It is always exciting to enter the reality that the fintech revolution he created, generating a global transformation of traditional finance and a shift of attention towards digital solutions to manage financial flows.
Indeed in the face of significant numbers: – 86 trl $ of Global GDP, between the world of debt and wealth (assets), 253 trl $ of debts and loans, 360 trl $ of household assets, 200 trl $ between stocks and bonds, 280 trl of real estate assets – Fintech solutions undoubtedly allow one efficient revenue management generated by the resulting transactions.
And in the face of this, the financial ecosystem on which Fintech expresses its full potential sees a total of commission returns of over $16 trillion in retail banking, global payments, FX transactions, insurance premiums, remittances and asset management. All this thanks to theintensive use ofartificial intelligence and advanced technologies who have transformed Fintech from a wild west into a thriving and boundless prairie of innovation available to all.
The macro trends of the Fintech industry
I macro trends which arise from the Fintech industry and which affect the international finance are: microfinance and crowdfunding, payments and remittances, roboadvisors/algotrading (and HFT, High Frequency Trading) and then the DLT technology, which stands out in the field of blockchain and crypto-assets. Right there distributed ledger technology (Distributed ledger technology, DLT) called DLT was the protagonist of the seminar of the 29th ASSIOM FOREX Congress dedicated precisely to: "Prospects for DLT: the role of central banks between innovation of market infrastructures and support for the digital development of the payments and finance” in which Bank of Italy offered an extremely interesting picture of the state of the art in our Central Bank's approach towards the markets, the authorities involved and savers also considering the new economic opportunities created for greater inclusion: not only of new market players but also and above all of non-banked subjects.
International financial markets increasingly linked to the success of blockchains
It is increasingly difficult to remember Finance before the advent of Fintech, such is the scope of changes accelerated in the post pandemic phase, also because 14 years have passed since the words Bitcoin e Blockchain they have entered our vocabulary and to date over 550 Italian families are involved in crypto-activities. Savers and families involved in the related ecosystem, unfortunately often with little awareness of risks and protections.
The reality of international financial markets tied more and more to blockchain success sees the breadth and speed of affirmation of DeFI, or decentralized finance, deriving in particular from the profound novelty that characterizes DLT, between new services, including crypto-assets, and new players, different from the traditional ones.
Last June 2022 the Regulation on the DLT Regime Pilot was published in the Journal, in force from next March 23rd, which is part of the European Commission's package of measures relating to MICAR and DORA respectively: the regulation for digital markets in cryptoactivity and the 'Digital Operational Resilience Act.
La Bank of Italy so he put the DLT at the center of the recent call for proposals of the Milano Hub to which 81 subjects with 56 projects have characterized an internationally participated response, to signal the centrality that the Italian initiative is having in the EU.
Le technologies based on distributed registers on the other hand they hired a fundamental role in the stability of the financial system and for the protection of customers. Thanks also to the extension of its effects on three strongly interconnected dimensions such as new technologies, new participants and tokens, to which correspond risk levels that must be monitored and regulated or at least supervised in the most appropriate and punctual manner.
Is a digital euro possible?
During the seminar we talked about digital euro and of the evolution that his realization it can influence the development of the technological infrastructure of the markets in view of the digital advancement of the payment and financial industry; the success of this path requires a regulatory framework that is able, among other things, to create areas of compatibility between centralized finance and decentralized finance, in a European context where the EU itself is the leader in digital regulation. But this "digital challenge" it requires the Authorities to look beyond the ordinary rules, because it extends to the platform economy, it exploits public-private partnership logics; it is a path that requires effective channels of dialogue with the market, in order to understand the needs of operators and customers in order to assume them as a reference parameter for institutional action.
What seemed very clear to us and how the Bank of Italy is increasing efforts and commitment to monitor the market, in conjunction with the other Authorities, ready to intervene even in advance of the definition of the European regulatory framework, as we have heard through the publication of specific indications for users, intermediaries and suppliers of technological solutions in the field of crypto-assets. The attention paid to the growing integration of supervisory profiles on financial intermediaries, on suppliers of critical functions and on the supervision of the regular functioning of the payment system associated with crypto-assets is evident. But not only that, it will use all the other tools at its disposal to intercept and prevent potential threats to user protection and system stability.
In any case, we must be ready to promptly intercept any new forms of risk without renouncing to fully reap the benefits that the digitization of finance, together with that of society itself, can derive for individuals, families and businesses. To this end, it is necessary to strengthen the existing "dialogue" between the market and the authorities, trying to preserve the necessary openness to innovation and compliance with the very strict deadlines imposed by international competition.
Bank of Italy in the front row
Il our country, together with its central bank, can have in this scenario a authoritative role thanks to his skills, his talents and his many excellences. And the next meetings within the International Monetary Fund for the Financial Stability Board they see Bank of Italy the chosen interlocutor and more authoritative for the development of useful recommendations to strengthen the possibility of finally reaching , even in the world of global stablecoins to a globally shared regulation and accepted because the protections are actually effective and "future-proof". The challenge for which it will be necessary work su two floors essential: an update of the ordinary rules without neglecting the overall dimension of the Fintech phenomenon and anticipating its development, leading it towards safety and efficiency tracks.
On the other hand, since last June, coinciding with the publication of the DLT Regulation, the Bank of Italy had alerted the Authorities involved because if the European regulation is a solid cornerstone and very advanced compared to other much more vague international legislation, it takes a two-dimensional approach in the new decentralized finance, because the traditional approach can miss the complexity of the new digital markets based on DLT.
The digital euro can lead to the development of the technological infrastructure of the financial markets
Thus reassuring market operators i representatives of the Bank of Italy who attended: Dr. Piero Cipollone, Member of the Executive Board and Deputy General Manager of the Bank of Italy and Dr. Massimo Doria, Deputy Director General – Directorate General for Currency Circulation and Retail Payments, Head of Banca d'Italia's Innovation Center “Milano Hub” , they have so concluded:
“The making of a digital euro, in its wholesale dimension, will be able to boost the further development of the technological infrastructures which support the functioning of the financial markets. The Bank of Italy is significantly committed to the realization of this process also through the promotion of appropriate forms of regulation of new digital markets, which also look at the need to intercept the technological code that characterizes the new digital ecosystems. Dialogue with the market represents a necessary complement to this action in order to translate abstract principles and rules into concrete terms, favoring, as the ultimate goal, the affirmation of services and products consistent with the needs of individuals, families and businesses“.
