If the size of financial technology companies becomes large enough to pose systemic risks, regulators must set standards to set standards for the technological changes sweeping the payment industry, the bank`s (RBA) warned.
Michele Bullock, assistant governor of the Bank of China, attended the meeting in China on Sunday. She said global regulators focused on protecting consumers and investors from fraud as they sought to strike a balance between the need to pursue innovation and security risks. But that will change as financial technology companies play an increasingly important role in the economy.
"most of the regulation of financial institutions is aimed at maintaining the stability of financial institutions. This is for prudential regulation to ensure that financial institutions do not fail. At present, financial technology, regulators are not worried about regulation. This does not mean that we will not move in this direction. If some of these companies become large enough, there will be systemic problems. This raises the question of what standards should be imposed on them, "Bullock said at the Shanghai Financial Technology Summit.
She said there was a need for co-operation between regulators in different economies in setting rules for financial technology to regulate regulation. She also said regulators should avoid binding requirements with specific types of financial institutions and should focus instead on the functions they provide.
Global regulators are studying how to protect consumers and investors from fraud, Bullock said.
While the first token issue of crowdfunding (ICOs) is an innovative example of how small companies want to take risks in the market, there are also examples that are "purely deceitful".
"regulators can`t back down," Bullock said. To ensure that consumers and investors are protected, they must take proactive actions to regulate them. "
"the problem here is that consumers, they [regulators] don`t want consumers to be victims of fraud, and they don`t want all of their savings gone."
Earlier, Bullock stressed that in a society with less cash, flexible retail payment systems were becoming increasingly important, meaning that failures could threaten the smooth functioning of the economy because consumers were unable to trade.
In May, for example, National Bank (NAB) `s all Australia online, mobile, EFTPOS and ATM services failed, leaving customers unable to access their accounts.
Traditionally, central banks and regulators have focused on large payment systems because of the potential for systemic disruptions if they fail, Bullock said. However, regulators do not require retail payment systems to meet the same high standards.
"as e-payment becomes more and more important, the resilience of e-retail payment systems is also critical to the smooth operation of the economy," she said.
"because people carry less cash, disruptions in the retail payment system may mean that customers cannot trade. In Australia, for example, a major bank has recently broken down, meaning that if customers don`t have cash (many of them don`t), merchants will have to reject them. "
Such disruptions disrupt business operations and undermine consumer trust in payment systems. As a result, regulators are starting to focus on the operational risks associated with the retail payment system and whether operators and participants have met appropriate high-resiliency standards. "Bullock did not specify how regulators might respond.
Globally, there is no uniform approach to block-chain technology and encrypted currency regulation, and some countries` government, such as South Korea, are cracking down on digital currencies.
In May, Australia`s government was urged to follow the UK`s lead by creating a new regulatory body for the payment industry to regulate new forms of payment through block chains and encrypted currencies.
A white paper commissioned by (ATA), a lobby group, commissioned by researchers at the Royal Melbourne Institute of Technology, found that existing institutions such as the Australian Reserve Bank were not suitable to regulate the rapidly changing digital payment industry because it was not flexible enough.
