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
EBA published a report analyzing the impact of the unwind mechanism of the liquidity coverage ratio (LCR) for a sample of European banks over a three-year period, from the end of 2016 to the first quarter of 2020.
In response to questions from a member of the European Parliament, the ECB President Christine Lagarde issued a letter clarifying the possibility of amending the AnaCredit Regulation and making targeted longer-term refinancing operations (TLTROs) dependent on the climate-related impact of bank loans.
IASB started the post-implementation review of the classification and measurement requirements in IFRS 9 on financial instruments and added the review as a project to its work plan.
FSB published a report that examines progress in implementing policy measures to enhance the resolvability of systemically important financial institutions.
EBA published a report on the benchmarking of national loan enforcement frameworks across 27 EU member states, in response to the call for advice from EC.
FSB published a letter from its Chair Randal K. Quarles, along with two reports exploring various aspects of the market turmoil resulting from the COVID-19 event.
RBNZ launched a consultation on the details for implementing the final Capital Review decisions announced in December 2019.
The Trustees of the IFRS Foundation, which are responsible for the governance and oversight of IASB, have announced the appointment of Dr. Andreas Barckow as the IASB Chair, effective July 2021.
HKMA issued a letter to consult the banking industry on a full set of proposed draft amendments to the Banking (Capital) Rules for implementing the Basel standard on capital requirements for banks’ equity investments in funds in Hong Kong.
ESRB published an opinion assessing the decision of Swedish Financial Supervisory Authority (FSA) to extend the application period of a stricter measure for residential mortgage lending, in accordance with Article 458 of the Capital Requirements Regulation (CRR).