How regulation should evolve to encourage fair competition between traditional banks and new fintech and big tech players is now being debated. Some advocate moving from an entity-based to an activity-based regulatory approach under the principle "same activity, same regulation".
However, there is only limited scope for further
harmonising the requirements for different players in specific market
segments without jeopardising higher-priority policy goals. In fact,
there seems to be a strong case for relying more, and not less, on
entity-based rules. The regulatory framework should incorporate
entity-based requirements for big techs in areas such as competition and
operational resilience that would address the risks stemming from the
different activities they perform. This strategy would not only help
regulation to achieve its primary objectives, but would also serve to
mitigate competitive distortions.
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