Strengthening financial sector regulatory arrangements has been a major focus of the G-20 since the crisis in 2008, and progress in strengthening financial regulations is often cited as its success. Nonetheless, the overall contribution of the G20 as a political forum for the oversight of international financial regulation is diming as FinTech is blurring the boundaries between intermediaries and markets, as well as between digital service providers moving into the financial space, nonbank financial companies, and banks. Along the same line, financial technology is causing paradigm changes to the traditional financial system, presenting both challenges and opportunities. As FinTech grows rapidly, the importance of regulation and supervision becomes more prominent. The three cornerstones of banking: taking deposits, making loans, and facilitating payments are being reassembled functionally and digitally outside of the bank regulatory perimeter by certain firms. Without comprehensive consolidated supervision, no single regulator can see the whole picture and understand how a firm as a whole operates and takes risk. No crypto firm to date is subject to comprehensive consolidated supervision, creating gaps in supervision alongside risks. Countries around the world are taking divergent views on cryptocurrency and other so-called “Web3” technologies based on blockchain. This book aims to provide a comparison between the various available approaches, models, or legislations by identifying certain key legislative policies within the G-20 as they cope with innovative financial technologies, and will be of interest to scholars, students, and practitioners of banking, financial regulation, risk management, and financial technology.
Author(s): Felix I. Lessambo
Series: Palgrave Macmillan Studies in Banking and Financial Institutions
Publisher: Palgrave Macmillan
Year: 2023
Language: English
Pages: 338
City: Cham
Acknowledgments
Disclaimer
Contents
Acronyms
List of Figures
1 Banking Regulation and Fintech Challenges
1.1 General
1.2 Evolution of Fintech
1.2.1 Fintech 1.0 (1886–1967)
1.2.2 Fintech 2.0 (1967–2008): Digitalization
1.2.3 Fintech 3.0 and 3.5 (2008–Current): The Start-Ups Era
1.3 Advantages and Disadvantages of FinTech
1.3.1 Advantages
1.3.1.1 Efficiency Enhancement
1.3.1.2 Financial Inclusion
1.3.1.3 Decentralization
1.3.1.4 Transparency
1.3.1.5 Reduced Credit Risks
1.3.2 Disadvantages
1.3.2.1 Concentration
1.3.2.2 Risks to Financial Stability
1.3.2.3 Macro-Financial Risks
1.3.2.4 Micro-Financial Risks
1.3.2.5 Managerial Risks
1.4 Fintech Activities
1.4.1 Digital Payment and Lending
1.4.2 Digital Platform Financing
1.4.3 Robot-Advice
1.4.4 InsurTech Business Model
1.4.5 Crypto Assets
1.5 FinTech Regulation
1.6 The Bali Fintech Paper
1.6.1 The Bali Agenda
1.6.2 The 12 Elements Under the Bali Agenda
1.6.2.1 Embrace the Promise of Fintech
1.6.2.2 Enable New Technologies to Enhance Financial Service Provision
1.6.2.3 Reinforce Competition and Commitment to Open, Free, and Contestable Markets
1.6.2.4 Foster Fintech to Promote Financial Inclusion and Develop Financial Markets
1.6.2.5 Monitor Developments Closely to Deepen Understanding of Evolving Financial Systems
1.6.2.6 Adapt Regulatory Framework and Supervisory Practices for Orderly Development and Stability of the Financial System
1.6.2.7 Safeguard the Integrity of Financial Systems
1.6.2.8 Modernize Legal Frameworks to Provide an Enabling Legal Landscape
1.6.2.9 Ensure the Stability of Domestic Monetary and Financial Systems
1.6.2.10 Develop Robust Financial and Data Infrastructure to Sustain Fintech Benefits
1.6.2.11 Encourage International Cooperation and Information Sharing
1.6.2.12 Enhance Collective Surveillance of the International Monetary and Financial System
1.7 Fintech Future
2 International Standard Setting Boards
