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We consider the drivers and implications of the growth of ‘BigTech’ in finance – i.e. the financial services offerings of technology companies with established presence in the market for digital services. BigTech firms often start with payments. Thereafter, some expand into the provision of credit, insurance and money management products, either directly or in cooperation with financial institution partners. Focusing on credit, we show that BigTech firms lend more in countries with less competitive banking sectors and less stringent bank regulation. Analysing the case of Argentina, we find support for the hypothesis that BigTech lenders, by acquiring a vast amount of non-traditional information, have an advantage in credit assessment relative to a traditional credit bureau. They also serve unbanked borrowers, and may have an advantage in contract enforcement. It is too early to judge the extent of BigTech’s eventual advance into the provision of financial services. However, the early evidence allows us to pose pertinent questions that bear on their impact on financial stability and overall economic welfare.

Macroprudential policy is increasingly being implementedworldwide, and is mostly applied to banks. A key question is whether this prompts substitution toward nonbank credit. Using two different global data sets on macroprudential measures and different methodologies, including detrended series, panel estimations, and propensity score matching, we find evidence of such substitution. Substitution toward nonbank credit appears to be strongerwhen policy measures are binding and are implemented in economies with well-developed nonbank credit markets. This substitution partially offsets the fall in bank credit, thus dampening the policies’ effect on total credit.

Digital payment innovations increase the tension between the right to privacy and combating illicit activity. Democratic societies must rise to the challenge of striking the proper balance. This will not be easy. Whether with bank accounts, cryptocurrencies, or central bank digital currencies (CBDCs), society needs an open dialogue on how to ensure the privacy of payments data. For CBDCs, technological and institutional safeguards must be used to help.

We analyze the relationship between ECB monetary policy and prudential policies in the host country and international lending by Dutch insurers and pension funds, using confidential institution-specific data. Our results suggest that insurers and pension funds do not significantly change their foreign lending in response to ECB policy changes, proxied by a shadow rate capturing both conventional and unconventional monetary policies. However, our findings suggest that these financial institutions do increase foreign lending when banks in the host country are more constrained by prudential regulation, pointing to a substitution effect from banks to non-banks.

In the past decade, the way we pay has changed dramatically, with so-called fast or instant payment systems taking off in many countries, especially emerging markets (see Chart 1). The largest stablecoins are issued by centralized entities that hold assets such as US Treasury bills and bank deposits to back stablecoins in circulation. [...]stablecoins fall short of providing necessary elasticity in the monetary system. Because more than 98 percent of stablecoins by value are tied to the US dollar, they can also undermine monetary sovereignty in many jurisdictions. [...]the public and private sectors need to coordinate to guide digital technologies toward applications that truly benefit people and businesses and lay a solid foundation for prosperity.

Fintech is being adopted across markets worldwide - but not evenly. Why not? This paper reviews the evidence. In some economies, especially in the developing world, adoption is being driven by an unmet demand for financial services. Fintech promises to deliver greater financial inclusion. In other economies, adoption can be related to the high cost of traditional finance, a supportive regulatory environment, and other macroeconomic factors. Finally, demographics play an important role, as younger cohorts are more likely to trust and adopt fintech services. Where fintech helps to make the financial system more inclusive and efficient, this could benefit economic growth. Yet the market failures traditionally present in finance remain relevant, and may manifest themselves in new guises.

FinTech is being adopted across markets worldwide - but not evenly. Why not? This paper reviews the evidence. In some economies, especially in the developing world, adoption is being driven by an unmet demand for financial services. FinTech promises to deliver greater financial inclusion. In other economies, adoption can be related to the high cost of finance, a supportive regulatory environment, and other macroeconomic factors. Finally, demographics play an important role, as younger cohorts are more likely to trust and adopt FinTech services. Where FinTech helps to make the financial system more inclusive and efficient, this could benefit economic growth. Yet the market failures traditionally present in finance remain relevant, and may arise in new guises.

[...]over the past two years, users have moved to other blockchains, resulting in growing fragmentation of the DeFi landscape (see Chart 1). [...]at the retail level, CBDCs have great potential, together with their first cousins, fast payment systems. [...]at the global level, central banks can link their wholesale CBDCs together to allow banks and payment providers to carry out transactions directly in central bank money of multiple currencies.

This is a revaluation of our study which we published in 2014 (Saiki and Frost, 2014) The study found that Japan's unconventional monetary policy (UMP) had widened income inequality in Japan. Since then, the Bank of Japan (BOJ) has further increased the monetary base and inflation has been low (headline inflation is about 1% as of this writing) but positive. We revisit the relationship between Japan's quantitative and qualitative easing (QQE) and find further evidence for our conjecture. The impact of UMP on income distribution may differ in Japan and other countries for various reasons, including differences in household balance sheets and the flexibility of labor markets.

Cryptocurrencies such as Ethereum and decentralised finance (DeFi) protocols built on them rely on validators or \"miners\" as intermediaries to verify transactions and update the ledger. Since these intermediaries can choose which transactions they add to the ledger and in which order, they can engage in activities that would be illegal in traditional markets such as front-running and sandwich trades. The resulting profit is termed \"miner extractable value\" (MEV). MEV is an intrinsic shortcoming of pseudo-anonymous blockchains. Addressing this form of market manipulation may call for new regulatory approaches to this new class of intermediaries.