Suptech: A new era of supervisory philosophy

Rūta Merkevičiūtė

Contents

Foreword

Preface

Preface

Introduction: Suptech/regtech defined: Payments, sandboxes and beyond

1.

The uncertain prudential treatment of cryptoassets

2.

US regulatory certainty versus uncertainty for crypto and blockchain

3.

Bermuda: Suptech and regtech supporting the risk-based approach

4.

Suptech: A new era of supervisory philosophy

5.

Cloud computing in the financial sector: A global perspective

6.

DeFi protocol risks: The paradox of cryptofinance

7.

IT transformation in the Prudential Authority of South Africa: A case study

8.

Making the vision a reality: Perspectives from the Monetary Authority of Singapore

9.

Lessons from Hong Kong through the lens of the HKMA

10.

Technological change: Is it different this time?

11.

The ECB’s suptech innovation house: Paving the way for digital transformation of banking supervision

12.

China’s financing opening up and regulatory convergence with the world

13.

Disclosures and market discipline: The promise of regtech

14.

Regtech and new derivatives developments

15.

Fintech and regtech: Leading the evolution and regulation of alternative investments

16.

The role of artificial intelligence and big data in investment management

17.

The promise and challenges of machine learning in finance

18.

Data privacy and alternative data

19.

Digital ID and financial inclusion

20.

Strategic technology: Regulation and innovation of CBDCs

21.

Regulatory sandboxes: Innovation and financial inclusion

22.

Technology and sandbox development innovation in a transitional market: A case study

23.

Developing the regulatory ecosystem: The evolution of stablecoin

24.

Central bank digital currency, regtech and suptech

25.

Digital dollar: Cryptocurrency for everyday commerce

26.

CFTC regtech implications for virtual currency trading

27.

Fintech, regtech, suptech and central bank decision making

Supervisory technology (suptech), defined as the use of innovative technology by supervisory and regulatory authorities, is developing rapidly. Suptech is designed to bolster supervisory capabilities in the digital era. Around the world, financial sector supervisors are experiencing a profound shift to data-driven supervision enabled by the next wave of technology and data solutions. In implementing suptech, supervisory authorities are often driven by two different motivations: (i) increasing operational efficiency; and (ii) improving hypothesis-driven supervision. The former often entails helping supervisors test and prove hypotheses using new sources of assessments or data by replacing elements of the supervisory decision framework with data and algorithms, resulting in significant efficiency gains, while the latter entails assisting supervisors in testing and proving hypotheses using new sources of analyses or data.

The expansion of digital activity prompted by the Covid-19 pandemic has re-emphasised the value of suptech for supervisory authorities. The direct and automated collection of granular regulatory data from supervised institutions is critical to replacing on-site

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