Financial Technologies and Financial Regulation

This paper analyses the challenges for financial regulation posed by new financial technologies. It provides a conceptual framework incorporating both new financial products and services and new institutional arrangements including decentralised finance without intermediaries. Four possible responses are identified: enhancing or adapting existing regulation, developing new regulation, reducing barriers to entry and exit and monitoring and regulating the ‘permissionless’/’permissioned’ boundary. Competitive efficiency emerges as a third financial regulation objective alongside established conduct of business and prudential objectives. Trade-offs between these objectives can be improved through market level regulation of processes and data standards, alongside existing functional and institutional regulation