Professor Allen Discusses Her New Book, “Driverless Finance: Fintech’s Impact on Financial Stability”
As noted in her book, Professor Allen remarked that the 2008 financial crisis was a defining economic crisis that presented similar challenges to the current threats posed by fintech. She observed that while governments around the globe reacted immediately and overwhelmingly to the 2008 crisis, they may not be able to do the same in the case of fintech-related threats.
In particular, Professor Allen commented that environmental concerns and other negative externalities have the potential to destabilize the financial system. Despite this, Professor Allen emphasized that international bodies such as the Basel Committee and the Financial Stability Board have an important role to play in addressing fintech threats through the evaluation of the risks of crypto currencies and the issuance of reports on regulatory best practices.
To conclude, Professor Allen predicted that new U.S. legislation addressing fintech was unlikely at this point, though if introduced, it’s value would be in providing more certainty for fintech firms, rather than maintaining financial stability. She did, however, state that U.S. banking regulators could take some initial steps, such as prescribing a Glass-Steagall-type separation between fintech firms and commercial banks. To view a recording of the discussion, click here.