Central Bank Supervision in the Digital Age

Abstract

The term “digital age” is on the verge of being overused and means a variety of things to different people. I will use it here, in the context of discussing financial services and their regulation, as a catch-all phrase to refer broadly to several interrelated phenomena that each have been facilitated by the increasing power of computers and speed of communication:

• the increasing sophistication and complexity of financial instruments (especially derivatives);

• the increasingly complex nature of financial strategies (trading and hedging in particular);

• the increasingly rapid transmission of information (financial and otherwise) between financial institutions, financial institutions and their customers, among users of financial markets and the markets themselves, and among all of these actors across national borders.