south african reserve bank keynote address by francois groepe, deputy governor of the south african reserve bank, at the strate gibs fintech innovation conference 2017 gordon institute of business science, johannesburg 22 august 2017 regulatory responses to fintech developments introduction programme director, distinguished guests, ladies and gentlemen. i would like to start by thanking the organisers for the invitation to address you at this year ’ s strate gibs fintech innovation conference. the conference is timely as we potentially face one of the most severe innovation - and technology - driven disruptions to products and services, particularly in the financial sector space. arvind sankaran, an advisor on fintech, argues : “ we are witnessing the creative destruction of financial services, rearranging itself around the consumer. who does this in the most relevant, exciting way, using data and digital, wins! ” to paraphrase the famous austrian - born economist joseph schumpter : it is the process of industrial mutation that revolutionises the economic structure within, incessantly destroying the old one, incessantly creating a new one, a prominent feature of capitalism – which he further describes as the ‘ perennial gale of creative destruction ’. my address today will focus on regulatory responses to fintech developments. page 1 of 11 fintech developments viewed from a regulatory perspective over the last decade or so, fintech has attracted attention from many quarters ; publicity around fintech developments continues to increase. interestingly, some parties suggest that fintech may offer revolutionary changes, such as completely new ways of banking where peer - to - peer lending arrangements, for example, may displace more traditional intermediaries. by contrast, others suggest that this type of innovation is not different to that experienced in the past. moreover, like the internet, these innovations are likely to integrate existing value chains and business processes that will give expression to a symbiosis between new fintech firms and incumbents. along these lines, others still argue that developments in the fintech space are merely part of an evolutionary process driven by innovation – that this is therefore nothing new and that regulatory regimes are adequate to deal with these developments. given these varying perspectives, regulators continue to reflect on how to respond to developments in the fintech space. i believe that the following three proposals could serve to strengthen regulatory approaches to fintech developments. these are : i. focusing analysis on activities involving financial services rather than on firms or technologies ; ii. continuing collaboration between local and global

, although protectionism appears to be an attractive policy response against a backdrop of low growth and a structural current account deficit, it should be approached with a degree of circumspection as an important lesson to be taken from economic history is that the period that followed the great depression was marked by an outbreak of protectionist trade policies. these policies led to a sharp contraction in global trade in the 1930 ’ s, beyond the economic collapse itself, and a lacklustre rebound in trade despite the eventual worldwide economic recovery. 2 it is also worth acknowledging that trade protectionism often fails to adequately address the underlying challenges of competitiveness, or the lack thereof, within an economy and it may even lead to a decline in the degree of competiveness as its could lead to higher input costs and hence contribute to price inflation. lastly, it is unlikely to restore external balance if external demand is weak. the international monetary fund ( imf ) has developed sustainable growth indicators which focus on policy, democracy, and governance as the drivers of growth. the policy component encapsulates economic policies, while the governance component relates to accountability. this approach by the imf enables a link between economic growth and the role of the south african reserve bank ( the bank ) and bodies, such as the institute of internal auditors, in fulfilling their respective mandates. the contribution by the bank enhances institutional capacity in the economy as it serves the south african society through maintaining price and financial stability in the interest of eichengreen, b and irving, d. a ( 2009 ) “ the slide to protectionism in the great depression : who succumbed and why? ” nber working paper no. 15142. bis central bankers ’ speeches balanced and sustainable growth. in the policy sphere, it conducts monetary policy to contain price inflation. in doing this, the bank assists in maintaining and improving competitiveness, protecting the purchasing power of the currency and, thus the living standards of all south africans. furthermore, this provides a favourable environment for employment creation through balanced growth. in addition, the bank also has the mandate to oversee and maintain financial stability which is a distinct and separate policy objective from price stability. we can feel very proud that south africa was ranked first out of 144 countries ranked in the global competitive index report for our strength of our auditing standards and reporting, second for accountability and third for the efficacy of our corporate boards. this is meaningful as the internal and external auditing profession forms an integral part of the international