sector soundness. adherence to these international best practices and codes should help to ensure that economies function properly. the third area is the strengthening of the financial sector. the assumption is that banks and other financial institutions need to improve internal practices, including risk assessment and risk management. at the same time the official sector needs to upgrade the supervision and regulation of the financial sector to keep pace with the modern global economy. to achieve these objectives, the basel committee has developed the core principles for effective banking supervision, while the committee on payments and settlement systems has drawn up the core principles for systemically important payment systems. universal principles for insurance as well as security market regulation have also been developed. the fourth area of financial sector reform concerns involving the private sector in crisis prevention. the involvement of the private sector should limit moral hazard, strengthen market discipline and improve the repayment of loans. the fifth area of reform concentrates on the prevention of systemic instability. most of the international best practices and codes have been established to minimise the effects that the insolvency of a financial institution may have on other institutions. in addition, the imf has created a contingent credit line facility as a precautionary defence for countries with strong economic policies. this facility has been designed to prevent the balance of payments problems that could arise from international financial contagion. south africa has been actively involved in discussions on the new international financial architecture. we recently also participated in a financial system stability assessment undertaken by the imf and the world bank. the report on south africa has not been published, but found that the south african financial system is robust and that the financial sector ’ s legal framework is impressive. the assessment was further that south africa is in broad compliance with recognised best practice in the fields of security, insurance and banking regulation and that we are making substantial efforts to ensure transparency. despite this favourable assessment, we must nevertheless continue to strive for sufficiently accountable, transparent and effective cooperation between the various agencies for the smooth running of south africa ’ s financial markets. this should instil public confidence in the financial system. the banks act and the regulations governing the activities of the banks have been amended to bring them into line with international developments. in addition, the reserve bank has established a financial stability unit ( fsu ) to focus on the overall stability of the financial sector and its preparedness for global competition. one of the functions of the fsu is to keep abreast of international developments as far as stability issues are concerned

##capital. in this way, finance, often thought to be destructive, can be a very transformative force as well. 2 / 3 bis central bankers'speeches regionalisation and digitalisation are changing the rules of the game so where does this leave us? as highlighted, the future of international banking is not necessarily bleak. with further calibration and evolution, it can continue to have a prominent role in serving global interests. the good news is this evolution is already taking place. previously dominated by the elite few, in this case large global banks, international banking is now increasingly open to a larger group of market participants. on one hand, the circle of banks is expanding, from large global banks to smaller regional banks. this is an important point that is also highlighted in the global financial development report, reflecting the growing extent of banking relationships between developing countries, particularly in this region. on another front, digitalisation is ushering in a new era, expanding the borders of international banking to now include non - bank fintech players. these players have the distinct potential of transforming global banking as we know it today. around usd13 billion was invested by venture capital players in fintech startups in 2017, the third highest annual total this decade. among these, the most impressive transformation is perhaps in cross - border payments. allow me to share an anecdote highlighting the magnitude of the change that is happening. earlier this year, eight chinese tourists went on a six - day trip to finland courtesy of a chinese online payment platform company. this trip was significant for two reasons. first, payments for the entire journey was cashless and performed through a mobile app, from the payment of flight tickets to food, ground transportation and other retail purchases. secondly, finland, located as far as 6, 000 km away from china, became the first country where this chinese app can be used to make virtually all payments. this is just the beginning. as fintech companies expand to other markets and enable seamless cross - border payments for other users, one can already imagine a future where one can travel the world with just a smartphone in hand. not only that, another related consequence of such a future is that essentially all we know of “ international banking ” today could be performed without an actual bank. naturally, we ask ourselves what are the implications of these changing boundaries of international finance? for financial customers, it means adapting to a new banking paradigm. a more regional and digital banking ecosystem could lead to increasing localisation