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The current collaboration of banking regulations with fintech is a challenging and complex task in such a robust environment. It becomes difficult for financial regulators to maintain a delicate balance between fostering innovation and safeguarding consumers where technological advancements can thrive. It is a difficult task to first understand the ongoing fast technological innovation and then apply an appropriate framework to try and protect people from scams.
According to the head of the World Economic Forum’s Center for Financial Monetary Systems, the regulators deal with understanding technological innovations while protecting people from scams. In the Asia-Pacific region, countries have more favorable regulations or fintech firms than other countries. According to the January 2024 report published by the World Economic Forum and the Cambridge Centre for Alternative Finance, 70% of the surveyed fintech entrepreneurs have given a favorable rating to the Asia-Pacific region climate which has exceeded the global average of 63%. Developed countries like Singapore, Hong Kong, and Australia have developed regulatory frameworks and cultivated fintech ecosystems.
India has taken good steps in holding regular deliberations with relevant sectors as it is self-regulated by the Reserve Bank of India and other regulators and the finance ministry of India.
Unfortunately, fraudsters exploit technological advancements for their own gain, often at the expense of others. Regulators must carefully navigate through this complex challenge to create systems or regulations that are precise and effective enough to prevent fraud.
It appears there is a tie between entrepreneurs and regulatory authorities. Only time will tell whether an increase in fraudulent activities will lead to a tightening of regulatory measures.
In India, fintech came into the spotlight when, in recent months, the RBI imposed restrictions on Paytm Payments Bank Ltd, apparently for the entity’s failure to comply with KYC norms and on money laundering concerns, among others.
India has a vibrant economy and remains a major contributor to global growth. However, the high inflation and interest rates present a potential threat to its continued growth. India’s FY24 growth is forecasted at 6.7% by the International Monetary Fund, i.e., more than double the global average.
Policymakers are facing crypto challenges of what to do to make an informed decision about crypto assets. The Center for Financial and Monetary Systems will publish a research report on digital assets, which will help policymakers solve the problem.
A team from the World Economic Forum’s Center for Financial Monetary Systems is analyzing policies and regulations related to digital assets in different regions, such as the UAE, Singapore, the US, Europe, and a few others. They are assessing the intended and unintended outcomes flowing from such regulations.
Thank you.
Regards,
Rituja Khobragade,
Kautilya, IBS Mumbai.
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