use them. d. exact

##s –, this new shared infrastructure would tackle markets which still rely on manual processes and lack standardisation, such as otc markets and unlisted stocks. 3 / 4 bis - central bankers'speeches a crucial first step will be to make central bank money available on this infrastructure : this makes it all the more important to offer a wholesale cbdc solution in the short term to prepare this long term target. let me conclude with billy wilder, the director of some like it hot. he once gave this sound piece of advice : " if you have a problem with the third act, the real problem is in the first act. " this leads me to a twofold conclusion : first, that it is the right time to engage in the design and experimentation of market infrastructures of the future ; second, that fast - paced transformations should not be at the expense of past achievements in financial stability, and increase risks. central bank money must remain the settlement asset at the core of the financial system, whether tokenised or not. under this condition, our common technological breakthroughs could contribute to meeting our major challenges. thank you for your attention. i regulation ( eu ) no 909 / 2014 on improving securities settlement in the european union and on central securities depositories ii esma ( european securities and markets authority ) proposes to move to t + 1 by october 2027, 18 november 2024. iii dlt stands for " distributed ledger technology ", which underpins the tokenisation of assets. iv villeroy de galhau ( f. ), innovation by central banks : the sooner the better, speech at the bis innovation summit, 6 may 2024. v villeroy de galhau ( f. ), wholesale cbdc : as decisive as retail cbdc, and actively experimenting, speech, 3 october 2023. vi ecb, exploratory work on new technologies for wholesale central bank money settlement, 4 december 2024. vii carstens ( a. ) and nilekani ( n. ), finternet : the financial system for the future, bis working paper, 15 april 2024. viii bis ( bank for international settlements ), project agora : central banks and banking sector embark on major project to explore tokenisation of cross - border payments, updated on 16 september 2024 4 / 4 bis - central bankers'speeches