A more diversified financial intermediation model, with new players, Fintechs but above all Bigtechs and Asset Managers, is welcome in that it will bring more sources of financing for the real economy. This nevertheless raises a big issue: they are performing bank-like activities without being regulated in the same way as banks. Beyond unlevel playing field considerations, this situation could have major financial stability implications. 2- Old issues, and new ones that need to be addressed by regulators and supervisors This leads me to my second point. The move from a bank-centric intermediation model toward new unbundled financial intermediation models performed by multiple players does not eliminate the need for central bankers (fortunately!) and regulators. But it does force us to revisit old questions (A) and to address new ones (B). (A) I would like to highlight three of the old issues we must revisit. First, the question of the scope of financial regulation. Just as an example, the use of the public cloud is becoming mainstream for performing core banking operations. Fintechs and Bigtechs have adopted a strategy of “all in”. Incumbents are also migrating, although more cautiously, to the public cloud. However, the cloud computing market is highly concentrated and Amazon Web Services has built a dominant position.
In today’s speech, I want to highlight some of the key features of this highly integrated economic system and discuss some of the challenges it may pose in the future. In particular, I will discuss how the changing shape of the world economy affects the task of national monetary authorities, such as the MPC. In other words, how can economic policy-makers maintain stability when we are constantly in danger of being buffeted by powerful global economic forces? The rise of Asia and the changing shape of the world economy A key feature of the new global economy we now inhabit is the increasing economic strength of the Asia-Pacific region. Chart 2 shows that the top ten economies in this region – led by China, Japan and India – have already overtaken both the European Union and the United States in their share of world economic activity. This compares with the situation thirty years ago when these economies were collectively just half the size of the European economy, and about two-thirds the size of the United States. 2  BIS central bankers’ speeches  Chart 2 – The rise of Asia Percentage share of world GDP, at current market prices and exchange rates US  EU-27  40%  Asia-pacific G10 *  35% 30% 25% 20% 15% 10% 5% 0% 1980  1990  2000  2010  *: Includes Australia, China, India, Indonesia, Japan, Malaysia, Singapore, South Korea, Taiwan Province of China and Thailand.