Rapid Digitalisation Poses Financial Risks in Asia – Says BoJ’s Ueda

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Rapid Digitalisation Poses Financial Risks in Asia – Says BoJ’s Ueda

The adoption of digital financial services has experienced a remarkable upswing in the Asia-Pacific region, particularly in emerging economies where a significant portion of the population previously lacked access to traditional banking services.

Smartphones’ widespread availability and convenience have revolutionised daily financial transactions, enabling greater financial inclusion for many. Despite these advancements, Ueda highlighted the pressing need for policymakers to address emerging challenges, including safeguarding against cyber threats and fortifying regulatory frameworks to combat money laundering.

During a keynote speech delivered at an Asia-Pacific high-level meeting focused on bank supervision, Ueda delved into the dual nature of technological innovations within the finance sector.

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He pointed out that while introducing crypto assets, tokenisation, artificial intelligence (AI), and other emerging technologies hold the promise of opening new doors of opportunity, they concurrently present potential risks that could jeopardise the integrity and stability of the financial infrastructure.

Ueda elaborated on the pivotal challenge facing financial regulators today: to effectively capitalise on the advantages offered by the digital transformation of financial services while devising and implementing robust measures to mitigate the associated risks. This delicate balancing act is essential for ensuring the ongoing stability of the financial system amidst rapid technological changes.

Furthermore, as the landscape of financial services and providers becomes increasingly diverse, the importance of adopting a regulatory approach that applies consistent rules for identical types of financial activities and associated risks grows more evident.

Ueda discussed the complexity involved in this approach, particularly the practical difficulty in clearly defining which activities and risks should be considered “the same” for regulatory purposes. This challenge underscores the ongoing efforts required by financial authorities to adapt and evolve regulatory frameworks in response to the dynamic nature of financial innovation and digitalisation.

The post Rapid Digitalisation Poses Financial Risks in Asia – Says BoJ’s Ueda appeared first on LeapRate.

 

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