FSI Survey Examines Policy Responses to Fintech Developments
The Financial Stability Institute (FSI) of BIS published a paper that provides a cross-country overview of policy responses to fintech developments, based on the survey responses from about 30 jurisdictions. The paper identifies several challenges facing authorities such as keeping up with the speed of technological change to understand novel business models and develop adequate policy responses, collecting data on fintech developments, adjusting regulatory reporting requirements, cooperating and coordinating at the local and international levels, and continuing to prevent regulatory arbitrage.
The paper also proposes a conceptual framework for analyzing policy responses to fintech, referred to as the "fintech tree." The fintech tree identifies three categories: fintech activities, enabling technologies, and policy enablers. Authorities pursue a range of approaches when regulating fintech activities. For digital banking, licensing regimes or other specific requirements are the exception. Some jurisdictions, however, have launched initiatives to facilitate the establishment of new banks, including digital banks. For enabling technologies, regulators have adjusted their existing regulations to add technology-specific elements in existing laws, regulation, or guidelines. However, there are no licensing regimes or other requirements that are specific to insurtech business models in surveyed jurisdictions. Nevertheless, the absence of insurtech-specific requirements does not mean that authorities are not responding to the increasing digitalization of the insurance business.
The survey reveals that almost all participating jurisdictions have either modified their existing regulatory frameworks or clarified their regulatory expectations on the use of cloud computing by financial institutions. Only a few jurisdictions have issued regulations specific to the distributed ledger technology while, to date, there are no specific regulatory requirements for financial institutions’ use of machine learning and artificial intelligence. However, a few jurisdictions have issued non-binding principles to encourage ethical and responsible use of artificial intelligence by financial institutions. Additionally, given its critical role in the economy, almost all jurisdictions have put in place cyber-security regulations and guidance specific for the financial sector.
Among the identified challenges, collecting data related to fintech developments and adjusting regulatory reporting requirements has been identified as a common challenge in most jurisdictions. Wherever licensed, authorities are obtaining information from regulated entities, including new entrants offering fintech services, through regulatory reporting. Other sources include information obtained through innovation facilitators or through the research of other public and private organisations. However, a survey conducted in 2019 by the Irving Fisher Committee found that fintech developments present various challenges to statisticians in a number of central banks. Some of these challenges are related to the granularity of data required to identify fintech firms and the integration of fintech activities in business classifications.
Related Links
Keywords: International, Banking, Insurance, Fintech, Regtech, Blockchain, Artificial Intelligence, Cyber Risk, Cloud Computing, Big Data, Insurtech, Reporting, BIS, FSI
Previous Article
HKMA Finalizes Implementation of BELR, BCAR, and BDAR in Hong KongRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
