The Financial Stability Board is to evaluate the potential for systemic risk posed by emerging innovations in financial technology, a move which may mark the beginning of the end to the regulatory advantages enjoyed by fintech firms operating at the fringes of the financial services sector.
In a letter to G20 finance ministers and central bank governors, Mark Carney, chair of the group of international policy-makers and standard setters, warned that the regulatory framework may have to be adjusted to meet new risks created by the growing number of startups looking to disrupt traditional banking business.
“A number of technological innovations with potentially transformative implications for the financial system, its intermediaries and users are now receiving close attention,” he told the G20, in a letter published on Saturday.
National regulatory bodies have so far taken a softly-softly approach to the growing fintech sector for fear of stifling potentially beneficial creative innovation.
The FSB's primary role is to increase the stability of international financial markets by assessing vulnerabilities affecting the global financial system and mobilising a coherent response.
Carney says the FSB is already working with standard setters that are monitoring developments in their respective sectors.
"The FSB is evaluating the potential financial stability implications of emerging financial technology innovation for the financial system as a whole," he wrote. "We are also working to understand better the potential impacts on financial stability of operational disruption to core financial institutions or infrastructure.”
The group will report back on the next steps in March.