Financial regulation needs to convert from analog to digital design. This paper is an RFC calling for gradual but urgent conversion of the financial regulatory system to a “digitally-native” framework – that is, to a system that will be rebuilt over time to leverage the power of digitization to make things work better, faster, and cheaper, all at once.
This series of six papers by Jo Ann Barefoot argues that new technology can enable most consumers to lead far healthier financial lives:
Paper 1: Technology Innovation to Protect and Benefit Consumers
Paper 2: Failures and Costs of Financial Regulation
Paper 3: Fintech - Digitizing Finance
Paper 4: Regtech - Digitizing Financial Regulation
Paper 5: Digital Technology Risks for Finance
Paper 6: Modernizing Consumer Financial Regulation for the Digital Age
Developments in financial technology hold great promise to enhance the quality, delivery, and reach of consumer financial services. However, many of the laws dictating the operations of financial regulators are more than 50 years old, and in drafting these laws Congress understandably did not anticipate the digital revolution. These aging laws and administrative practices present meaningful obstacles to financial innovation that new technology could deliver.
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