Featured Product

    Erkki Liikanen of IFRS on Impact of Big Tech on Financial Stability

    December 06, 2019

    While delivering a keynote speech at the L’Agefi’s 10th Meeting of the Financial Industry, Erkki Liikanen, Chair of the Trustees of the IFRS Foundation expressed his views on whether big tech is a threat to financial stability. He noted that certain aspects of the financial system are inefficient and even outdated. The entry of big tech and fintech firms poses challenges and represents an opportunity to energize the market for payment services, credit provision, and insurance, among other services. He also shared his observations on the actions policy makers should take to deal with the resulting challenges.

    Mr. Liikanen spoke about the BIS contribution to the discussion on the role big techs. He said, "Professor Hyun Song Shin, economic adviser and head of research for the BIS, sets out both the opportunities and risks associated with big tech in finance. In his regulatory compass, the menu of policy choices can be reflected to help policymakers navigate this complex landscape." Building on the ideas of Professor Hyun Song Shin, Mr. Liikanen offered following three observations:

    • Policymakers need to decide how much to encourage big tech to enter finance—should policies promote the entry of big techs or restrict it.
    • Big tech tests the regulatory perimeters of data protection, competition policy, and now financial regulation. As such, regulation that is fit-for-purpose will require enhanced cooperation among multiple regulatory bodies. The entry of big tech into financial services requires cooperation of different regulators. Joined-up thinking is essential to achieving a regulatory environment fit for purpose.
    • There is a need to recognize the cross-border nature of the big tech and fintech challenge and respond appropriately.

    He concluded that innovation is here to stay and it will bring both benefits and challenges. However, a balanced approach is needed to reap the benefits of financial inclusion and efficiency and ensure a level playing field between big techs and banks.

     

    Keywords: International, Banking, Big Tech, Fintech, Financial Innovation, Financial Inclusion, BIS, IFRS

    Related Articles
    News

    FED Revises Capital Planning and Stress Testing Requirements for Banks

    FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.

    January 19, 2021 WebPage Regulatory News
    News

    ECB Releases Results of Bank Lending Survey for Fourth Quarter of 2020

    ECB published results of the quarterly lending survey conducted on 143 banks in the euro area.

    January 19, 2021 WebPage Regulatory News
    News

    ESAs Publish Reporting Templates for Financial Conglomerates

    ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.

    January 18, 2021 WebPage Regulatory News
    News

    EBA Publishes Report on Asset Encumbrance of Banks in EU

    EBA published the annual report on asset encumbrance of banks in EU.

    January 18, 2021 WebPage Regulatory News
    News

    MAS Revises Guidelines on Technology Risk Management

    MAS revised the guidelines that address technology and cyber risks of financial institutions, in an environment of growing use of cloud technologies, application programming interfaces, and rapid software development.

    January 18, 2021 WebPage Regulatory News
    News

    US Agencies Publish Updates for Call Reports, FFIEC 101, and FR Y-9C

    FED updated the reporting form and instructions for the FR Y-9C report on consolidated financial statements for holding companies.

    January 15, 2021 WebPage Regulatory News
    News

    EBA Proposes Guidelines for Establishing Intermediate Parent Entities

    EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.

    January 15, 2021 WebPage Regulatory News
    News

    EC Adopts Financial Reporting Changes Arising from Benchmark Reforms

    EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.

    January 14, 2021 WebPage Regulatory News
    News

    BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk

    BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.

    January 14, 2021 WebPage Regulatory News
    News

    HMT Updates List of Post-Brexit Equivalence Decisions in UK

    HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.

    January 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6462