1.6b Do regulations help society? (Part 2)

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En provenance du cours de The Hong Kong University of Science and Technology

FinTech Security and Regulation (RegTech)

2 notes

The Hong Kong University of Science and Technology

FinTech Security and Regulation (RegTech)

2 notes

Our primary goal is to help you to understand RegTech and to become more confident and persuasive in your ability to analyze and make recommendations to executives within the finance industry regarding how to react to these changes, e.g. Regulations to crypto-currencies like BitCoin & ICO. This MOOC on RegTech offered by HKUST presents the views of several professors from the top business school in Asia as well as perspectives from industry professionals. HKUST has been ranked for many years as the number one EMBA program in the world, as the number one Finance program in Asia, and as the top MBA program in Asia by multiple independent rating and review journals and surveys. This course offers the combined strengths of HKUST in Business, Finance, and Technology as one the world's leading academic institutions on an important area of technology and business innovations. For students from outside Asia, this also gives an insight into changes happening in the most advanced FinTech markets of the world, since Asia leads worldwide in FinTech adoption and creative innovations. This course "FinTech Security & Regulation(RegTech)" is part of the HKUST-Coursera FinTech specialization. There are 3 other courses in the specialization including FinTech Foundations and Overview, FinTech Risk Management, and FinTech Innovative Disruption: Implications for Society. The FinTech specialization will be launched in Fall 2018, stay tuned!

À partir de la leçon

Introduction to FinTech Security & Regulation

In this module, learners will examine the relationship between security and regulation as twin methodologies for managing and reducing risk in financial services. Issues explored will include "What is RegTech?", "What is InsurTech?", and how can we determine when regulation and security are enough or too much to achieve important social & business objectives.

1.6a Do regulations help society? (Part 1)8:59

1.6b Do regulations help society? (Part 2)6:26

1.7a How much security is optimal? (Part 1)8:13

1.7b How much security is optimal? (Part 2)9:31

Rencontrer les enseignants

Theodore Henry King CLARK
Associate Professor
Information Systems, Business Statistics and Operations Management Department

Now, regulation can be good but regulation can also be bad.

Good regulation protects us.

It protects us from fraud,

it protects us from harm,

it makes society more stable.

Bad regulation may also make society more

stable but it makes it stable so that you can't innovate.

Bad regulations tend to stifle creativity and stifle

innovation and can sometimes create costs with no benefit.

Bad regulation may create cost or barriers to entry or may even create

monopolies or large powerful oligopolies

without much benefit to consumers or society of doing that.

So, we have to be very careful and ask,

is there too much regulation?

Now, you may or may not like what

happened in the US in the last election with Donald Trump getting elected.

You may not like parts of him and I'm not a big fan of Trump.

At least on some of his social or moral oppositions.

But he is right about one thing,

that regulations have a tendency to get created and stay forever.

So, I will, a 100 percent agree with

his point that we tend to get more and more and more regulations.

We have a tendency to want to create regulations without removing regulations.

Now, I may not like the regulations he's removing,

I may not like the direction he's going,

but his message that we ought to be thinking about taking away

a regulation when we add a regulation is not a bad idea for a government as concept.

Is that let's look at regulations,

and there may be regulations on the books that are far

obsolete and you may look and say we don't need this,

or this isn't appropriate,

or this is irrelevant.

We may also have a tendency to want to stop change.

Governments like stability, but stability is incompatible with innovation.

So we want to innovate,

we want to change.

If governments were able to stop smartphones would that be a good thing?

Well, no. Of course it's not.

And of course we don't want governments telling

us how much computing power we can have in

our pocket or what we can do with apps on our phone.

No, go away.

Leave us alone. But sometimes government regulation is good and is helpful.

So, I'm not saying we shouldn't regulate.

I'm saying let's think carefully about regulations and about whether they're

just a knee-jerk reaction to change or whether they are truly protecting society.

Good regulation helps society and helps individuals.

Bad regulation opposes change without a corresponding benefit.

So we need to talk about the cost and benefits of regulations.

Now, sometimes people will look and say we need weaker regulations or less regulations.

In some ways they're not wrong.

Weaker regulations does tend to lead to more profits because we weaken

banking regulations from the time of Ronald Reagan through the time of Donald Trump.

Because we weaken over time or at least through 2008,

we weekend banking regulations.

Bankers made more and more money.

Their profits were huge.

But of course then there was the 2008 financial crisis and then we re-regulated it.

We put more regulations in and probably went too far.

But those regulations were designed to help us to avoid

the next financial crisis and some people are looking and saying the current efforts in

the US and in Europe and other places to deregulate

may be good for profits but maybe bad for society,

may lead to a financial services meltdown.

These weaker regulations resulted in 2008,

in a global crisis.

But it wasn't the first such global crisis and

poor regulations or weak regulations on currency,

trading or in appropriate regulations on fixed exchange rates and lack of

regulations on lending led to a late 1990's financial crisis in Asia.

The Asia economic crisis,

we have the 2008 crisis,

we have that SNL crisis before the 2008 crisis,

we have crisis after crisis.

The goal of regulations is to reduce the number of such crises.

By weakening regulations that were put in place after the great depression,

to try and say no more great depression.

Well, that was good but bankers weren't making a lot of money.

Weaker regulations means higher profit,

weaker regulations means less stability,

not just for a nation but for the planet Earth.

Because an economic crisis in one country can easily spill

over into other countries as happened in 2008.

And so, weaker regulations worries governments,

or is politicians in part because they worry about people.

And they have altruistic or good hearts, some of them.

In part because they worry about their jobs,

because weaker regulations leading to

social instability might lead people to elect a different person to run

their country or to rise up in military rebellion

against a dictator that they don't like who is not protecting their personal interests.

So, it doesn't have to be a democracy that can change control because of a crisis.

So that's it in terms of regulation.

Regulation is good but too much regulation can be bad.

Too little regulation can be bad.

Regulation has a role,

but we need to balance its cost versus its benefits. Thank you

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