Financial Technology, Climate Change, and Challenges for Central Banks and Financial Regulators in Asia

Technology firms’ new and innovative banking services are rapidly transforming the banking industry. This has significant implications for the effectiveness of monetary policy since its main transmission mechanisms are based on influencing the cost of financing to the traditional commercial banking sector. At the same time, a growing number of central banks are examining the impact of digital money and crypto assets and exploring the feasibility of issuing central bank digital currency. In the process, security and data privacy risks, reputational risk, and concentration risks must be carefully considered, especially when dependent upon a few large technology companies.