Actively choosing the very thing that businesses seem to fear the most is more likely to mean that investment projects that have so far been postponed will instead be cancelled for good. The point, rather, is that for a given duration of uncertainty, it’s better that people are aware of it from the start, rather than being repeatedly surprised at how long the process takes. 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4  One way of thinking about this situation is that periods of uncertainty – especially those with acute downside risks and that are expected to last only a short period of time – raise the required rate of return on new investments. They therefore have similar effects as a standard increase in the cost of finance: they incentivise firms to meet new demand with labour rather than capital. In the last section I’ll go through some crude arithmetic to get some idea of the scale of such effects and, in that context, comment on the recent strength of employment and, more generally, on the weakness of productivity growth since the financial crisis. The Value of Waiting for News In economic theory, the negative impact of uncertainty on investment depends centrally on the assumption that capital spending is costly to reverse.
This culminated in the development of a blockchain-based prototype for digital multi-currency settlement in Phase 5. Through this project, the benefit to the industry had become clear, along with private incentives for commercialisation. With Project Ubin having paved the way, industry players are now better placed to pursue commercialisation opportunities. DBS Bank, JP Morgan and Temasek are leading the development of a digital multi-currency payments network aimed at enhancing commercial cross-border clearing and settlements globally. Looking back, this has been a great collaboration journey. MAS and the industry learnt from each other, created new knowledge, and strengthened relationships, and we created a strong ecosystem that is willing to collaborate to build better together. We will utilise the same model to explore the opportunities offered by other promising emerging technologies in future. Addressing Two Key Challenges 9. Looking ahead, central banks can play an active role in two key challenges: supporting sustainable growth through green finance, and enhancing cross-border payments to facilitate trade and investment. Let me start with sustainable growth. Harnessing innovation to support sustainable growth 10. Green finance today is hampered by challenges that reduce the incentive for investors to invest in green projects. Technology can be an enabler to overcome two of these challenges. First, to accurately verify and monitor the carbon footprint and resource consumption across an entire supply chain. This is necessary to address greenwashing and to build trust.