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
ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.
ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).
ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.
ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.
EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).
APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.
FED released hypothetical scenarios for a second round of stress tests for banks.
FED is proposing to temporarily revise the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes necessary to conduct stressed analysis in connection with the re-submission of capital plans, using data as of June 30, 2020.
FED adopted a proposal to extend for three years, with revision, the information collection under the market risk capital rule (FR 4201; OMB No. 7100-0314).
EBA published a voluntary online survey seeking input from credit institutions on their practices and future plans for Pillar 3 disclosures on the environmental, social, and governance (ESG) risks.