Monetary regulation within the age of the platform financial system

Prof Barry Eichengreen in this research paper (open entry) revealed in Journal of Banking Analysis discusses how platform financial system and banking poses challenges for monetary regulation:

Platform companies enable for collaboration with nontraditional companions and produce collectively totally different classes of consumers, within the monetary context savers and buyers or lenders and debtors, creating massive, scalable networks of customers. Their entry into finance guarantees potential advantages to shoppers within the type of new merchandise, decrease costs, wider selection, and enhanced client expertise. On the identical time, their new enterprise fashions and applied sciences doubtlessly threaten the dominant place of conventional monetary providers suppliers and create challenges for regulators.

Platform companies can use their preferential entry to buyer information to skim off high-quality loans, leaving solely low-quality clients for different lenders. Their capability to supply complementary nonfinancial providers that can not be equipped by FinTech start-ups and banks could make it troublesome or unattractive for patrons to modify to various suppliers. This hazard is particularly acute when BigTech companies have monopoly energy in different markets that complement monetary providers.

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