BIS held its 18th Annual Conference in Zurich, Switzerland, on June 28, 2019. The key issues under discussion were the implications of technological change for the financial system as well as the implications of financial innovation and the meaning of big data for central banks. BIS published the remarks of Claudia Buch, the Vice-President of Bundesbank; Norman Chan, the former Chief Executive of HKMA; and Jon Cunliffe, the Deputy Governor of BoE at the conference. Additionally, it published two working papers that were presented at the annual conference: one paper was on fintech and financial inclusion while the other one was related to behavioral screening by credit card companies.
The working paper on fintech and financial inclusion offers preliminary evidence and theoretical analysis about the impact of technological progress in the finance industry. The paper investigates whether the rise of fintech has pushed down the unit cost of financial intermediation. The paper then asks whether the potential gains from fintech will have distributional consequences and investigates the role of machine learning and big data. The study concludes that fintech is not only likely to decrease the costs of financial intermediation, but also to create new regulatory issues. It shows that the unit cost of financial intermediation has fallen since the great financial crisis, concluding that fintech has made the financial sector more efficient.
This paper develops a simple model of robo-advising, showing that the net effect of fintech on welfare crucially depends on the type and size of fixed costs it entails. Based on a model that features a new technology to analyze non-traditional consumer data, it was concluded that big data and machine learning will likely reduce human biases against minorities while eroding the effectiveness of existing regulations. The tentative conclusion is that fintech can bring widely shared welfare benefits but changes in existing policies and regulations are necessary to achieve its full potential.
- Notification on Annual Conference
- Overview of Annual Conference
- Paper on Fintech and Financial Inclusion
Keywords: International, Banking, Insurance, Securities, Fintech, Big Data, Financial Intermediation, Research, Machine Learning, Blockchain, BIS
EBA published an erratum for the technical package on phase 2 of the reporting framework 3.0.
MAS amended Notice 643A that addresses requirements for banks to prepare statements of exposures and credit facilities to related concerns or parties.
ECB has published, in the Official Journal of the European Union, the Guideline 2021/565 on the euro short-term rate (€STR) and this guideline amends the previous ECB Guideline 2019/1265.
EBA launched a consultation on the draft regulatory technical standards on the list of countries with an advanced economy for calculating the equity risk under the alternative standardized approach (FRTB-SA).
PRA is proposing, via CP7/21, the approach to implementing new requirements related to the specification of the nature, severity, and duration of an economic downturn in the internal ratings-based (IRB) approach to credit risk.
The UK government launched the Recovery Loan Scheme (RLS) as part of its continued COVID-19 support for UK businesses, as announced by HM Treasury on March 03, 2021.
FSB published a letter, from its Chair Randal K. Quarles, to the G20 Finance Ministers and Central Bank Governors, ahead of their virtual meeting on April 07, 2021.
OSFI issued a letter to the deposit-taking institutions issuing covered bonds and announced the unwinding of the temporary increase to the covered bond limit for deposit-taking institutions, effective immediately.
To support recovery from the COVID-19 crisis, EU has published two regulations to amend the securitization framework, as set out in the Securitization Regulation (2017/2402) and the Capital Requirements Regulation or CRR (575/2013).
HM Treasury announced that G7 Finance Ministers and Central Bank Governors met ahead of COP 26, the 2021 UN Climate Change Conference, and agreed on green agenda.