The Federal Reserve stated after its last meeting that the upside and downside risks to the attainment of sustainable growth for the next few quarters were roughly equal. The risk of inflation becoming undesirably low was therefore deemed to be greater than the risk that inflation would move up from its already low level. This is the predominant concern of monetary policy in the period ahead. Monetary policy in the US may therefore remain expansionary for a fairly long period ahead. BIS Review 46/2003  7  In Japan, expectations of a continued fall in prices have held up the real interest rate in spite of low nominal interest rates. In Japan, the key rate has been close to zero since the end of 2001. This limits the central bank’s scope for stimulating demand. In recent years, “untraditional” monetary policy instruments have also been discussed, such as supplying considerable liquidity through purchases of various types of securities, including long-term paper. The Bank of Japan has to a large extent purchased long-term government bonds and, since last summer, asset-backed securities as well. How to respond to financial bubbles Another subject that is being discussed globally is how monetary policy should respond to financial bubbles. Should we try to prevent the bubble from developing or be content with responding afterwards once the bubble has burst and then make the best out of the situation? And what is actually feasible? Financial stability is often defined as the absence of financial instability.
In fact, 32% of our survey respondents said that they have fully implemented at least one Regtech solution in their bank. Having said that, we do believe that Regtech adoption can be and should be much wider than it currently is. And to make that happen, some barriers must be addressed. 24. At this point, I would venture a guess that at least some of you are thinking that, when it comes to barriers to Regtech adoption, the HKMA must be one of the biggest barriers. It is true that in our study, Regtech firms ranked regulators as the fifth highest barrier to Regtech adoption. But interestingly, banks thought the opposite. They actually ranked regulators as the third lowest barrier. Well, of course, this may just be an indication that banks are exceptionally tactful in responding to our survey! 25. But joking aside, I am sure you want to know what are the most common Regtech adoption barriers identified in our study? Those include: First, concerns over budget issues There are also concerns about solutions lacking maturity And then respondents talked about a shortage of appropriate talent There are also concerns about the risks involved in applying Regtech solutions; and Finally, there is a lack of awareness of the potential value of Regtech 26. Quite understandably so, budget constraints were consistently named as the top barrier by both financial institutions and Regtech providers. Especially in the current environment, cost management is a key focus for most banks.