Big techs in finance: forging a new regulatory path

Remarks prepared for delivery by Mr Agustín Carstens, General Manager, Bank for International Settlements, at the BIS conference "Big techs in finance – implications for public policy", Basel, Switzerland, 8–9 February 2023.

As big techs continue to push into financial services on the back of their data-driven business model, it is increasingly evident that the current regulatory approach is not fully fit for purpose to address related policy challenges. A regulatory re-think is warranted, and it is high time to consider tangible options for action.

One of the following approaches could serve as a basis for a new regulatory framework for big techs in finance. The "restriction" approach would prohibit big techs from engaging in regulated financial activities. The "segregation" approach would require big techs to form a financial subgroup that would be ring-fenced. And the "inclusion" approach would impose group-wide requirements on governance, conduct, operational resilience and, only when appropriate, financial soundness. The segregation and inclusion approaches are to some extent compatible, and in practice a combination of both may be desirable.

Regardless of the approach chosen, the implementation of any new regulatory framework raises a host of practical questions. To support the search for answers, a thorough international policy debate is essential. After all, international standards are the only way to shape a consistent policy response.