## A Balanced Approach to Fintech Regulation and Innovation—at Home and Abroad

_IMF News, April 1, 2019_

## Source details

**Canonical URL:** [A Balanced Approach to Fintech Regulation and Innovation—at Home and Abroad](https://www.imf.org/en/news/articles/2019/04/01/sp040119-a-balanced-approach-to-fintech-regulation-and-innovation)

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## Bibliographic details
- Published: April 1, 2019

---

### Overview
- Occasion: Opening Remarks for the 2nd IMF Fintech Roundtable.
- Speaker: IMF First Deputy Managing Director David Lipton.
- Date: April 1, 2019.
- Central framing: balance between promoting fintech-driven innovation and preserving financial sector stability, including the need to align cross-border regulatory approaches.

### The Bali Fintech Agenda
- The IMF/World Bank membership approved the Bali Fintech Agenda at the Annual Meetings in October.
- The Bali Fintech Agenda contains 12 elements that frame policy challenges related to fintech.
- Emphasis: while discussion often focuses on risks and resilience, the agenda highlights the key word “innovation.”

### Opportunities and Empirical Examples
- Fintech change spans online payments, peer-to-peer lending, use of artificial intelligence in investment advice, and platform-based distribution models.
- Example findings cited:
  - The IMF’s African Department shows the 45 countries of Sub-Saharan Africa lead the world in mobile money accounts in per capita terms, and in mobile transactions as a percentage of GDP—almost 10 percent.
  - The Asia-Pacific Department estimates China now accounts for about 40 percent of global e-commerce transactions; a decade ago that was only 1 percent.
- Observed impacts: potential to reduce costs and transaction times, boost growth, lift living standards, and enable creation of new businesses and industries.

### Risks to Financial Sector Stability
- Key risks noted: competition concerns, market power of technology giants, cyber-risks, social disruptions, data collection and use, and taxation of IT firms.
- The IMF is addressing stability risks by:
  - Convening regional events to discuss the Bali Agenda.
  - Encouraging ongoing dialogue among entrepreneurs, inventors, investors, and regulators.
  - Expanding understanding through regular policy consultations, financial sector assessment programs, and engagement with industry and standard-setting bodies.
- Multilateral cooperation is considered essential to manage these risks.

### Cross-Border and Multilateral Challenges
- Emerging forces of fragmentation could weaken multilateral cooperation:
  - Examples include trade disputes, policies promoting national champions (e.g., the battle over 5G networks), and potential regulatory races to the bottom.
- Policy actions in one country can have spillovers; both action and inaction carry cross-border implications.
- Risk highlighted: fragmentation into competing clubs could exacerbate common vulnerabilities and threats.

### Policy Balance and Recommendations
- Dual balancing act required:
  - Between promoting innovation while preserving financial stability.
  - Between acting in the national interest while avoiding adverse spillovers to other countries.
- Recommended approaches:
  - Seek solutions through collaboration and multilateral dialogue, such as the roundtable format.
  - Re-evaluate and, where necessary, strengthen multilateral rules of the game.
  - Continue experimental regulatory approaches (e.g., regulatory sandboxes, exploration of central bank cybercurrencies) to encompass both innovation and oversight.
- Charge to participants: keep the delicate balancing act in mind to maximize benefits of new technologies for citizens globally.

*Opening Remarks for the 2nd IMF Fintech Roundtable — David Lipton, April 1, 2019.*

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## References

- [David Lipton](http://www.imf.org/external/np/omd/bios/dl.htm)
- [People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)
- [Republic of Lithuania and the IMF](http://www.imf.org/external/country/LTU/index.htm)
- [Singapore and the IMF](http://www.imf.org/external/country/SGP/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2019/04/01/sp040119-a-balanced-approach-to-fintech-regulation-and-innovation_