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Bank of Russia head sees bigger challenge than rates for lenders

Bloomberg Published on Fri, Oct 14, 2016 / 7:34 AM GMT+8

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BLOOMBERG (Oct 14): Preoccupied by ultra-low interest rates in much of the industrialised world, the financial industry risks being blindsided by an even bigger challenge, according to Russian central bank Governor Elvira Nabiullina.

“Banks could fall into a trap,” Nabiullina said at a conference in Kazan, capital of Russia’s republic of Tatarstan. “What do they mostly complain about now? Low interest rates, tough oversight, unjust regulation compared with parallel sectors. Meanwhile financial technologies quietly crept up from behind, and that’s the main challenge that banks should pay attention to.”

New financial technologies such as peer-to-peer lending and the use of cryptocurrencies such as bitcoin are coming under greater scrutiny by central banks. While some countries such as Singapore have taken a more relaxed approach to regulation as they focus on the benefits of innovation, nations from India to China are tightening oversight to curb emerging risks. The technologies present a test for regulators that may even eclipse the challenge they pose for the banking industry as a whole, according to Nabiullina.