factor authentication is mandatory in many jurisdictions for transactions performed online, as is the case for transactions in south africa. a national digital identity platform enables multi - factor authentication and reduces the cost for each provider doing so on their own. in closing, fintech holds great potential which can meaningfully lift the growth potential of our economy and significantly improve efficiencies. to nurture this technology, we would, however, need to be alive to the new threats that it may introduce. hence, we need to team up and collaborate, especially given the cross - border implications of many of these services. furthermore, as the sarb, we are committed to ensuring that we make a concerted effort to understand technological changes in an effort to regulate smartly. we will continue to conduct further trials. we will also continue to create an ever more enabling environment by creating innovation facilitators. e. g. ‘ francois @ abc ’ page 8 of 9 as a central bank, we are therefore committed to contributing and being part of this journey towards a more inclusive and digitally enabled economy while ensuring that financial stability is maintained. thank you. page 9 of 9

francois groepe : lessons to be learnt from progressive economies address by mr francois groepe, deputy governor of the south african reserve bank, at the 18th southern african internal audit conference, hosted by the institute of internal auditors south africa, johannesburg, 18 august 2015. * * * chairperson, ladies and gentlemen. thank you for inviting me to participate in the 18th southern african internal audit conference, hosted by the institute of internal auditors, south africa. in my address this morning, i will spend some time discussing the lessons learnt from progressive economies and applying them to south africa. economies, and the factors affecting them, have generated much interest in our attempts to deepen our understanding of the most appropriate and efficient ways of organising the economy in an effort to optimise the allocation of scarce resources. at the outset, it must, however, be emphasised that the management and allocation of resources within an economic system does not happen in isolation or in some abstract manner. factors such as culture, values, education, technology, social and other institutions, political structures and legal systems all provide content and context and set the backdrop and parameters in which the different economies function. in this regard, douglas north writes, “ it is the admixture of formal rules, informal norms and enforcement characteristics that shape economic performance … and economies that adopt the formal rules of another economy will have very different performance characteristics than the first economy because of different informal norms and enforcement ”. 1 there are clearly different schools of economic thought, with their own analytical frameworks, which in turn has a bearing on both the analyses of economic imbalances and the policy prescripts to remedy them. despite certain reservations raised by some economist it can be argued that the united states ( us ) economy has made huge strides during the 20th century in growing to become the world ’ s largest economy and arguably one of the world ’ s more successful economies. one of the outcomes of this achievement was the establishment of a large middle class population following the second world war. despite this strong economic performance, inequality has widened more recently. the average income of the top 1 per cent of the population in the us had increased by more than 250 per cent during the preceding two decades, while the income of most other americans had stagnated. this may have contributed to president obama pronouncing that, “ growing inequality is the defining issue of our time ”. he declared that it was a tipping point for the middle class in the us and