This article will introduce Sun Guofeng , Director of the Monetary Policy Department of the People's Bank of China, on the latest views on regulatory technology. The last article in this series.
Core point of view :
- How to get valuable news in the currency circle?
- 15 countries will jointly develop global digital currency monitoring system with international organization FATF
- Opinion | What impact will the new digital currency have on the international currency competition landscape?
- Interview with Qu Shuangshi, Development Research Center of the State Council: Stablecoins with specific issuers and anchoring certain collateral may become real "payment currencies"
- Cai Weide: Analysis of the Four Key Elements of New Currency Competition
- MUFG, the world's fifth largest bank, plans to put its digital currency into actual use this year.
The essential nature of finance determines that the ultimate goal of financial technology is to support the development of the real economy by improving the allocation efficiency of financial resources. Only under the guidance of supervision can the technologies such as blockchain, big data, cloud computing and artificial intelligence be used to serve the real economy instead of regulatory arbitrage.
2. What is RegTech?
The Financial Conduct Authority (FCA) of the United Kingdom first proposed the concept of regulatory technology, that is, financial institutions use new technologies to more effectively address regulatory compliance issues and reduce rising compliance costs.
3. Regulate the relationship between technology and financial technology
The essence of financial technology is to use emerging information technology to transform and innovate financial products and services. It is to optimize, upgrade and reshape the financial industry from the perspective of technology research and development and application.
There is no direct relationship between regulatory technology and financial technology. The two are the products of technology and financial supervision, and the integration of technology and finance. Regulatory technology is used to regulate the entire financial industry, including traditional financial and financial technology, rather than being limited to regulating the financial technology industry.
The emergence of the financial technology industry, the effective use of technology in the financial sector, and the risks exposed by financial technology itself have made financial regulators and financial institutions aware of the important driving role of technology, thus accelerating the emergence and development of regulatory technology.
4. The inherent logic of financial supervision and technology
(1) Financial technology has made financial risks more concealed, spread faster, and spread more widely, increasing financial systemic risks.
(2) Financial technology has made traditional financial “disintermediation” risk even greater. That is, the financial intermediation status of commercial banks is declining, and the situation in which financial transactions are separated from existing financial controls is becoming more serious.
(3) Technical risks are more prominent.
(4) Data risks and information security risks are intertwined.
(5) Traditional credit risks will continue to exist.
(6) Regulatory arbitrage risk.
(7) The point of concentration of financial technology risks. * Mentioned the case of P2P blasting.
5, mode selection
The Fifth Financial Work Conference of the country clearly stated that it is necessary to adhere to the reform of the financial supervision system from the national conditions, enhance the authority and effectiveness of financial supervision and coordination, and strengthen the professionalism, unity and penetration of financial supervision. The 19th National Congress of the Communist Party of China proposed "improving the financial supervision system and maintaining the bottom line of systemic financial risks."
Relatively speaking, in a strict regulatory environment, the market demand for regulatory technology is greater. Therefore, regulatory technology is developing rapidly in countries such as the United Kingdom and the United States. China has always adopted an encouraging and inclusive attitude towards the development of financial technology. Relatively unbalanced with the development of regulatory technology. Once the financial technology industry occurs and exposes a large area of non-compliance business, it will eventually force regulators to concentrate on clean-up and rectification. For example, China’s previous Internet finance special rectification work has increased the burden of supervision, delaying and hindering. The sustained and healthy development of financial technology. In the face of the growing mass of business of financial technology companies, regulatory costs will continue to rise. Therefore, an interactive mechanism needs to be formed between financial institutions and regulatory agencies.
After analyzing and summarizing the experience of international financial supervision, Comrade Sun Guofeng believes that such a large economy in the United States is more useful. In particular, its penetrating supervision and functional supervision. In the United States, regardless of the form of financial technology, financial services involved in the nature of finance are incorporated into the existing financial regulatory system. At the same time, it is necessary to combine the special circumstances of China. For example, China is clearly leading in the use of financial technology, but there are also fuzzy areas of supervision, especially the protection of personal data is not as perfect as the United States.
6. Development path
China's financial supervision is actually an inclusive regulation, which is likely to cause insufficient incentives for financial institutions to develop regulatory technology to meet regulatory compliance requirements. Therefore, the demand for financial supervision technology is mainly from the Chinese financial regulatory authorities.
First, regulatory technology should serve both financial institutions and financial regulators. Otherwise, regulatory technology may become a tool for some financial institutions to evade regulation and even regulatory arbitrage.
Secondly, it is necessary for the financial industry to share the cost of developing financial technology for a part of financial institutions, which is regarded as the necessary expenditure to maintain a level playing field.
Finally, regulatory technology should be led by financial regulators, and financial technology companies or regulatory technology companies should undertake research and development.
7, application scenarios
(1) Identify and prevent liquidity risks of financial institutions, enterprises, and stock markets.
(2) Supervision of shadow banking
(3) Combating illegal fund raising
(4) Supervising smart investment
(5) Anti-money laundering
My interpretation :
1. When you hear the word "regulation", you will always unconsciously think of monitoring and control, and there is a feeling of being restrained. In fact, jumping appears like watching regulation, which is essentially a security strategy.
2. After reading the supervision part of "Golden Nail", my feeling is that supervision technology is a big business. I have a friend who is starting a business in the field of machine learning. I told him: You have to do supervised technology. Mr. Sun has written the criteria and development path for you, clearly and plainly.
At that time, Zhang Yiming also read the book "Recommended System Practice" and made a headline today. He also personalized the recommended merits. Now the parent company's bytebeat has been valued at $75 billion. The author of this book has also been in the byte jump.
3. Regarding the shadow banking, Comrade Sun Guofeng won the Sun Yefang Financial Innovation Award last year for his paper "The Definition of China's Shadow Bank and Its Scale Measurement-Based on the Perspective of Credit Money Creation". In this book, Comrade Sun Guofeng proposed a solution to use the regulatory technology to crack shadow banking. They are:
(1) Blockchain accounting, obtaining decentralized, developmental, and information that cannot be tampered with.
(2) Big data and cloud computing make data processing more efficient
(3) Artificial intelligence can make the management layer respond more promptly to risks.
4. The last chapter of "Golden Nails" also mentioned the "data oligarchy" problem in the field of financial technology. "Penetration supervision" is also a high-frequency word. If it is ultimately to rely on the regulatory authorities to break through the island of data, it is also a solution.
So far, Sun Guofeng, director of the Monetary Policy Department of the People's Bank of China, has completely interpreted the blockchain, central bank digital currency and regulatory technology. Recommend interested friends to read the original, big data chapter is also very insightful.
Part I: Block View of Sun Guofeng, Director of the Currency Division (1) Creative Destructive Force
Middle Part: Block View of Sun Guofeng, Director of the Currency Division (2) Central Bank Digital Currency