Innovations in FinTech have been added to the list of things the Financial Stability Board worries about by Mark Carney, head of the international group of policymakers and regulators.
The governor of the Bank of England told G20 finance ministers that the FSB would start to examine
Financial Stability Board to put FinTech under the lens
whether the growing fintech sector presents any risk to the financial system. The FSB will determine its next steps in March – according to the FT.
“A number of technological innovations with potentially transformative implications for the financial system, its intermediaries and users are now receiving close attention,” he wrote in a letter to the ministers published on Saturday.
“The regulatory framework must ensure that it is able to manage any systemic risks that may arise from technological change without stifling innovation.”
“The FSB is evaluating the potential financial stability implications of emerging financial technology innovation for the financial system as a whole, working with standard setters that are monitoring developments in their respective sectors. We are also working to understand better the potential impacts on financial stability of operational disruption to core financial institutions or infrastructure.”
The FSB’s scrutiny comes as financial companies are grappling with blockchain, the open-ledger technology that underpins bitcoin, the cryptocurrency. In turn, that has attracted the attention of regulators around the world. But this is the first time an international group has flagged its interest.
The influential FSB makes policy recommendations around financial regulation to the G20 nations, whose finance ministers were meeting in China. Its past work has included leading work to mitigate “too big to fail” banks.
Its attention this year is moving beyond banks: Mr Carney reiterated comments that broadly speaking banks were moving to what the FSB considers is the safe amount of capital to conserve, and that the FSB would concentrate on making sure existing regulations were implemented consistently around the world.
In a move that will cheer banks, he added that the body would examine any unintended consequences of post-crisis regulation; something that the BoE and EU are also doing.
The FSB will continue looking at asset managers, the shadow-banking sector, clearing houses and insurers.
While asset managers managed last year to convince the FSB to shelve a plan to label them as systemically important as some banks are — which would have brought extra capital charges and increased supervision — Mr Carney’s letter said the FSB would put out policy recommendations for the sector, particularly around reducing fire-sale risks. The body has been concerned with open-ended funds offering their investors redemptions at very short notice.
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