Fintech and Payments Regulation: Analytical Framework

Tanai Khiaonarong and Terry Goh

No 2020/075, IMF Working Papers from International Monetary Fund

Abstract: Financial technology (Fintech) has prompted authorities to consider their potential financial stability benefits, risks, and effective regulation. Recent developments suggest that regulatory approaches and their legal foundations need to augment entity-based regulation with increasing focus on activities and risks as market structure changes. This paper draws on recent international experiences in modernizing legal and regulatory frameworks for payment services. An analytical framework based on a four-step process is proposed—(i) identifying payment activities; (ii) licensing entities and designating systems; (iii) analyzing and managing risks, and (iv) promoting legal certainty. As payment activities evolve and potential systemic risks heighten, adherence to international standards and additional regulatory requirements should be warranted.

Keywords: WP; payment transaction; oversight framework; payment activity; payment infrastructure; payment scheme; Fintech; payment services; central bank; regulation; payment system; payment token; nonbank payment institutions; obligation law; account directive; payment system oversight; network organization; oversight department; Payment systems; Digital currencies; Mobile banking; Legal support in revenue administration; Virtual currencies; Global; Africa; Anti-money laundering and combating the financing of terrorism (AML/CFT) (search for similar items in EconPapers)
Pages: 38
Date: 2020-05-29
New Economics Papers: this item is included in nep-cba, nep-cwa and nep-pay
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