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For immediate release
Contact: Daneil Mazone, Media Relations, 215-574-7163
San Diego, CA — Some form of regulation is in the interest of the evolving fintech industry, Federal Reserve Bank of Philadelphia President Patrick T. Harker said today in remarks at the Global Interdependence Center’s Payment Systems in the Internet Age conference. “Regulation is not just a question of protecting consumers; it’s a question of protecting the innovators as well,” Harker said. “It’s in their best interest to have an established framework in which to operate.”
Fintech firms, those that apply technological innovation to financial functions and systems, are somewhat new from a regulatory standpoint. However, Harker said that trust in the mechanisms that safeguard financial systems is the foundation of their soundness and strength. “Fintech firms need that trust the same as any other bank or financial institution,” Harker said. “This underlying expectation is why it’s best to get in early on regulation. It’s in these firms’ self-interest to provide a layer of trust building that regulation can offer.”
Many questions remain about how fintech lenders in the United States should be supervised. Harker said he is not speculating that the Federal Reserve will be involved in fintech regulation, but emphasized that regulators are not trying to stifle innovation. “If anything, you’ll hear us praise the ingenuity and imagination that comes from the technology sector,” Harker said. “But there are risks and we should be talking about them. Regulation can’t solve everything and it can’t anticipate or guard against every problem. But it can try.”
The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank savings and loan holding companies, and provides financial services to depository institutions and the federal government. It is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware.