“Digitalisation has compressed the time dimension in finance… narrowing the time obtainable between early warning and realised affect,” mentioned RBI deputy governor Shirish Chandra Murmu on the School of Supervisors’ international convention. “Regulatory processes should evolve in the direction of proactive detection and agile interventions with out sacrificing prudence and high quality of judgement.”
Murmu flagged 5 main challenges for regulators within the digital period, beginning with the pace of technological change. “New functions and enterprise fashions are rising with growing frequency, difficult the appropriateness and pace of regulatory response,” he mentioned.
He additionally cautioned that digitalisation is blurring conventional regulatory boundaries, creating fragmented oversight. “Many monetary actions are actually being unbundled and delivered by way of non-financial platforms… no single authority has a complete, end-to-end view of the complete exercise chain,” Murmu famous.
Indicating that prescriptive guidelines danger changing into out of date as applied sciences evolve, whereas principle-based frameworks can result in uneven utility. “The problem lies in calibrating regulation to have readability with out rigidity and adaptability with out ambiguity,” he mentioned.
Systemic dangers from improvements similar to cloud and decentralised finance are one other concern. “Fragility can emerge with none single entity showing weak… regulators should look past entity-level soundness to systemic results,” Murmu warned.
Cybersecurity and operational resilience stay crucial. “Monetary establishments course of huge quantities of delicate data, making them engaging targets for cyberattacks… the problem is to advertise innovation whereas enhancing safeguards,” he mentioned.
