EBI is happy to announce a contribution of Dr. Chusu He (University of Bath), Prof. David T. Llewellyn (Loughborough University) and Prof. Alistair Milne (Loughborough University) in the EBI Working Paper Series No. 123. Their paper entitled “Financial Technologies and Financial Regulation” was published on 18th May 2022.
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.