Selected Publications: Chartering the FinTech Future

2. Januar 2021, von Pedro Magalhães Batista

Foto: CC

In a recent paper, "Chartering the FinTech Future," Charles Calomiris shows how chartering FinTech shadow banks as national banks could be favourable for economic development. Calomiris argues that FinTech unbundled bank activities through novel providers of payments and lending services. FinTech and their consumers could benefit from coming out of the shadows by enhancing their geographic reach and market credibility through the OCC examination.

It is essential to clarify that Calomiris does not advocate that all FinTech offering quasi-banking activities should be required to obtain national charters. For some, the regulatory burden would impede them to meet customers needs. To others, however, chartering fintech banks would allow them to reap higher net gains. And more interestingly, allowing FinTech to obtain charters while not requiring them to do so would enable policymakers to evaluate specific regulations' value better.

Another question Calomiris addresses is if there is a rationale for extending the national bank charter to stablecoins providers. Such a possibility could ensure reduced transaction costs for payment services, reduce the risk of hacking, and new payment services, while blockchain-based payments would reduce systemic risk and criminal activities. Calomiris also foresees the possibility that such permission could be blocked by vested interests and points out how bank charters' future is a political question as much as an economic one.