The Dialogue on Global Digital Finance Governance has examined all the activities in which BigFintechs are involved, their related impact across the full spectrum of SDGs and with a particular focus on least developed countries (LDCs).
Summary of Technical Papers
BigFintechs & Sustainability: A necessary convergence
A summary of key findings from the technical papers addressing various aspects of ‘BigFintechs’, their evolution, impacts – positive & negative, role and governance.
This paper also outlines the Dialogue’s next steps to build capacity around its findings in developing economies.
1.1 BigFintechs and their impacts on sustainable development
BigFintechs are generally examined in terms of their potential to drive greater inclusion and mobilise additional financing for sustainable development.
Negative implications focus on data governance, consumer protection and operational risk management, preventing a more holistic view of impacts across their ecosystems and related implications for the SDGs.
This paper looks at BigFintechs’ business model ecosystems and examines their impacts and trade-offs at a more systemic level.
1.1B BigFintechs and their impacts on macroeconomic policies
This paper examines regulatory capacity to address macroeconomic impacts of BigFintechs, from tax base erosion to crowding out of local SMEs, and the limitations of current governance structures to keep pace with the evolving business models of these complex global platforms.
Regulators from least developed country (LDC) governments are ill-equipped to regulate the full gamut of impacts which BigFintechs bring to their countries.
1.2 Digital currencies and CBDC impacts on least developed countries (LDCs)
The landscape of digital currencies, associated taxonomy and related regulations are still evolving alongside their potential implications. From this entry point, the paper examines the evolution of macroeconomic impacts of CBDCs on developing countries and regulatory gaps. Especially relevant to the dialogue around new governance innovations, key findings address emerging trends, risks and vulnerabilities in LDCs as well as a potential gap between national fiscal and monetary policy, and nations’ capabilities to execute them.
2.1 BigFintechs and the UN SDGs: the role of corporate governance innovations.
This paper discusses corporate governance approaches of BigFintechs in relation to their effects on the SDGs, with a specific focus on innovative voluntary mechanisms. In the absence of a broader regulatory framework, Corporate governance innovations could be and are indeed playing a role in addressing certain BigFintech impacts. While existing efforts by BigFintechs to implement such voluntary mechanisms are not necessarily inclusive of most stakeholders impacted by their externalities, and remain largely experimental,they point to interesting solutions that could be further amplified at industry level and would complement traditional regulatory approaches to digitization and sustainability-related risks.
3.1 Policymakers, BigFintechs and the United Nations Sustainable Development Goals
This paper addresses the significant potential of BFTs to contribute to the SDGs through financial inclusion and provision of financial services. To better understand the scope and limitations of existing regulatory approaches, regulations relating to economic activities, structures and impact of BFTs are examined, with a focus on financial, data, competition and Internet/telecoms regulations. The paper also examines regulatory initiatives relating to the SDGs. The analysis of the BFT and SDG processes and regulatory approaches highlights gaps that need to be addressed by relevant stakeholders.
3.2 BigFintechs and international governance, policymaking and the United Nations Sustainable Development Goals: the SDGs in the international governance of finance
BigFintechs have significant positive and negative impacts on the path towards achieving the SDGs. At present, however, there is no systematic or holistic international governance framework that manages potential negative impacts or effectively encourages positive impacts. As such, this paper provides an overview of the ways in which a select set of SDGs are reflected in international governance and their potential lessons and implications for the governance of BFTs.
3.3 A Principles-based approach to the governance of BigFintechs
Only through embedding an understanding of both opportunities and risks can we maximize benefits while minimizing the risks of BigFintechs. This paper presents five guiding principles and a toolkit covering hard and soft law, market-based private ordering and co-regulatory approaches, at the domestic, regional and international levels. Existing institutions and approaches are considered, highlighting the need to embed awareness of these central principles throughout the UN, G20, IMF, World Bank, BIS, FSB, OECD, ITU and others.