financial stability risks. regulators need to be alert to such developments and act accordingly. for very different reasons it is neither to be recommended that central banks change their entire business model from being the banks of banks to issuing digital currency to the general public, say by opening an account for every citizen and company ( including foreigners? ). for a start it would not create something which is not already offered by private banks. it would not be a substitute to notes and coins but to private bank accounts. it would therefore rather open a highway to bank runs, challenging financial stability, unless the amount allowed would be limited to an extent where it could not serve useful transactions purposes. it would add competitive distortions at the expense of private institutions and very substantial costs in terms of it, staff and regulatory compliance. in addition, piling up large deposits from the general public in central banks page 5 of 6 would raise the question if central banks should also engage in centralised and perhaps politically motivated lending activities. new sources of risk finally, unfortunately, all the virtues of digital financial services do not come for free. the system is exposed to vulnerable or unstable equipment, human error and outright crime, such as cyberattacks. these are serious operational risks, which need to be managed by financial institutions one by one, by authorities and in cooperation. of course we passed the point of no return quite a while ago. the use of cash in this country is rapidly declining and digital payments accounted for around 80 per cent of retail turnover last year. danmarks nationalbank has initiated a forum for collaboration among the critical companies in the danish financial sector – the financial sector forum for operational resilience, fsor. fsor has three primary goals : 1. to create an overview of cyberthreats to financial stability, 2. to implement joint measures to ensure financial sector resilience and 3. to set up a framework for collaboration and knowledge - sharing. testing is one measure that has proven to be excellent at uncovering cybersecurity weaknesses. we regularly test cross - sector crisis response plans to manage serious operational incidents, including cyberattacks. but we also seek to test the cyberresilience of individual institutions through so - called red team testing. in a red team test, an external team is hired to perform a series of coordinated attacks. the target institution's internal it security then has to defend the systems to the best of their abilities. once the test is over, the institution's vu

, came the covid - 19 pandemic that has dominated global discourse over the last eighteen months. unlike the global financial crisis that was largely an advanced economy phenomena, covid - 19 has extended its damage across the world. it has upended global lives and livelihoods and literally left no one unscathed. but amidst the gloom and doom, human resilience powered by digital platforms has shone through. in africa, the digital rails built on mobile phones have served us well, enabling official and personal transfers to the most vulnerable segments of our population including women, youth and micro, small and medium enterprises ( msmes ). our financial institutions, governments and businesses have pivoted to digital platforms to adapt to the new normal occasioned by the pandemic. in the kenyan banking sector for instance, transactions outside bank branches have increased from 91 percent before the pandemic to over 96 percent currently. significantly, the number of bank transactions on mobile phones has increased from 56 percent to 85 percent of all transactions. as digitalization democratizes and transforms financial services to anytime anywhere access by 1 / 3 bis central bankers'speeches customers and new business models emerge, regulators must adapt to the new terrain. at the central bank of kenya ( cbk ), our regulatory philosophy has evolved to maximizing the opportunities presented by technology and innovation while minimizing the risks. this requires an agile approach on our part which is the focus of our deliberations today. this leads me to the question of what does agile regulation mean? allow me to highlight three broad directions to set the stage. first, regulators need to walk with the innovators. reflecting back on the introduction of mobile phone financial services, we at cbk adopted a test and learn approach that sought to understand the business models, risks and their mitigants. this approach later developed across the world through the sandbox approach. financial services are moving from an institution - based approach to an ecosystem approach with incumbent regulated institutions at the centre. agile fintechs are key partners in the ecosystems to provide cutting - edge innovations such as credit scoring and customer relationship management solutions based on artificial intelligence. regulators must seek innovative approaches to understand these fintechs, mentor them and grow their risk management capabilities. in this regard, cbk partnered with the monetary authority of singapore ( mas ) in 2019 to launch the afro - asia fintech festival to create a collaborative platform for african and asian fintechs and regulators. on the back of this