. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 12 - 10. html 8 / 12 10 / 12 / 2019 a payments system for the digital economy | speeches | rba graph 6 the graph illustrates why the cost of cross - border payments is such an issue for the south pacific countries. these costs are noticeably higher than for payments to most other countries. this is a particular problem as many people in the south pacific rely on receiving remittances from family and friends in australia and new zealand. in many cases, low - income people are paying very high fees and it is important that we address this where we can. as is evident from the graph, most digital mtos do not service the smaller south pacific economies, which limits customers'choice of providers. in part, the high costs – and slow speed – of international money transfers is the result of inefficiencies in the traditional correspondent banking process. it is understandable why some large tech firms operating across borders see an opportunity here. where people are being served poorly by existing arrangements, new solutions are likely to emerge with new technologies. this represents a challenge to the traditional financial institutions to offer better service at a lower cost to their customers, while still meeting their aml / ctf requirements. central banks have a role to play here too, and there is an increased focus globally on what we can do to reduce the cost of cross - border payments. one example of this is the promotion of https : / / www. rba. gov. au / speeches / 2019 / sp - gov - 2019 - 12 - 10. html 9 / 12 10 / 12 / 2019 a payments system for the digital economy | speeches | rba standardised and richer payment messaging globally through the adoption of the iso20022 standard. the rba is also working closely with the reserve bank of new zealand, austrac and other south pacific central banks to develop a regional framework to address the know - yourcustomer concerns that have limited competition and kept prices high. operational resilience a fourth area where we would like to see more progress is improving the operational resilience of the electronic payments system. disruptions to retail payments hurt both consumers and businesses. given that many people now carry little or no cash, the reliability of electronic payment services has become critical to the smooth functioning of our economy. we understand that, given the complexity of it systems, some level of payments incidents and outages

mismeasurement of subprime mortgage risks which turned into a systemic problem. ii. macroprudential analysis : a policy - maker ’ s view [ slide 5 ] economic research has a key role in the design of better regulation. research can inform regulators in their search for the right balance between robustness and sophistication of regulatory rules. we also need high quality cost - benefit and impact analyses of regulation in order to assess the effects of regulation on financial institutions and markets, and, ultimately, on the real economy. a recent example of the use of network analysis is toivanen, m. ( 2015 ) : essays on credit contagion and shocks in banking. doctoral dissertation, university of vaasa. bis central bankers ’ speeches in addition to the traditional financial regulatory rules we should think of safeguarding financial stability with macroprudential policy more generally. in this more holistic approach the role of analysis and research is, if possible, even more important than in the design of the traditional microprudential regulatory rules. when talking about macroprudential policy, some observers have yet found it useful to make a distinction between it and regulation. paul tucker, for instance, defines macroprudential policy as “ dynamically adjusted financial regulation ”. given that definition, one could argue that a well - designed and stringently implemented financial regulation is the first line of defense against systemic risks. macroprudential policy – that is, the dynamic adjustment of regulation – is the important second line of defense. 3 high - quality analysis reduces the inaction bias [ slide 6 ] most economists and policy - makers seem to agree that the key objective of the macroprudential policy is to provide additional resilience to financial institutions and the financial system against cyclical and structural systemic risks and vulnerabilities. but that is not sufficient. we also need macroprudential policies that can effectively restrain an excessive build - up of leverage and growth in household and corporate borrowing and thus dampen the credit and financial cycles. in the euro area, this need is particularly acute, as the economic cycles are currently diverging across countries and as the key monetary policy rates will stay low for a prolonged period of time. to prevent or at least dampen potentially destructive financial booms, the authorities must be able to take early macroprudential actions. to do that, the role of reliable early warning indicators is critical. i welcome the strong emphasis of this conference on