2.1 General
2.2 The Basel Committee—Overview
2.2.1 Mission and Objectives
2.2.2 Activities
2.2.3 Organizational Structure
2.3 The Financial Stability Institute
2.3.1 Missions
2.3.2 Objectives
2.3.3 Organizational Governance
2.3.4 FSI Activities
2.4 International Association of Insurance Supervisors (IAIS)
2.4.1 Mission
2.5 International Organization of Securities Commissions
2.5.1 IOSCO Mission
2.5.2 IOSCO Governance
2.6 International Association of Deposit Insurers
2.6.1 Mission and Objectives
2.6.2 IADI Governance
2.7 The Committee on Payments and Market Infrastructure (CPMI)
2.7.1 Mission and Objectives
2.7.2 Governance/Organization
2.8 The Financial Action Task Force on Money Laundering (FATF)
2.8.1 Mission and Objectives
2.8.2 FAFT Secretary
3 FinTech Regulations and Supervision in the United States
3.1 General
3.2 Fintech Regulation and Supervision
3.2.1 The Office of the Comptroller of the Currency
3.2.1.1 The OCC Mission and Objectives
3.2.1.2 OCC and National Bank Charter
3.2.1.3 OCC Structure
3.2.2 The Consumer Financial Protection Bureau (CFPB)
3.2.3 The Securities and Exchange Commission (SEC)
3.2.3.1 Mission and Objectives
3.2.4 The Commodity and Futures Trading Commission (CFTC)
3.2.4.1 Mission and Objectives
3.2.4.2 Organizational Chart
3.2.5 US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN)
3.2.5.1 FinCen Activities
3.3 Fintech Regulations
3.3.1 FinTech Regulation Approach
3.3.2 The OCC Fintech Charter
3.3.3 Digital Payment and Lending
3.3.4 Digital Platform Financing
3.3.5 Cryptocurrency
3.3.6 InsurTech
3.4 OCC Financial Statements
3.4.1 The Balance Sheet
3.4.1.1 Assets
3.4.1.2 Investments
3.4.1.3 Liabilities
3.4.1.4 Net Position
3.4.2 Statements of Net Cost
3.4.3 Revenues and Other Financing Sources
3.4.4 Statements of Changes in Net Position
3.4.5 Statements of Custodial Activity
4 The European Banking Authority
4.1 General
4.2 EBA Mission and Objectives
4.3 EBA Scope of action
4.4 EBA Organizational Structure
4.5 EBA Funding
4.6 The EU Sandbox Approach
4.7 Fintech Regulatory and Supervision
5 The Deutsche Bundesbank
5.1 General
5.2 Missions and Objectives
5.3 Organizational Structure
5.4 Deutsche Bundesbank and Banking Supervision
5.4.1 The Federal Financial Supervisory Authority (BaFin)
5.4.2 The Consumer Advisory Council
5.4.3 The Financial Stability Committee
5.4.4 The Insurance Advisory Council
5.4.5 The Securities Council
5.4.6 The Deutsche Bundesbank
5.5 Fintech Regulation
5.5.1 Sandbox Approach
5.5.2 Mobile Payments
5.5.3 Crowdfunding and Crowdlending
5.5.4 Robot-Advice
5.5.5 Blockchain
5.5.6 InsurTech
5.6 DB Financial Statements
5.6.1 The Balance Sheet
5.6.2 Profit and Loss
6 The Bank of France
6.1 General
6.2 Missions and Objectives
6.3 Organizational Structure
6.3.1 Governor and Deputy Governors
6.3.2 The Executive Committee
6.3.3 The General Council
6.3.4 The Audit Committee
6.3.5 The Compensation Committee
6.4 Fintech Regulation
6.4.1 Sandbox Approach
6.4.2 Electronic Payments
6.4.3 Crowdfunding and Crowdlending
6.4.4 Robot-Advice
6.4.5 Cryptocurrencies and Blockchain
6.4.6 InsurTech
6.5 BDF Financial Statements
7 The Bank of Italy (Banca d’Italia)
7.1 General
7.2 Missions and Objectives
7.3 Organizational Structure
7.3.1 The Governing Board
7.3.2 The Board of Directors
7.3.3 The Board of Auditors
7.3.4 The Shareholding Meeting
7.3.5 The External Auditor
7.4 Fintech Regulations
7.4.1 The Sandbox Approach
7.4.2 Digital Payments and Money Transfer
7.4.3 Crowdfunding
7.4.4 Robot-Advisory Services
7.4.5 Cryptocurrency
7.4.6 InsurTech
7.5 Banca d’Italia Financial Statements
7.5.1 The Balance Sheet
7.5.2 Profit and Loss
8 The Central Bank of Spain (Banco de España)
8.1 General
8.2 Missions and Objectives
8.3 Organizational Structure
8.3.1 The Governor
8.3.2 The Deputy Governor
8.3.3 The Governing Council
8.3.4 The Executive Commission
