Monday, 29 May 2017

A holistic approach to future-proofing the financial system

Nobuchika Mori, Commissioner of Japan’s Financial Service Agency, writing in the Financial Times in May 2017, called for a fundamental change in the way that regulators relate to financial services marketplaces. He says that…

Regulators have made the global financial system more resilient by major regulatory reforms… But all this should not be the end of the story. It is now time to shift the focus from regulation to supervision.

From A holistic approach to future-proofing the financial system

I would rephrase this slightly, in the language of big data and blockchain, always-on digital identities and roboadvisors, to call for an era of shared ledgers, translucent transactions and ambient accountability, in which the traditional boundaries around accounting and auditing dissolve to form a new way to manage markets to the benefit of society.

This new era is what I have labelled the era of “the glass bank”. I’ve written before about the origins of this concept and the way in which it came to crystallise my thinking around the response to the Great Financial Crisis (GFC). Central to my thinking is the

In his magnificent “Fraud: An American History from Barnum to Madoff”, Professor Edward Balleisen (associate professor of history at Duke University) talks about the way in which the notion of transparency in accounting formed a fundamental response to the frauds of the modern age and an enabler for the steady shift from the centuries-old age of caveat emptor to the modern age of caveat venditor. 

Ambient accountability is the logical next step.





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