Financial Technology has imposed unique transformational impact on central banks and their financial system which will enhance the execution of their various core functions like, currency issuance and payment systems.
However, some aspects of fintech pose major challenges, hence, raising the questions such as, What is the impact
of fintech on central bank mandates? Is the structure of their decision-making bodies conducive to a sound response? Will fintech affect their autonomy?
How should central banks be transparent about, an accountable for, their response? to the central banks’ govern.
In response, central banks and their political authorities are taking steps to ensure that the legal foundations of their governance remain robust. The legal mandates have been strengthened and new decision-making bodies have been created to respond to fintech.
Some legal steps to be taken to prepare their governance for fintech are, consider carefully the stated objectives of those policies,execute its statutory functions in a digitalized world and review the legal powers in the central bank law,ensure that data is processed, managed, and used in conformity with applicable laws and rules, maintain appropriate levels of functional autonomy of central banks, review the legal framework for the central bank’s accountability to ensure that the central bank can be held accountable for its actions in response to fintech, paying special attention to data and AI governance and also review the effectiveness of the central bank’s code of conduct/ethics against the backdrop of the specificities of high-level executive officers and staff dealing with fintech firms.
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