The Financial Stability Board (FSB) has issued a report on the financial stability implications from FinTech. The report identifies ten areas, of which the following three are seen as priorities for international collaboration:
- the need to manage operational risk from third-party service providers. Authorities should determine if current oversight frameworks for important third-party service providers to financial institutions are appropriate;
- mitigating cyber risks. Ex ante contingency plans for cyber-attacks, information sharing, monitoring, a focus on incorporating cyber-security in the early design of systems, and financial and technology literacy could help to lower the probability of cyber events that have adverse effects on financial stability; and
- monitoring macro-financial risks that could emerge as FinTech activities increase. While there are currently no compelling signs of these risks materialising, experience shows that they can emerge quickly if left unchecked. Systemic importance and pro-cyclicality could emerge from a number of sources, including from greater concentration in some market segments and if funding flows on FinTech lending platforms were to become large and unstable.
The six other issues that merit authorities’ attention are:
- cross-border legal issues and regulatory arrangements;
- governance and disclosure frameworks for big data analytics;
- assessing the regulatory perimeter and updating it on a timely basis;
- shared learning with a diverse set of private sector parties;
- further developing open lines of communication across relevant authorities;
- building staff capacity in new areas of required expertise; and
- studying alternative configurations of digital currencies.
View FSB issues a report on the financial stability implications from FinTech, 27 June 2017