IMF published a paper that took stock of the fintech experience in different countries, conducted in-depth review of selected fintech topics, and identified key fintech issues that merit further attention of the membership and international bodies. The paper found that, despite the important regional and national differences, countries were broadly embracing the opportunities of fintech to boost economic growth and inclusion, while balancing risks to stability and integrity.
Last year, IMF and World Bank Group approved the Bali Fintech Agenda, which lays out key issues to consider in how technological innovation is changing the provision of financial services with implications for economic efficiency and growth, financial stability, inclusion, and integrity. In approving the Agenda, IMF Executive Directors asked staff to review fintech developments and consider their implications within the mandates of IMF and World Bank. This paper is in response to this call and draws on discussions with country authorities on issues raised in the context of IMF surveillance and World Bank country work, the findings of a survey of the membership on their approach to the Bali Fintech Agenda, and deeper exploration on selected fintech topics by staff. It identified key areas for international cooperation––including roles for IMF and World Bank Group––and the areas in which further work is needed at the national level and by relevant international organizations and standard-setting bodies.
The IMF Directors agreed that several key policy issues would require heightened attention from national authorities and international bodies. These include managing competing policy priorities with the aim of harnessing the benefits of fintech while supporting competition and strengthening financial stability, financial integrity, and consumer protection. Directors also emphasized the importance of other priorities, including building regulatory capacity, strengthening cyber-security, and enhancing data frameworks. They took note of staff’s analysis on the need to develop new international standards or good practices to support countries in adapting their legal and regulatory frameworks, although some Directors did not see the need for new standards related to fintech beyond what is already under discussion in the relevant international fora.
The IMF staff conducted an in-depth review of selected fintech topics, including regulatory sandboxes, aspects of crypto-assets, payments and settlement systems (large value and retail), data frameworks, selected legal issues, institutional arrangements, and the central bank digital currency. Based on the review. the paper concludes that development of international standards or good practices by standard-setting bodies is an urgent issue. This will help many countries adapt their legal and regulatory frameworks to the new entrants that are increasingly becoming part of the intermediation and financial service delivery chain. The paper highlights that cyber-security is another widely considered key risk facing financial systems and fintech applications. The rising capabilities of cyber-attacks is creating a sense of urgency among public authorities to institute effective measures for cyber-security risk management and operational resiliency.
Related Link: Report
Keywords: International, Banking, Insurance, Securities, Fintech, Cyber Risk, Regtech, Crypto-Assets, Digital Currencies, Financial Stability, IMF
Previous ArticleEBA Consults on Standards for Internal Model Approach Under FRTB
HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.
EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.
BoE has set out a three-phased plan to transform data collection from the UK financial sector over the next decade.
BIS recently made a couple of announcements with respect to the planned and ongoing work in the area of financial technology.
ESRB updated the list of national macro-prudential measures applied by each member state in the European Economic Area.
BoE has set out results of a survey on the impact of COVID-19 events on the use of machine learning and data science.
In response to a request from the European Council and Parliament, ECB published an opinion on the proposed regulation on markets in crypto-assets.
APRA announced the updated aggregate amounts for the 2021 Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated authorized deposit-taking institutions that are subject to the Liquidity Coverage Ratio (LCR).
ECB published supervisory Memorandums of Understanding (MoUs) with UK as well as other European and non-European authorities.
EIOPA identified business model sustainability and adequate product design as the two EU-wide strategic supervisory priorities.