##lity, this challenge is not one that most other countries have faced. it is an issue for china because of its size. when australia opened its capital account the rest of the world hardly paid attention. but this is not the case for china. the rest of the world is watching and it has a strong interest in the outcome. chinese gross portfolio flows remain small relative to the size of its economy. as my predecessor, glenn stevens, noted, if china ’ s gross portfolio flows were equivalent to 5 per cent of gdp in 2015 – the figure for many other countries in asia and a bit less than that for australia – china would account for a little more than one - fifth of global portfolio flows. 4 because of china ’ s size, investment by chinese entities abroad has the potential to affect the prices of many assets significantly. we have already seen some signs of this with, for example, housing prices in some cities being affected by the inflow of chinese money. the nature of the foreign assets owned by chinese entities is also changing, as the central bank has a different portfolio composition from that of most other chinese entities. in many countries, a related issue is the purchase of domestic assets by chinese state - owned enterprises. there have been a few high - profile cases where governments have blocked deals by chinese state - owned enterprises. but, by and large, most countries, including australia, have welcomed chinese investors in a wide range of sectors. chinese capital is helping to build businesses and stronger trade links. so there are a lot of issues to be managed here. conclusion to conclude, china is going through an important transition. it was not that long ago that the chinese currency could be used only within china ’ s borders. in contrast, today china has the ambition of having a global currency. the effects of this transition – involving the internationalisation of the rmb and the opening up of the capital account – could ultimately be as wideranging as were the effects of china ’ s ascension to the world trade organisation. managed well, this transition can be a win - win for both china and the rest of the world. thank you. 1 eichengreen b ( 2017 ), ‘ the renminbi goes global – the meaning of china ’ s money ’, foreign affairs, 13 february. available at www. foreignaffairs. com / reviews / review - essay / 2017 - 02 - 13 / renminbi - goes - global. 2 see, for example, frankel (

end. and it will be easier for customers to separate their payments services from their savings deposits. the bank of england is playing an active role by giving new non - bank payment service providers ( provided they meet appropriate standards ) access to the uk ’ s real time gross settlement system. the first non - bank payment service provider went live a week ago, and a number of others are set to join over the coming months. this means the new payment providers will gain direct access to the uk ’ s payment systems, including the world - leading faster payments service. it should spur innovation in payments, increasing choice and reducing costs for customers. regulation will need to keep up with this unbundling to make sure the benefits to the economy in the good times don ’ t bring with them unintended risks in the bad. how? first, incumbent banks have had their possible strategic responses to greater competition reviewed in our first exploratory stress exercise. second, existing bank liquidity regulation may need to adjust. regulations currently treat customer deposits as ‘ stable funding ’, requiring banks to hold few liquid assets against them. as open banking develops, the stability of deposits connected via a central service provider will need to be monitored carefully. and third, frameworks for operational resilience, particularly cyber risk, will need to evolve too. the combination of the revised european payment services directive ( psd2 ) and the competition and markets authority ’ s open banking reforms will require banks which provide online payment services to allow – at a customer ’ s request – third parties to access account information and / or to initiate payments via a single common application programming interface ( api ). this was covered in a recent speech by karina mcteague, director of retail banking supervision at the fca. see https : / / www. fca. org. uk / news / speeches / payments - after - psd2 - evolution - or - revolution see ‘ stress testing the uk banking system : 2017 results ’, section 2 ‘ the 2017 biennial exploratory scenario ’, pp 12 - 22. all speeches are available online at www. bankofengland. co. uk / speeches such resilience is vital. that ’ s why we ’ re establishing clear expectations for the system ’ s ability to recover critical services after an attack. as customers access services increasingly through third party aggregators or payment service providers, that should not compromise the degree of resilience they can expect. the fca has set