as the leverage ratio, total loss - absorbing capacity ( tlac ), and net stable funding ratio ( nsfr ), are on the way, again in steps. since all these new internationally agreed rules are part of a bigger package, they must unfalteringly come into effect as envisaged if the rules are to have the desired effects. having said that, we also must be mindful of the danger of the means becoming an end unto itself. if compliance to rules becomes an overarching goal, there could be unintended effects on the functioning of financial intermediaries. financial regulation must not be the procrustean bed of greek mythology. accordingly, financial authorities and banks must closely monitor the effects of the new rules on the macro economy and financial markets without prejudice and from the broadest of perspectives. i. global economic developments : adjustment ending but fragility lurking global recovery and the waning of pessimism as the global financial system is generally returning to a surer footing, the global economy is also regaining its momentum since the second half of last year. in the world economic outlook ( weo ) published last month, the international monetary fund ( imf ) expects the global economy to grow by 3. 5 percent this year. the developed economies - - japan, the united states, and europe - - are all envisaged to enjoy robust domestic demand growth, while the forecast for chinese growth is around 6. 5 percent. at the same time, with the strengthening of major economies and the bottoming out of commodity prices, nascent recovery is observed in the growth momentum of developing countries and resource - rich economies. all in all, the prevailing pessimism since the global financial crisis, which fostered colorful language such as " secular stagnation " and " low growth trap, " is clearly on the wane. such a sea change probably could be attributed in part to the anticipation over the economic policies of the new u. s. administration. having said that, more fundamentally, i would note that the global economy has finally reached escape velocity. support from various policies during the ten years since the crisis is now finally bearing fruit. looking back, during the last few years, the global economy suffered weak corporate investment and there was talk of the c - suite losing its animal spirit. while the huge negative demand shock resulting from the crisis inevitably depressed investment, it also seems difficult to deny that the cloud of pessimism rising from the shocks

profits ; in other words, not endanger financial stability via an overheating channel. fintech : a new wave of it innovation in such an environment, fintech, which is fast emerging worldwide, could potentially be an " enabler, " opening up new business frontiers and allowing financial institutions to free themselves from the yoke of low profitability. looking at the current state of the global economy, we find the rise of " connected businesses, " which tie together information and services almost instantly over a wide horizon, against the backdrop of advances in digital communications technologies and epitomized with terms like " the fourth industrial revolution " and the " internet of things ( iot ). " " sharing economy " is one example of such development that is gaining traction everywhere, and broadly speaking, fintech can be understood in the same context. a business model where banks develop and sell insurance products. it became popular in europe ( france, italy, and spain in particular ) from the 1990s onward, involving mainly life insurance products. however, there have been signs of deemphasizing this model recently, reflecting doubts on synergies achieved. this trend is probably changing the nature of innovation from the longstanding emphasis on improving individual products to an emphasis on transforming how services are provided ; in other words, the distribution channel of services. in adapting to such a change, firms that can perform meticulous customer analytics will be able to more appropriately and promptly provide individual customers with services that are tailored to their attributes and preferences. such " personalization of services, " as it often is called, is making rapid inroads, especially in fields such as healthcare and development of new drugs. 5, 6 it also could become more prevalent in finance, leveraging on advances in fintech, in areas such as retail payments, remittances, and lending, as well as in less capital intensive areas such as transaction banking and wealth management. 7 here, it is interesting to note that trends in the two of the most heavily regulated activities - - medicine and finance - - are pointing in the same direction with the personalization of services. meanwhile, financial institutions cannot shy away from improving their cost structure in meeting their profitability goals, and here again, fintech can make significant contributions. for example, it is a well - known fact that the return on equity ( roe ) of financial institutions is materially higher in the nordic economies, where online banking is prevalent and branch network density is generally low