A review carried out by “global regulators” claims that the fintech growth does not translate into “any compelling risks” on the “financial stability”. However, this scenario could potentially undergo change along with the growing sector.
Technology used in the financial sector is reshaping the “financial services and information” delivery, although there lies “no evidence” to support that services such as crowd-funding, robo-advice and “cloud computing” have the potential to “fundamentally” bring about a change in the “underlying activities such as lending”, mentioned the report of the Financial Stability Board.
FSB occupies in the coordination seat that binds the regulations between the G20 economies, whereby it has found no such “signal” of “immediate rush” for introducing “new rules at the global level” for mitigating “financial stability risks”. On the part of the regulators, there has been a ‘relative’ relaxation concerning fintech due to its small “size” in comparison to “banks with investment totalling $21 billion in the first nine months of 2016”. However, FSB continuous to monitor “the sector”.
Looking beyond the risks, one can see the “potential benefits” of fintech that include “greater efficiency, transparency, competition and resilience of the financial system” along with “economic growth”. While, the report of FSB stated:
“The FSB will continue to monitor and discuss the evolution of the potential financial stability implications of fintech developments”.
Additionally, enough data is not available at the moment on fintech which could enable one to rightly gage the “financial stability threats”, while the regulators show no keenness on burdening the “new sector” with “heavy handed rules”. Broader “financial rules” already takes into account the activities of fintech, although “many countries are already planning to take further measures to protect consumers and investors”, claimed the FSB.
Furthermore, the FSB report recognised 3 “priority areas” wherein “international collaboration” concerning fintech monitoring could take place. These areas are:
“…managing operational risks such as management failures; mitigating cyber risks; and monitoring risks to the financial system that could emerge as fintech activities increase”.
Taking the “essential first” step, the said report enumerated “fintech by activities and primary function”, preparing the grounds for designing “any new rules”. In the words of the “senior deputy governor at the Bank of Canada and chair of the FSB's fintech issues group”, Carolyn Wilkins:
“Regulators need to understand the impact that developments in fintech can have on financial stability, especially given the rapid rise of innovation in this space”.
“Our report today sets out a clear picture of supervisory and regulatory issues, which the FSB will continue to monitor and discuss going forward.”
References:
www.reuters.com
Technology used in the financial sector is reshaping the “financial services and information” delivery, although there lies “no evidence” to support that services such as crowd-funding, robo-advice and “cloud computing” have the potential to “fundamentally” bring about a change in the “underlying activities such as lending”, mentioned the report of the Financial Stability Board.
FSB occupies in the coordination seat that binds the regulations between the G20 economies, whereby it has found no such “signal” of “immediate rush” for introducing “new rules at the global level” for mitigating “financial stability risks”. On the part of the regulators, there has been a ‘relative’ relaxation concerning fintech due to its small “size” in comparison to “banks with investment totalling $21 billion in the first nine months of 2016”. However, FSB continuous to monitor “the sector”.
Looking beyond the risks, one can see the “potential benefits” of fintech that include “greater efficiency, transparency, competition and resilience of the financial system” along with “economic growth”. While, the report of FSB stated:
“The FSB will continue to monitor and discuss the evolution of the potential financial stability implications of fintech developments”.
Additionally, enough data is not available at the moment on fintech which could enable one to rightly gage the “financial stability threats”, while the regulators show no keenness on burdening the “new sector” with “heavy handed rules”. Broader “financial rules” already takes into account the activities of fintech, although “many countries are already planning to take further measures to protect consumers and investors”, claimed the FSB.
Furthermore, the FSB report recognised 3 “priority areas” wherein “international collaboration” concerning fintech monitoring could take place. These areas are:
“…managing operational risks such as management failures; mitigating cyber risks; and monitoring risks to the financial system that could emerge as fintech activities increase”.
Taking the “essential first” step, the said report enumerated “fintech by activities and primary function”, preparing the grounds for designing “any new rules”. In the words of the “senior deputy governor at the Bank of Canada and chair of the FSB's fintech issues group”, Carolyn Wilkins:
“Regulators need to understand the impact that developments in fintech can have on financial stability, especially given the rapid rise of innovation in this space”.
“Our report today sets out a clear picture of supervisory and regulatory issues, which the FSB will continue to monitor and discuss going forward.”
References:
www.reuters.com
