issues in the shadow banking sector, see t. lane, “ shedding light on shadow banking ” ( speech to the cfa society toronto, toronto, 26 june 2013 ). see “ consultation paper on fintech regulatory sandbox guidelines, ” monetary authority of singapore, 6 june 2016. bis central bankers ’ speeches here in canada, we are consulting with fintech entrepreneurs. the bank of canada is also partnering with payments canada, canadian banks and r3 – which leads a consortium of financial institutions – to test drive distributed ledgers. our only goal at this stage is to understand the mechanics, limits and possibilities of this technology. the plan is to build a rudimentary wholesale payment system to run experiments in a lab environment. our experiment includes a simulated settlement asset used as a medium of exchange within the system. it is very much like the settlement balances in lvts, except it is using dlt. because it cannot be used anywhere else, it is a different animal altogether from a digital currency for widespread use. this is an experiment in the true sense of the word. i cannot think of a better way to understand this technology than to work with it. other frameworks need to be investigated, and there are many hurdles that need to be cleared before such a system would ever be ready for prime time. the third way to address innovation proactively is to do fundamental research on the effects of new technology. 18 the bank of canada ’ s research over the past few years has focused on new payment methods, the adoption and competitiveness of digital currencies, and the essential benefits of private e - money. 19 we are continuing this work and broadening it to include other developments, such as peer - to - peer lending and uses of dlt. we also want to understand how new financial technologies will address the underlying forces that created the need for financial intermediation in the first place. in theory, new technology could enable a different framework for addressing the same frictions, potentially one that does not require financial intermediaries at all. the names and faces may change, but i do not see technology changing the need for maturity transformation, loan monitoring, intermediation of borrowers and lenders, and trust. this is a good question for academics. conclusion let me wrap up. while it is important to filter out the hype surrounding fintech, i am convinced that it could have a net positive impact on the financial system, provided the risks are adequately managed.

to these factors as we assess the evolving prospects for pressures on capacity and inflation. we will provide a detailed analysis of the outlook for inflation and the economy in our monetary policy report, which will be published on 21 october. that report will also extend our economic projections into 2006. conclusion let me conclude by summarizing my main points. first, communication has become another vital tool in the implementation of monetary policy. thanks in part to effective communication, canadians are now more confident that inflation will be kept near the 2 per cent target, and this expectation is feeding into their day - to - day decision - making. second, central banks need to be strategic in their approach to communications. by communicating in a timely and effective way, we can engage the markets and the public in the issues we face. at the same time, public input helps make monetary policy more effective. and finally, there will continue to be numerous day - to - day challenges in communicating monetary policy. but in addressing these challenges, be they complex ones like the conditionality and forward - looking nature of monetary policy or technical ones like capitalizing on new technology, we are always striving to achieve better, more effective policy. communications is indeed a vital tool in helping the bank achieve the goal of low, stable, and predictable inflation. but it is important to remember that low inflation is not an end in itself. ultimately, it is the means by which monetary policy contributes to canada ’ s solid economic performance and to the rising living standards of canadians.