8.3.5 The Audit Committee
8.4 FinTech Regulation
8.4.1 The Sandbox Approach
8.4.2 Payment Services
8.4.3 Online Banking
8.4.4 Social Trading Platforms
8.4.5 Crowdfunding
8.4.6 Cryptocurrency
8.4.7 InsurTech
8.5 Financial Statements
8.5.1 The Balance Sheet
8.5.2 Profit and Loss
9 The Prudential Regulation Authority
9.1 General
9.2 Mission and Objectives
9.3 Organizational Structure
9.4 Funding
9.5 Fintech Regulatory and Supervision
9.5.1 Fintech Accelerator: Bank of England (BoE)
9.5.2 Digital Payment and Lending
9.5.3 Digital Platform Financing
9.5.4 Blockchain/Cryptocurrency
9.5.5 InsurTech Business Model
10 China Banking Insurance Regulatory Commission
10.1 General
10.2 Mission and Objectives
10.3 Main Responsibilities
10.4 Organizational Structure
10.5 Fintech Regulatory and Supervision
10.5.1 Digital Payments and Lending
10.5.2 Digital Financing Platform
10.5.3 Cryptocurrency
10.5.4 InsurTech
10.6 Financial Statements
10.6.1 Income Statement
10.6.2 Balance Sheet
10.6.3 Statement of Cash Flows
11 The Reserve Bank of India
11.1 General
11.2 Mission and Objectives
11.3 Organizational Structure
11.4 Funding
11.5 Fintech Regulatory and Supervision
11.5.1 The Sandbox Approach
11.5.2 Digital Payments and Lending
11.5.3 Digital Financing Platform
11.5.4 Cryptocurrency
11.5.5 InsurTech
11.6 Financial Statements
11.6.1 The Balance Sheet
11.6.2 The Statement of Income
11.6.3 The Statement of Cash Flows
12 The Bank of “South” Korea
12.1 General
12.2 Objectives and Missions
12.3 Organizational Structure
12.4 Fintech Regulations
12.4.1 The Sandbox Approach
12.4.2 Mobile Payments/Digital Payments
12.4.3 Digital Financial Platform
12.4.4 Robot-Advisor
12.4.5 Cryptocurrency
12.4.6 InsurTech
12.5 Financial Statements
12.5.1 The Balance Sheet
12.5.2 Statement of Income
12.5.3 Statement of Changes in Equity
12.5.4 Statement of Appreciation of Earned Surplus
13 Indonesia Bank
13.1 General
13.2 Objectives and Missions
13.3 Organizational Structure
13.4 Fintech Regulation
13.4.1 Sandbox Approach
13.4.2 Digital Payments
13.4.3 Digital Financial Platform
13.4.4 Cryptocurrency
13.4.5 Insurtech
13.5 Financial Statements
13.5.1 Statement of Financial Position
13.5.2 Statement of Profit & Loss
13.5.3 Statement of Cash Flows
14 Bank of Canada
14.1 General
14.2 Bank of Canada Mission and Objectives
14.3 Bank of Canada- Organizational Structure
14.4 Bank of Canada Funding
14.5 Fintech Regulatory and Supervision
14.5.1 The Sandbox Approach
14.5.2 Digital Payments
14.5.3 Crowdfunding
14.5.4 Cryptocurrency
14.5.5 Robot-Advice
14.5.6 InsurTech
14.6 Bank of Canada: Financial Statements
14.6.1 The Balance Sheet
14.6.2 The Statement of income
15 The Australian Prudential Regulation Authority
15.1 General
15.2 Mission and Objectives
15.3 Organizational Structure
15.3.1 Committees
15.3.2 Audit Committee
15.4 Funding
15.5 Financial Digital Information Supervision
15.6 Fintech Regulatory and Supervision
15.6.1 Sandbox Approach
15.6.2 Digital Payments and Lending
15.6.3 Digital Financing Platform
15.6.4 Cryptocurrency
15.6.5 InsurTech
15.7 Financial Statements
15.7.1 Statement of Financial Position
15.7.2 Statement of Income
15.7.2.1 APRA’s Income
15.7.2.2 Reserves
15.7.3 Statement of Changes in Equity
15.7.4 Statement of Cash Flows
16 The Swiss National Bank
16.1 General
16.2 SNB Mission and Objectives
16.3 SNB Organizational Structure
16.3.1 The Bank Council
16.3.2 The Governing Board
16.3.3 Departments
16.3.4 The Secretariat General
16.3.5 The Internal Auditors
16.4 SNB Funding
16.5 Financial Digital Information Supervision
16.6 Fintech Regulatory and Supervision
16.6.1 Sandbox Approach
16.6.2 Mobile Payment
16.6.3 Money Transfer
16.6.4 Distributed Ledger Technology
16.6.5 InsurTech
16.6.6 Robot-Advice (Online Wealth Management)
16.7 SNB Financial Statements
16.7.1 The Balance Sheet
