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.
50 years of traditional US regulation aimed at promoting financial inclusion and fairness for consumers has largely failed. This series of six Harvard papers argues that new technology can both protect consumers from harm and widen their access to affordable financial services.
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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