Featured Product

    IMF Paper on Strategy for Fintech Applications in Pacific Island

    August 22, 2019

    IMF published a paper highlighting the use of some elements of the Bali Fintech Agenda in Pacific island countries, which face significant financial-structural challenges. The paper outlines technologies and policy areas relevant to the Pacific context and provides a potential action plan to help advance the policy agenda. The paper emphasizes the feasibility of adopting fintech applications in the Pacific through a coordinated regional approach, anchored by appropriate regulation and infrastructure.

    The paper draws on elements of the Bali Fintech Agenda and uses fintech examples from less developed economies that might be feasible for the Pacific island countries. The Bali Fintech Agenda highlights 12 principles for policymakers to consider when formulating their approaches to fintech. The agenda aims to harness the potential of fintech while managing associated risks. The paper builds on the results of IMF research on financial inclusion showing that small states are more likely to leapfrog into new technologies. The paper first describes the state of financial development and the level of access to technology in the Pacific Island countries. It then focuses on identifying the necessary prerequisites for technology-enabled financial inclusion, including the technological and general infrastructure requirement and the regulatory and market environments. Next, the paper outlines a strategy for promoting fintech solutions in Pacific Island countries in four areas—payment systems, identification requirements, credit sharing information, and risk assessment and management. The paper concludes with key takeaways and policy recommendations.

    Technological adoption requires policymakers to provide the appropriate supporting physical and regulatory infrastructure, but this is a demanding task. A regional approach to fintech applications for financial inclusion and regulatory frameworks is essential to overcome capacity and scalability constraints. Regional initiatives such as innovation hubs, regulatory sandboxes, and technological platforms would avoid duplication and harmonize policy and regulatory standards. They enable a two-way knowledge exchange between regulators and digital financial service providers. This would set the stage for the regional know-your-customer utility introduced at the 2018 South Pacific Central Bank Governors’ Meeting. These initiatives would also allow policymakers to build a market environment attractive to incumbent and new market participants.

    The implementation of fintech products and services will face risks and constraints that need to be factored into the implementation and risk mitigation strategy. Policymakers should conduct a comprehensive assessment of risks by type and nature to decide how to absorb, control, or mitigate them. The risk assessment forms the foundation of a risk-mitigation strategy, which will help guide policymakers in determining appropriate action items. The paper highlights that work needs to be done in the areas of cyber-security, market, and operational risks. Regulators and institutions in Pacific island countries could be at a disadvantage in coping with the growing risks of cyber threats. The gap between regulatory priorities and knowledge is highest for cyber-security and technological tools for regulation and supervision. This knowledge gap could translate into weaker capacity to confront attacks and fraud, thus increasing Pacific island economies’ exposure to cyber-security risks. Regional approaches are needed to ensure that regulators and supervisors in Pacific island countries can adopt strong controls and overcome resource and skill constraints.

     

    Related Link: IMF Paper

     

    Keywords: Asia Pacific, Banking, Pacific Island, Fintech, Bali Fintech Agenda, Risk Assessment, Regtech, Cyber Risk, IMF

    Related Articles
    News

    APRA Revises Standard on Margin Rules for Uncleared Derivatives

    APRA revised CPS 226, which is the prudential standard on margin and risk mitigation requirements for non-centrally cleared derivatives.

    September 19, 2019 WebPage Regulatory News
    News

    SEC Adopts Rules and Amendments Under Regulatory Regime for Swaps

    SEC announced that it took a significant step toward establishing the regulatory regime for security-based swap dealers (SBSDs) by adopting a package of rules and rule amendments under Title VII of the Dodd-Frank Act.

    September 19, 2019 WebPage Regulatory News
    News

    PRA Issues Consultation on Prudent Person Principle Under Solvency II

    PRA, via the consultation paper CP22/19, has set out its proposed expectations for investment by firms, in accordance with the Prudent Person Principle (PPP).

    September 18, 2019 WebPage Regulatory News
    News

    PRA Proposal on Probability of Default and LGD Estimation

    PRA proposed, via the consultation paper CP21/19, an approach to implementing EBA’s recent regulatory products relating to Probability of Default (PD) estimation, Loss Given Default (LGD) estimation, and the treatment of defaulted exposures in the internal ratings-based (IRB) approach to credit risk.

    September 18, 2019 WebPage Regulatory News
    News

    BIS Formalizes Agreement to Set Up Innovation Hub in Hong Kong SAR

    BIS and HKMA signed the Operational Agreement on the BIS Innovation Hub Center in Hong Kong Special Administrative Region (SAR).

    September 18, 2019 WebPage Regulatory News
    News

    APRA Observations from Thematic Review on Recovery Plans of Insurers

    APRA issued a letter to general insurers and life insurers, outlining observations from a recent thematic review on recovery planning by insurers.

    September 18, 2019 WebPage Regulatory News
    News

    BNM Publishes Financial Stability Review for the First Half of 2019

    BNM published Financial Stability Review for the first half of 2019.

    September 18, 2019 WebPage Regulatory News
    News

    CFTC Extends Comment Period for Proposals on Cross-Border Clearing

    CFTC announced that it is extending, until November 18, 2019, the comment period for the proposal for an alternative compliance framework for derivatives clearing organizations (DCOs) that are organized outside of U.S. and that do not pose substantial risk to the U.S. financial system.

    September 18, 2019 WebPage Regulatory News
    News

    FASB Issues Summary of Tentative Board Decisions at September Meeting

    FASB published a summary of the tentative decisions taken at its Board meeting in September 2019.

    September 18, 2019 WebPage Regulatory News
    News

    EIOPA Forms Consultative Expert Group on Digital Ethics in Insurance

    EIOPA established the Consultative Expert Group on Digital Ethics in Insurance to assist EIOPA in the development of digital responsibility principles in insurance.

    September 17, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3848