16.7.2 Income Statement and Appropriation of Profit
17 The Central Bank of Russia
17.1 General
17.2 Mission and Objectives
17.3 Organizational Structure
17.4 Funding
17.5 Fintech Regulatory and Supervision
17.5.1 Sandbox Approach
17.5.2 Digital payments and lending
17.5.3 Digital Platform Financing
17.5.4 Blockchain/ cryptocurrency
17.5.5 InsurTech
17.6 Financial Statements
17.6.1 The Balance sheet
17.6.2 The Statement of income
17.6.3 Statement of Capital, Funds, and Profit Allocation
18 Brazil Central Bank
18.1 General
18.2 Mission and Objectives
18.3 Organizational Structure
18.4 Funding
18.5 Fintech Regulatory and Supervision
18.5.1 Sandbox Approach
18.5.2 Digital Payment and Lending
18.5.3 Digital Platform Financing
18.5.4 Cryptocurrency
18.5.5 InsurTech
18.6 Financial Statements
18.6.1 The Balance Sheet
18.6.2 The Statement of Income
18.6.3 The Statement of Change in Equity
18.6.4 Statements of Cash Flows
19 Central Bank of Argentina
19.1 General
19.2 Missions and Objectives
19.3 Organizational Structure and Governance
19.3.1 The Governor
19.3.2 The Deputy Governor
19.3.3 The Board of Directors
19.3.4 The Comptroller
19.4 FinTech Regulations
19.4.1 Sandbox Approach
19.4.2 Mobile Payments
19.4.3 Payment Service Providers and Payment Accounts Definitions
19.4.4 Crowdfunding
19.4.5 Cryptocurrency
19.4.6 InsurTech
19.5 Financial Statements
19.5.1 The Balance Sheet
19.5.2 Statement of Income
19.5.3 Statement of Change in Equity
19.5.4 Statement of Cash Flows
20 Central Bank of Mexico
20.1 General
20.2 Missions and Objectives
20.3 Organizational Structure and Governance
20.3.1 Governing Board
20.3.2 The Board of Directors
20.3.3 The Audit Committee
20.4 Fintech Regulations
20.4.1 Mexico Sandbox Approach
20.4.2 Lending
20.4.3 Crowdfunding
20.4.4 Cryptocurrency
20.4.5 InsurTech
20.5 Financial Statements
20.5.1 Balance Sheet
20.5.2 Statement of Income
20.5.3 Statement of Changes in Equity
21 The Saudi Arabia Monetary Authority
21.1 General
21.2 Mission and Objectives
21.3 Organizational Structure
21.4 Fintech Regulatory and Supervision
21.4.1 The Sandbox Approach
21.4.2 Digital Payment and Lending
21.4.3 Digital Platform Financing
21.4.4 Cryptocurrency
21.4.5 InsurTech
21.5 Financial Statements
21.5.1 Statement of Financial Position
21.5.2 Statement of Revenues and Expenses
22 The Central Bank of Turkey
22.1 General
22.2 Missions and Objectives
22.3 Organization Governance
22.3.1 The Governor
22.3.2 The Board
22.3.3 The Monetary Policy Committee
22.3.4 The Executive Committee
22.3.5 The General Assembly
22.3.6 The Auditing Committee
22.4 The CBRT Ownership and Funding
22.5 Fintech Regulation and Supervision
22.5.1 The Sandbox Approach
22.5.2 Digital Payment
22.5.3 Digital Lending
22.5.4 Blockchain and Cryptocurrency
22.5.5 Robot-Advice
22.5.6 InsurTech
22.6 Financial Statements
22.6.1 Balance Sheet as of December 2020
22.6.2 Profit and Loss Statement
23 The South African Reserve Bank (SARB)
23.1 General
23.2 Mission and Objectives
23.3 Organizational Structure
23.4 Funding
23.5 Fintech Regulatory and Supervision
23.5.1 The Sandbag Approach
23.5.2 Digital Payment and Lending
23.5.3 Digital Platform Financing
23.5.4 Robot-Advice
23.5.5 Cryptocurrency
23.5.6 InsurTech
23.6 Financial Statements
23.6.1 The Statement of Financial Position
23.6.2 Statement of Profit and Loss
23.6.3 Statement of Cash Flows
23.6.4 Statement of Change in Equity
24 Sandbox and Innovation Test Bed Case Study
24.1 General
24.2 Regulatory Sandbox and an Incubator
24.3 Examples of Sandbox Throughout the G-20
24.3.1 Sandboxes in the United States
24.3.2 Sandboxes in the European Union
24.3.3 Sandbox in the United Kingdom
24.3.4 Sandboxes in Asian-Pacific region
24.3.5 Sandboxes in Latin America
24.4 Cross-Border Sandbox Coordination
24.5 Global Financial Innovation network—The Global Sandbox
Glossary of Terms
Bibliography
Index
