calibrates regulation according to the risks that the specific payment activity poses, rather than applying a fixed set of regulations to all payment service providers. while we have expanded the regulatory scope to address emerging risks in payment developments, regulations are also right - sized to the risks posed. 11. first : as individual e - wallets, how do we keep them safe to use? when we look at ewallets, we find that they face very similar risks as digital banking products. firstly, as online services, both are dependent on technology and face cyber risk – so mas expects them to manage these technology and cyber risks well. second, they both hold retail customer monies, so they need to safeguard these monies. the differences however, are that an e - wallet is used for day - to - day payments, and so needs to be very liquid to meet customer demands, and ewallet issuers don ’ t give loans with the float. so it ’ s important to right - size our regulations to their business model, and not to stifle innovation by loading them with bank - like requirements. taking these into account, mas sets out proportionately simple options for e - wallets to safeguard customer monies, for example, holding it as a deposit with a bank. mas may also prescribe further safeguarding measures in liquid and low - risk assets. second : collectively, how do we manage risks that e - wallets pose to the financial system? our role as central banks is to protect the stability of, and confidence in, the financial 12. system. to achieve this, we need to develop regulations that, while addressing key risks, do not obstruct the industry developments. in the case of payments, that key risk is money laundering and terrorist financing ( ml / tf ), and the balance that we have to strike is to allow new e - wallet businesses to start quickly, but also ensure that ml / tf risks are managed before they get too large. in this context, while kyc continues to be a key requirement, we allowed smaller wallets holding funds of no more than $ 1, 000 to carry out simplified kyc requirements. this framework is similar to those used in other markets like hong kong, india, australia and the uk. finally, as a market, how do we ensure that e - payments function smoothly with each other and the financial system? many of us think of smooth functioning as having liquidity 13. providers in capital

whether this credit flows from banks, nonbank financial institutions, or institutional investors. why is this so? the answer is simple. it is because the credit intermediation process is ultimately what determines how well our economies function and therefore how well our economies are able to grow and allow their citizens to prosper. when the credit intermediation process does not work well, when there are disruptions to the supply of credit to the economy, as history has amply shown, the costs for our businesses and our people can be enormous in terms of lower output and fewer jobs. a well - functioning credit intermediation process is, in short, critical to the sustainability of any economy ’ s success. it is for these reasons that central bankers are interested in the flows of credit from the global securities markets, just as we have needed to know about the flows of credit from the banks whose operations we are charged with overseeing. at the end of the day, the flow of credit from securities markets has the same impact on our respective societies as that from banks. therefore, central bankers have an obligation to understand the nature of these flows and the risks that they raise. crucial to our obligations to our citizens is the need to be certain that these credit markets work smoothly and that credit flows efficiently from those most willing and able to bear the risks to those most able to put the funds to good use. this is as true for the united states as it is for any other country, developed or developing. does this mean that central banks believe that capital markets should be supervised in the same ways banks are overseen? clearly the answer to this question is no. this is not our role. in my view, central banks broadly have two main responsibilities with respect to the global debt markets. the first is to enhance the price discovery process by promoting transparency in their own actions. the second is to ensure that the banks, as providers of liquidity, perform their proper role in supporting the trading process by making sound credit decisions. in the united states, the federal open market committee or fomc has a pronounced effect on the fixed - income market, both through its policy decisions and in the way the federal reserve conducts monetary policy. indeed, an important part of the price discovery process is the anticipation of the federal reserve ’ s future actions. because the federal reserve is such a critical player in the market, it is important that it not create unnecessary uncertainty. that is, the federal reserve has a responsibility to be as transparent as