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Mr. Ali J Al-Sadiq
The outbreak of the COVID-19 pandemic has helped accelerate the digitization of public services. The lockdown initiated by most governments to curb the spread of the coronavirus forced most public agencies to switch to online platforms to continue providing information and services to the public. It is widely recognized that information diffusion and communication technology play a large role in improving the quality of public services in terms of time, cost, and interface with the public, business, and other agencies. Potentially, e-government could enhance a country’s locational advantages and attract more Foreign Direct Investment (FDI) inflows. This hypothesis is tested empirically using an unbalanced panel data analysis for 178 host countries over the period 2003-2018. The results suggest that e-government stimulates the inflow of FDI.
International Monetary Fund. European Dept.
The UK entered 2020 negotiating a new economic relationship with the EU and facing other challenges, including meeting climate targets, dealing with an aging population, and reinvigorating tepid productivity growth. Growth and investment had been weak since the 2016 referendum, and the current account deficit elevated, but unemployment was low, inflation on target, and balance sheets strong. The global pandemic hit the UK hard in March, and the country now faces a second wave. The economic impact has been severe, but helped by an aggressive policy response, jobs have been preserved, businesses kept afloat, and banking sector losses contained. Still, the outlook for the near term is weak, as the economy works through the second wave, Brexit, rising unemployment, and corporate distress. Risks are overall to the downside, centering on the degree of balance sheet damage sustained by households and small and medium enterprises. The pace at which vaccines are able to bring the pandemic under control could be an important mitigating factor.
Mr. Tanai Khiaonarong and Terry Goh
Financial technology (Fintech) has prompted authorities to consider their potential financial stability benefits, risks, and effective regulation. Recent developments suggest that regulatory approaches and their legal foundations need to augment entity-based regulation with increasing focus on activities and risks as market structure changes. This paper draws on recent international experiences in modernizing legal and regulatory frameworks for payment services. An analytical framework based on a four-step process is proposed—(i) identifying payment activities; (ii) licensing entities and designating systems; (iii) analyzing and managing risks, and (iv) promoting legal certainty. As payment activities evolve and potential systemic risks heighten, adherence to international standards and additional regulatory requirements should be warranted.
Mr. Charles R Taylor, Christopher Wilson, Eija Holttinen, and Anastasiia Morozova
Fintech developments are shaking up mandates within the existing regulatory architecture. It is not uncommon for financial sector agencies to have multiple policy objectives. Most often the policy objectives for these agencies reflect prudential, conduct and financial stability policy objectives. In some cases, financial sector agencies are also allocated responsibility for enhancing competition and innovation. When it comes to fintech, countries differ to some extent in the manner they balance the objectives of promoting the development of fintech and regulating it. Countries see fintech as a means of achieving multiple policy objectives sometimes with lesser or greater degrees of emphasis, such as accelerating development and spurring financial inclusion, while others may support innovation with the objective of promoting competition and efficiency in the provision of financial services. This difference in emphasis may impact institutional structures, including the allocation of staff resources. Conflicts of interest arising from dual roles are sometimes managed through legally established prioritization of objectives or establishment of separate internal reporting lines for supervision and development.