Small banks are trimming product lines and pulling back from certain customer segments. Emerging market and developing economies (EMDEs) have expressed concerns that global banks have been reducing their activities in these markets as they review their business models in light of the new regulatory environment. The FSB is keeping a close watch on this. We have rightly focused our regulatory efforts to minimise the risk of another financial crisis. But we must continually ensure that we do so without minimising economic growth and opportunity. Fine-tuning regulation We must be careful to avoid “pendulum swings” in regulation that could undermine the gains in financial stability that we have achieved, not to mention prolong and add to the uncertainties facing the financial industry. That regulations have imposed costs on the economy is in itself not sufficient reason to unwind them. 3/9  BIS central bankers' speeches  These costs have to be weighed against the benefits of a more stable financial system to support sustainable economic growth. De-regulation has its own costs. Having said that, some fine-tuning may be necessary to reduce the unintended effects of reforms while preserving their benefits. Regulatory policy must continually seek the fine line between discouraging excessive risktaking and encouraging innovation. We should not be afraid to adjust and fine-tune where necessary. As Dan Tarullo, former governor of the Federal Reserve Board, says with respect to the Dodd-Frank Act and other regulations in the US, “some recalibrations and reconsiderations will be warranted on the basis of experience."
1/5  BIS central bankers' speeches  Indeed, the various measures that were implemented have been instrumental in accelerating the e-payment agenda forward, only because of the cooperation of the industry, sometimes with a bit of nudging. But truth be told, we have been able to achieve so much. Today, the payments industry is no longer the exclusive domain of banks. The advent of FinTech driven by the increasingly inexpensive and pervasive internet and mobile technology has encouraged the entry of more agile non-bank players as potential disruptors or collaborators of the incumbent players. This has set the stage for an exciting new era in payments, an era in which the industry is expected to take on a larger role in delivering a more robust and efficient payments system for Malaysia. The Bank will facilitate this in three key ways: i. First, through policy initiatives to encourage collaborative competition or ‘co-opetition’; ii. Second, by further strengthening industry alignment; and iii. Third, by supporting more inclusive governance arrangements for the development of the payment system. Policies to promote co-opetition as a key enabler for greater efficiency, competition and innovation Network effects are critical to an efficient payment system. The larger the network of a payment system, the more valuable it is to users of the payment system.