Regulation

The leading edge of fintech is moving faster than many regulatory capabilities, posing risks to financial stability, security and inclusion. Artificial intelligence applications could help flip the script, by transforming how regulators, risk managers and ordinary consumers interact with the financial system.

While digital asset ecosystems continue to hold great promise, they often lack trust, governance and interoperability. This prevents them from enabling simple and secure digital commerce use cases for ordinary users. New regulatory standards can help them flourish by developing consistent expectations, clear frameworks and a shared global understanding.

As the European Union continues to set out new policies and requirements around digital finance, it remains an open question to what extent excessive regulation is penalizing firms on the continent.

Applying time-worn policy frameworks to new financial technologies can lead to unexpected risks — including both under-regulation and over-regulation. By embracing practices grounded in “futurism,” authorities can better recognize when innovations call for breaking the regulatory mold.

Europe’s Single Supervisory Mechanism was established a decade ago to gather fragmented national banking systems under a safe and secure environment. As the financial landscape has evolved, the European Central Bank has turned to the latest supervisory technologies to transform its operations, capabilities and culture.