John C. Williams, president and CEO of the Federal Reserve Bank of San Francisco, Calif., sees fintech as holding great promise for the financial system, but he also believes regulation plays an important role in allowing fintech to fulfill its potential.
Speaking to the LendIt USA 2016 conference in San Francisco , Williams said there are potential risks involved with new advances that regulators have to consider. LendIt USA is an online lending platform.
During his presentation [PDF], he cited the possibility that digital currency can be used to support criminal and terrorist activity. [L]eft unbridled, the ease and anonymity of some types of fintech, such as digital currencies, have the potential to make criminal and terrorist activity even easier. As a representative of the Fed District that is home to a technology hub that is considered the center of the tech universe, Williams said he is compelled to consider future obstacles. Financial System Fundamentals
He began by reviewing how the financial system should serve the economy and society. The financial system’s goal is to facilitate payments among buyers and sellers, as well as direct homes’ and businesses’ savings to their best uses.
These “best uses” include building homes and businesses, achieving an education or creating infrastructure. The system is also tasked with being resilient and efficient.
Williams said fintech holds great promise, but he sees potential risks. He said regulators often don’t highlight risks since they know they are perceived as pessimists, but they are nonetheless required to consider unintended consequences.
Williams made what he called a standard disclaimer, meaning the views he expressed were his alone and don’t necessarily reflect others in the Federal Reserve system He also noted that as president of the San Francisco Fed, he does not write regulations directly. He did not wish to discuss specific regulations […]
