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Fintech and Financial Stability Potential Influence of FinTech on Financial Stability, Risks and Benefits

Author

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  • Milena Vučinić

    (Central Bank of Montenegro Podgorica, Montenegro)

Abstract

Since the last global financial crisis supervisory mechanisms and regulations have become more stringent which have significantly improved resilience of banks therefore positively affecting financial stability. Apart from traditional financial institutions which have been supervised according to strict regulations and standards technological development in financial services commonly called FinTech have introduced new trends providing fast peer to peer lending which directly matches lenders and borrowers thus putting more pressure to policymakers and supervisors. This paper presents potential implications of FinTech developments to financial stability, while explaining FinTech influence to market structure as well as benefits and risks of technologically driven financial innovations to financial stability. The paper stresses out an importance of international cooperation of regulators in order to preserve financial stability in the recent world of technological changes and innovations. FinTech has changed consumers’ expectations and preferences while increasing the number of users expecting fast and easily accessible services available on mobile phones and other electronic devices. The paper shows that new technology provides the space for expanding financial services but it also poses additional risks to financial system in terms of microfinancial and macrofinancial risks.

Suggested Citation

  • Milena Vučinić, 2020. "Fintech and Financial Stability Potential Influence of FinTech on Financial Stability, Risks and Benefits," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(2), pages 43-66.
    • Handle: RePEc:cbk:journl:v:9:y:2020:i:2:p:43-66
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    References listed on IDEAS

    as
    1. Jonne O. Lehtimäki & Marianne Palmu, 2019. "Central Bank Communication and Monetary Policy Predictability under Uncertain Economic Conditions," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 8(2), pages 5-32.
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    3. Kevin J. Stiroh, 2019. "Thoughts on cybersecurity from a supervisory perspective: remarks at SIPA’s Cyber Risk to Financial Stability: State-of-the-Field Conference 2019, Federal Reserve Bank of New York, New York City," Speech 317, Federal Reserve Bank of New York.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    financial stability; FinTech; technological developments; financial innovations; market structure;
    All these keywords.

    JEL classification:

    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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