Bank of Canada examining the need for a stronger regulatory response to new fintech firms

Regulation | June 20, 2016 By:

Bank of Canada Senior Deputy Governor Carolyn Wilkins said that fintech can solve problems but also create new ones, and it’s essential for all involved to guard against potential risks.

“I worry that players not covered currently by regulation could become important to the system even if they never take on bank-like risks … or become big enough to be considered systemically important,” said Wilkins.

At a minimum, Wilkins said, “authorities need to put a large enough weight on operational dependencies when looking at systemic importance, particularly in light of cyber-risk. When a payment system grows to be prominent or systemically important, the Bank of Canada’s job is to oversee it.”

To understand some of the risks and opportunities that arise from new technology, the Bank of Canada has partnered with Payments Canada, the Big Five banks and R3, a consortium of more than 40 global financial institutions, to experiment with distributed ledgers.