Fintech and Financial Stability

A critical look at IMF recommendations on financial stability concerns from Fintech and DeFi

Decentralized Finance — Photo by Shubham Dhage on Unsplash

Fintech and financial stability

Fintech is technological innovation in financial activities, or in other words, financial innovation aided by technology. This by itself is not new. The ATMs which made their entry in the late 1960s was also in this sense, fintech. With the rapid growth in crypto assets in recent years, and that of decentralised ledger technology (DLT), fintech has evolved and grown rapidly in recent years to provide traditional banking functions, including deposit taking and lending. Referred to as Decentralized Finance, or DeFi for short, it threatens to disintermediate banks from savers and borrowers, transform the traditional banking landscape, and threaten financial stability. The IMF flagged its concerns in the third chapter of the April 2022 issue of its biannual Global Financial Stability Report (GFSR). Continue reading “Fintech and Financial Stability”

CBDC and the Future of Money

The growth of cryptocurrencies in the last decade has forced many central banks across the world to consider issuing their own version, called Central Bank Digital Currency (CBDC). There have been several studies, official and private, that examine the pros and cons of introducing CBDC. Eswar Prasad in his new book provides a comprehensive look at the entire gamut of issues relating to CBDC.

My review of Eswar Prasad’s new book on fintech, cryptos, and CBDC: Future of Money: How the Digital Revolution is Transforming Currencies and Finance. Continue reading “CBDC and the Future of Money”

Ten economic predictions for 2022

Predictions

“Prediction is very difficult, especially if it’s about the future” is a famous quote attributed in different forms to people ranging from Niels Bohr, the great physicist and Nobel Laureate, to Yogi Berra, the all-time great baseball catcher. But, that has never deterred predictions, especially economic predictions, as a universal beginning-of-the-year pastime. Continue reading “Ten economic predictions for 2022”

Governor Brainard on Digital Currencies

Governor Lael Brainard of the US Federal Reserve, speaking at the Federal Reserve Bank of San Francisco’s Innovation Office Hours, on 13 August 2020, gave an update on the work on Central Bank Digital Currencies in the US. She is a former Assistant and Associate Professor at MIT, and an Under Secretary in the Department of Treasury under the Obama administration. Continue reading “Governor Brainard on Digital Currencies”