Central banks have been carrying out significant efforts in order to improve the monitoring of the financial sector in the form of financial stability reports. Based on our recent experience we know that close monitoring of asset prices, credit flows and the current account deficit is required. Moreover, substantial work also needs to be done in monitoring the vulnerabilities of both bank and non bank agents – including financial intermediaries, firms and households. Finally, understanding interconnections in the financial system – be they via balance sheets, asset markets or risk perceptions – is also a key component of financial stability monitoring. The challenges in doing all of this are both conceptual and practical, as we often rely on a statistical toolbox best aimed at capturing macroeconomic trends and less suited for the analysis of the whole distribution and, in particular, tails risks, which are crucial for financial stability analysis. Although most central banks have an explicit financial stability objective, for some of them it was a secondary issue for many years, as GDP was growing strong and banks and firms displayed sound balance sheets. Now things have changed dramatically. As of last year, financial stability became the key factor driving monetary policy management in developed countries. It should remain at the same level of priority as price stability in the future to avoid a repetition of recent events.
The relationship between the incumbents and insurgents has been sometimes competitive but often collaborative – and both have been good for the ecosystem. We adopted a multi-pronged strategy to build what is now regarded by many as one of the most vibrant FinTech ecosystems in the world. First, a conducive regulatory approach that facilitates innovation while managing risks: simplifying rules; selectively easing licensing criteria; providing guidance on new areas like cloud computing, robo-advisers, and digital tokens; adopting activity-based regulation right-sized to the risks posed, as in our Payment 1/5  BIS central bankers' speeches  Services Act; and allowing experimentation through regulatory sandboxes. Second, the digital infrastructure necessary for the adoption and proliferation of new technologies: a 24/7, real-time electronic payment system; a national digital identity and trusted data architecture that allows seamless online authentication and financial transactions; digital platforms to connect businesses, financial institutions, and FinTech firms: matching buyers and sellers through, for example, Business sans Borders; and matching problem statements and solutions through, for example, the API Exchange (or APIX); cross-border data and digital connectivity agreements and frameworks; and Project Ubin - a blockchain based prototype platform for cross-border payment and settlement in different currencies on the same network – faster and cheaper than conventional cross-border payment channels.