(As featured in IBS Intelligence- January 30, 2017)
Written by: Scott Thompson
Blockchain startup Ripple has responded to Governor of the Bank of England Mark Carney’s warning last week that financial innovation could lead to “systemic risks” unless properly regulated. There’s nothing new under the sun, it would seem.
In a speech at the Deutsche Bundesbank G20 conference on ‘Digitising finance, financial inclusion and financial literacy, Carney observed that FinTech could reduce systemic risks by delivering a more diverse and resilient system where incumbents and new entrants compete along the value chain. Yet at the same time, some innovations could generate systemic risks through increased interconnectedness and complexity, greater herding and liquidity risks, more intense operational risk and opportunities for regulatory arbitrage.
“We strongly agree with Mark Carney’s comments that innovation in FinTech, especially when in collaboration with banks, can provide next generation products that go a long way to unlocking financial inclusion and better meet the needs of customers,” says Danny Aranda, Managing Director Europe, Ripple. “However, despite continuous innovation in the FinTech industry, the risks it poses are not new. Managing these risks has always been and remains of utmost importance. As a financial industry, we have a well-founded principle-based framework for mitigating risk that is a natural starting point for this discussion. We believe it is the responsibility of the whole industry to ensure that risk is always considered in the development and refinement of new and existing products.”
He adds: “We’re grateful that Mr. Carney has drawn attention to this issue once again and it is important to continuously remind the industry that it is through maintaining the highest of standards that FinTech’s potential will be fully realised.”
Find the link to the full story below: https://ibsintelligence.com/ibs-journal/ibs-news/ripple-launches-staunch-defence-of-fintech/