enhanced by big data and pattern recognition algorithms. but technology risks may be higher, such as runaway algorithms or cyber criminals stealing customer information. 3 / 7 bis central bankers'speeches then there is the question of systemic or macro - financial risks. here we simply do not know enough. but here are a couple of points to ponder : the failure of a robo - advisor could potentially lead to contagion among other algorithm - driven service providers. this could present systemic risk if investors seek to withdraw their investments in securities through fire sales. the pro - cyclicality arising from algorithms is another unknown, as the interaction between algorithms could exacerbate market trends. often, with these risk assessments of fintech, there is a certain “ fear of the unknown ” or tendency to “ imagine the worst ”. a degree of conservatism and caution are indeed laudable virtues for regulators, but we should guard against taking too pre - emptive an approach when dealing with the uncertainties of fintech. regulators need to keep pace with innovation but regulation itself must not front - run innovation. introducing regulation prematurely may stifle innovation and potentially derail the adoption of useful technology. mas ’ approach is to apply a materiality or proportionality test. this means regulation kicks in only when the risk posed by the new technology becomes material or crosses a certain threshold. and the weight of regulation must be proportionate to the risk posed. in 2015, mas laid out a vision for a smart financial centre, where innovation is pervasive and technology is used widely. and a smart financial centre needs smart regulation – that promotes innovation while safeguarding public confidence and financial stability. we are still learning and our approaches still evolving, but let me share with you three aspects of our regulatory response to fintech. first, using a regulatory sandbox to test new ideas in a confined environment. second, harnessing supervisory technology, or suptech as we call it, to carry out supervision in a more efficient and effective manner. third, strengthening cyber security across the financial industry to make it safer to use new technologies and instil confidence in consumers. regulatory sandbox mas launched a regulatory sandbox in june last year, to enable financial institutions and fintech start - ups to conduct live experiments with innovative financial products or services. these firms do not need to fully meet the relevant regulatory requirements at the onset. to ensure that the consequences of any failure are contained, the experiments are conducted within agreed boundaries, such as

ensure that the legal and regulatory regimes remain robust in ensuring the safety and soundness of markets and institutions, and yet conducive for islamic finance to grow at a sustainable rate. some progress has been made on this front with the ifsb issuing new regulatory standards that serve as useful reference points for supervisors. however, as the global financial reforms take shape, all financial institutions including islamic institutions will have to rethink the assumptions underlying their business strategies and reassess their business models in light of the structural shift. they will have to retool their organizations so as to remain competitive and to serve their customers better. 13. third, the industry ’ s need for more manpower will be an important issue, given the lead time needed to develop new competencies. as islamic finance becomes more widely accepted and more financial institutions begin to offer a greater variety of islamic products, the demand for financial, accounting and legal professionals who are conversant with islamic finance will rise. in this regard, institutes of higher learning, such as the singapore management university ’ s international islamic law and finance centre, and quality training providers can play a vital role to increase the knowledge of islamic finance, and develop new capabilities and products through industry - relevant research. singapore ’ s role 14. i will now briefly touch on singapore ’ s role in growing connectivity in the global arena. singapore already enjoys excellent and long - standing relations with the gcc. we have entered into investment guarantee agreements with bahrain, oman and saudi arabia and concluded the gcc - singapore free trade agreement in doha in 2008 – the first such agreement signed by the gcc. we will do more to broaden our ties with the middle east. 15. we have identified three areas where singapore can offer its services as a financial centre to support the growth of islamic finance – namely in wholesale banking services, asset management and capital markets. the mas has facilitated the development of islamic finance in singapore ’ s financial markets. last year, we saw several sizeable cross - border transactions, including the world ’ s first shariah - compliant data centre fund ( securus data property fund ), the listing of the world ’ s largest islamic real estate investment trust ( sabana shariah - compliant reit ) on the singapore exchange, as well as khazanah nasional ’ s landmark s $ 1. 5b sukuk deal – the largest singapore dollar sukuk to date. 16. however, we need to continue working together with