| Abstract: |
A new wave of technological innovations, often called “fintech,” is
accelerating change in the financial sector. What impact might fintech have on
financial services, and how should regulation respond? This paper sets out an
economic framework for thinking through the channels by which fintech might
provide solutions that respond to consumer needs for trust, security, privacy,
and better services, change the competitive landscape, and affect regulation.
It combines a broad discussion of trends across financial services with a
focus on cross-border payments and especially the impact of distributed ledger
technology. Overall, the paper finds that boundaries among different types of
service providers are blurring; barriers to entry are changing; and
improvements in cross-border payments are likely. It argues that regulatory
authorities need to balance carefully efficiency and stability trade-offs in
the face of rapid changes, and ensure that trust is maintained in an evolving
financial system. It also highlights the importance of international
cooperation. |
| Keywords: |
Central banks;Financial sector;International cooperation;Fintech, cross border payments, market structure, financial regulation, financial stability, monetary policy, virtual currencies, digital currencies, competition, entry, intermediaries, concentration, market contestability, vertical integration, horizontal integration, product differentiation, network externalities, economies of scale, barriers to entry, sunk costs, fixed costs, information asymmetries, transaction costs, matching, innovation, adoption, cross-border payments, General, Government Policy and Regulation, Government Policy and Regulation |