Central banking 2020: Ahead of the curve
As central banks are trying to keep pace with the complexity of the rapidly evolving financial services market, they are scanning a new and uncertain landscape. In their new paper Central banking 2020: Ahead of the curve PwC’s Central Bank Group explores how central banks can keep up with the rapid transformation in societies, economies and communications and the systemic risks this generates.
Given the regulatory reform that is still sweeping through the banking sector, it is tempting to see regulation as the key determinant of the industry’s future shape. However, there are much more fundamental forces at work than regulation, ranging from the significant shifts in technology, change in public expectations, and the migration of ‘banking’ activities beyond the traditional banking sector.
In PwC’s view, it is these wider shifts that will ultimately dictate both how the banking sector as a whole will reform, and also what the role and shape of banking regulation will need to be. Building on this observation, PwC’s Central Bank Group has formulated three hypotheses and the implications for central banks:
- Banking services will increasingly be delivered outside of regulated banking industry
- Banks need to invest heavily and rediscover and reassert their core in society
- Regulators and regulation need a radical re-orientation and realigning from policing to protecting
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