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The Regulatory Future

Author

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  • Jan Kregel

    (Ragnar Nurkse School of Innovation and Governance, Tallinn University of Technology)

Abstract

New lending and payment systems challenge traditional banks by splitting the two sides of the balance sheet into separate operations, leaving traditional regulated institutions as the bridge between the two. They thus also represent a potential challenge to the existing regulatory system designed for traditional deposit banking. None of these payment systems are themselves subject to prudential regulation, although they have linkages to parts of the formal financial system that are regulated in different ways. This raises the question of whether these new developments are increasing the efficiency and stability of the financial system. The new payments systems have the ability to evade or distort the regulation on the liability side of financial institutions, while the p2p system replace the due diligence of bank loan officers and bank supervisors with computer algorithms. It is for this reason these system will be the major challenge to the future regulation of the financial system

Suggested Citation

  • Jan Kregel, 2016. "The Regulatory Future," Working papers wpaper164, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    • Handle: RePEc:fes:wpaper:wpaper164
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    File URL: http://fessud.eu/wp-content/uploads/2015/03/FESSUD_The-Regulatory-Future_Working-Paper164.pdf
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    References listed on IDEAS

    as
    1. Claudia Campbell & Hyman Minsky, 1987. "How to get off the back of a tiger, or, do initial conditions constrain deposit insurance reform?," Proceedings 158, Federal Reserve Bank of Chicago.
    2. Exploratory Committee on Research in the Capital Markets, 1964. "Research in the Capital Markets," NBER Books, National Bureau of Economic Research, Inc, number unkn64-6.
    3. Knapp, Georg Friedrich, 1924. "The State Theory of Money," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number knapp1924.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Eugenio Caverzasi & Daniele Tori, 2018. "The Financial Innovation Hypothesis: Schumpeter, Minsky and the sub-prime mortgage crisis," LEM Papers Series 2018/36, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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    More about this item

    Keywords

    Financial regulations; regulatory foresight; Hyman P. Minsky; Henry Kaufman; financial innovation; payment and lending systems; P2P;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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