Digitalisation and the future of banking

New technologies are changing how banks produce and provide financial services. These changes have implications for traditional banks, creating novel sources of systemic risk which could in turn pose regulatory and policy challenges. This column introduces a new report by the Advisory Scientific Committee of the European Systemic Risk Board that discusses the impact that digitalisation may have on the structure of the European banking system. Based on three scenarios for the future development of European banking, the authors derive an array of macroprudential policy recommendations.

Identifying indicators of systemic risk

In the aftermath of the global financial crisis, a consensus rapidly emerged that systemic risk – a central concept in financial stability – needed to be contained going forward. However, to this day experts cannot agree on how to measure systemic risk in the first place, with researchers having proposed a plethora of indicators. This column proposes an analytical approach designed to lend structure to this universe of indicators for measuring systemic risk.

The populist damage to the trading system

Around the world, populism has weaponised anxieties over globalisation and other forms of social change. This column argues that populist trade policies have damaged the global trading system through protectionist policies themselves and by undermining the rules and norms of the WTO. The author suggests that the Trump administration’s national security tariffs and Brexit have inflicted the greatest populist damage on trade rules and trade integration so far and that economic and institutional reforms will be necessary to break the populist influence on trade policy.

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