Exploring the Nexus of Digital Financial Services (DFS ... · Sandbox!as!atool!for!...
Transcript of Exploring the Nexus of Digital Financial Services (DFS ... · Sandbox!as!atool!for!...
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Digital Financial Services Research Team, UNSW Australia
Speaker: Dr. Cheng-‐Yun Tsang
Team Members: Ross Buckley, Colin Picker, Louise Malady, Cheng-‐Yun Tsang and Katharine Kemp
(November 30, 2016)
Exploring the Nexus of Digital Financial Services (DFS) and Financial Stability –
The Use of Regulatory DiagnosNc Toolkit and Sandbox
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The Nexus of DFS and Financial Stability
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o Linkage between DFS (digital financial inclusion) and
financial stability is intricate and under-‐researched.
o PotenIal benefits to financial stability brought by DFS may
include: credit risk diversificaIon, increased trust in
financial services providers, enhanced compeIIon,
reduced reliance on foreign financing, and increased
stable source of funding.
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The Nexus of DFS and Financial Stability
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o New suppliers and demanders of credit as well as new
channels of accessing credit, but not necessarily new
financial stability risks or new ways of transmiMng such
risks.
o Need tools to help explore and op5mise the linkage
between digital financial inclusion and financial stability.
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The Regulatory DiagnosNc Toolkit (RDT)
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Purpose of the RDT o Provide regulators with a framework of analysis to assess
their regulatory regimes to remove barriers and idenNfy gaps in the adopIon of DFS to advance financial inclusion.
o Highlight gaps in the data/evidence necessary for more informed policy decisions.
o Improve capacity of regulators to promote opNmal linkages between financial inclusion, financial stability, financial integrity and consumer protecIon.
o Support regulators to navigate towards compliance with internaNonal best pracNce while seizing opportuniIes DFS present for financial inclusion and economic growth.
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What RDT Is / Is Not Designed to Do
o IS designed to guide us in asking the regulator the right quesIons.
o IS designed to list the issues that should be thought about (many will be raised, not necessary to address all).
o IS NOT designed to lead to regulaIon in any specific area but to idenIfy criIcal data gaps and inform policy making.
o IS NOT designed to burden the regulator but to assist in refining their focus and prioriIsing their objecIves.
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o PromoIng financial inclusion and innova5on through fostering
compe55on and ensuring consumer protec5on.
o The process is all about achieving stakeholder collabora5on,
compliance adap5on, consumer protec5on, standards co-‐
crea5on and interagency coordina5on.
o The design of sandbox should be able to enhance regulatory
capacity.
Sandbox as A Regulatory Approach
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What Sandbox Is / Is Not ? o It is not a regulatory vacuum but a regulatory
transi5on. o It is not a technical mechanism to relax licensing and
supervision but a pracIcal approach to channel and regulate innova5on.
o It is not designed to waive compliance requirements but to enhance compliance preparedness.
o It might help manage consumer protec5on risk, but might not be effecIve in foreseeing or reducing systemic risk.
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ü Learning before regulaIng. ü Enhancing regulatory capacity as top priority. ü RDT as a tool for priori5sing regulatory objec5ves and
Sandbox as a tool for enhancing regulatory capacity.
ü Moving toward a data-‐driven, evidence-‐based
proporNonate approach to underpin the policy
development process.
Concluding Thoughts