Our recent Center for Financial Markets whitepaper, “FinTech: Building a 21st-Century Regulator’s Toolkit,” argued that policymakers should explore alternative regulatory tools, processes and approaches to facilitate responsible FinTech development. As if on cue, federal and state regulators recently announced that they are exploring such approaches in regulating FinTech and are rethinking regulatory rules and frameworks created many decades ago. A properly tailored approach to regulating FinTech can fulfill the objectives of ensuring consumer and investor protection without overly burdening innovative financial platforms and services.
“The afternoon knows what the morning never suspected.”
Robert Frost’s metaphor was never more apt than it is today, as a global demographic revolution alters almost every aspect of social and economic life. The world is aging as never before, thanks to increasing lifespans and declining birthrates. Advances in medicine and technology promise to fuel the aging of societies by continuing to extend longevity.
Last year, Israel’s new housing Cabinet turned to the Milken Institute to help develop economically feasible solutions to the country’s pressing need for housing. We convened a Financial Innovations Lab® and followed up afterward with attendees and other experts. Israel’s dramatic housing market failure has imposed untenable pressures on working families, especially younger ones. There are not enough apartments for rent, and homes for sale are too expensive. A dramatic rise in housing costs over the past five years has not been matched by household incomes. Indeed, the crunch helped spark street protests during the 2011-12 social crisis in Israel, and the bubble in prices doesn’t seem likely to deflate soon.
The European Central Bank recently released results from its stress test of large banks in the European Union. The ECB’s examination of capital levels and fiscal soundness was highly anticipated because it is viewed as the region’s most comprehensive financial regulatory assessment to date. Regulators hope the stress test will augment the credibility of the EU banking system and address its vulnerabilities. The following views from the Milken Institute offer insight into the meaning of the stress test results and the future of EU banking.
You don’t have to look far in medical and scientific research today to feel the shifting sands and see signs of change. At times it seems we are simultaneously tilling the soil with a set of old yet tried and true tools while making new ones. Each year, as my organization prepares to bring together leaders in medical research, we confront all of this change head on.
As much as we all like to wring our hands and lament the challenges, the solutions are not always simple but are often elegant. We are supposed to embrace change and seek it out, but it can be a pain. What we have seen is that to reinvent, you have to understand where we are and then find those best practices and case studies that show a path forward, thus easing the pain a bit.
At the moment, policies meant to deal with South Korea’s slowing economy and high level of household debt are putting pressure on its already-weakened banking sector. Banks operating in Korea have struggled with profitability, causing many to restructure and downsize. For instance, foreign banks such as Standard Chartered, HSBC and Citibank have trimmed headcount, sold business operations or closed retail units.
The development of financial technologies is driving profound shifts in financial markets and services. From new digital payment systems and the use of digital or electronic currencies to the use of data analytics and the creation of online investment and finance platforms, the “Internet of Finance” is here to stay.
This is the first in a series of leadership profiles that takes the pulse of FinTech: where we are and where we are likely to go when it comes to responsible development.
I recently spoke with Sam Hodges, co-founder and U.S. managing director of Funding Circle, an online marketplace lender with operations in the U.S. and UK. Sam has explored how the existing regulatory system affects banking, and, with Funding Circle’s cross-Atlantic operations, observed first-hand differences between U.S. and UK policy frameworks applying to online lenders. Here’s our conversation.
This week the Milken Institute Center for Financial Markets, along with diverse FinTech stakeholder groups, launched its newest program, FinTech: 21st Century Market and Policy Developments. We are responding to policy needs emerging from the growing number of new financial technologies – FinTech – and their effect on traditional financial markets and services. We will help develop policy frameworks and regulatory approaches that responsibly facilitate FinTech development.
How does a society, inundated with a great number of incurable diseases, ensure that those who would dedicate their time to finding cures have the resources necessary to do so? Declines in investment for innovative medical research and early-stage biotech companies have spurred patients and their supporters to be more engaged than ever in raising both funds and awareness for promising science. Crowdfunding has emerged as an increasingly popular vehicle among bioscience entrepreneurs and philanthropists otherwise stymied by the current economic climate, but questions about the sustainability and impact of this funding model on advancing drug development remain.
The largest banking organizations in the United States have long been subject to much debate and contention. How should they be managed in the event of a crisis?
This is the second in a series of Too Big to Fail (TBTF) charts of the week, and this week we track the development of TBTF banks from 1983 to where we stand today in 2014. The total bank assets of the TBTF banks have grown almost seven-fold since 1983. These developments are discussed in a new paper by Jim Barth and me; see The Big Keep Getting Bigger: Too-Big-to-Fail Banks 30 Years Later. The chart encapsulates our report and shows the growth and evolution from TBTF banks to globally systemically important banks (G-SIBs).
