Lawmakers pummel Zuckerberg but don’t have clue how to regulate libra

The rapid pace of technological change provides a breathtaking opportunity to challenge and change the world. We are moving toward a technology space that is swift, connected and digitized. This will not only reshape industries but also the regulatory frameworks around them.

With this in mind, regulators must reimagine how they oversee new technology and how they use it themselves, recognizing that regulatory roadblocks and inaction may create more risk rather than less. The problem is, they need to understand the technology first.

A prime example of the dilemma facing regulators arises from blockchains and stablecoins — digital tokens that are pegged to a currency like dollars or euros. This technology is uniquely mold-breaking, posing both benefits and risks, especially for those seeking to transform consumer services in finance and payments.

In financial services, blockchain businesses can benefit the financial system and its customers in powerful ways. They can accelerate financial processes, reduce friction and lower costs. Stablecoins, for example, are a medium to bypass the traditional payment infrastructure, which remains expensive and slow, especially for international payments. The related technology can also improve regulatory functions and be a tool to fight consumer data abuse, market exploitation and illicit money movements.

Some of these innovations seek to close the gap for the 1.7 billion underbanked people in the world who have no access to payments, both by reducing costs and frictions and by creating an alternative payment infrastructure in places that lack stable and reliable currency systems. Other innovators are attempting to provide access to credit for individuals who are on the outside of the financial system looking in.

At the same time, these innovations raise numerous risks that may call for regulatory action.

These include concerns about the use of consumer data, privacy, transparency, economic impact and potential abuse, such as fraud and money laundering. Lawmakers must decide how to balance and, in some cases, reshape regulation to ensure that desirable innovation can flourish, while still protecting against risk.

Source link

Share with your friends!

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest Business news
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.