Financial Regulation Can Be Better With The Help Of Fintech

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Regulation of the financial sector appears to be costly and complicated – it is time for technology to step in! 

Cryptoassets, banking innovations and progressive payment systems signal drastic changes in the financial sector. Yet, this development requires better oversight. 

According to the Bank of England report, banking supervision teams get to obtain loads of reading over a week. From this, it follows that banking regulation in England has come to be highly complicated. There is a suspicion that the supervision system of banking is completely blurred and not available for common understanding. 

Van Steenis, the leading expert in banking supervision and the head of the British supervisory commission, claims that better technology utilization could make a difference. In particular, banking regulators would benefit substantially from using the technology of machine learning and artificial intelligence to identify current risks and amoralities. He also highlights that the problem of banking regulation to a large extent arises due to the conflicting and overlapping strategy goals of many regulators. 

Comparing to the US financial market, the UK regulatory system is more or less streamlined. At some point, it even faces overregulation with a large list of requirements, posed by the Bank of England, the Financial Conduct Authority, the Competition and Markets Authority, the Payment Systems Regulator, and the Open Banking Implementation Entity. These requirements are sometimes conflicting and serve different intentions. 

Van Steenis goes on to argue, that the issue of overregulation is especially acute when it comes to the payments system, which, due to an increasing number of entrants, has become complex to supervise. At the end of the day, a number of different regulators impose their own rules and regulations. 

The idea was positively assessed by the UK government, though it is clear that bringing all the regulators along with their rules and requirements to the coherence will be challenging. Thus, what pays to be done at this point is finding a common strategy to improve the payment infrastructure. One of the possible ways to do it is borrowing the regulation approach, utilized by air traffic control, that ensures that the regulations of different regulations do not overlap and eventually land on the same bank institutions uncontrollably. The idea was positively assessed by the UK government, though it is clear that bringing all the regulators along with their rules and requirements to the coherence will be challenging. 

So how does it work for air traffic control? 

Air traffic can impose a requirement for a plane to enter a holding pattern, as everyone could recently see when flying to Heathrow. The question is - who could ask a statutory regulator to take some time and wait for other regulators to do their jobs. We can only hope the government can give an answer to this question in the long run. 

The main concern at this point relates to how the payment instruments have been evolving the recent years. Cash is progressively losing its demand in many countries, although this rate varies from country to country. For instance, in Sweden, cash used has moved down by 81% during the last ten years and is currently falling by 10% annually in the United Kingdom, while in German it does not change at all. Van Steenis states that the Swedish example warns us that without better management, there is a risk that will exclude some groups in society”. 

Van Steenis states that fintech has the future, and cryptocurrencies will eventually come as the ultimate option for both users and banking systems. No wonder! Already at this point cryptocurrencies along with blockchain technologies already have to offer much more data protection, security, shiftiness, and fee- free services than any banking institution currently existing. The expert goes on to say, that with so much complicacy in banking regulation, the decentralization and self-regulation offered by blockchain technology will certainly be able to cut the mustard. For now, the crypto-market already swarms with a variety of application, allowing users to leverage their crypto assets and actively use blockchain in their day-to-day transactions. 

When it comes to blockchain-backed projects, Metahash can serve as a perfect example. Metahash is a decentralized cryptocurrency and payment system which involves a bunch of advantageous features, which help Metahash tick all the boxes of how a real decentralized payment system should look like. Tracechain is supposed to fasten the transaction and prevent any downtowns, thus solving one of the claiming problems crypto-world poses today – the speed of transactions. Moreover, Metahash also utilizes smart contract technology, which also ensures fast and low-fee transactions. Metahash is guided by the ultimate goal to establish a fully decentralized network, which will be run exclusively by users and will exist within a blockchain.

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