#8: New Regulations for the Operational Resilience of FMIs

24 Nov

26th January 2023

With:

| Patrick Papsdorf (European Central Bank)

| Claudine Hurman (Banque de France)

In Session #8, two of Europe's leading authorities on payment oversight discuss the fundamental shift from traditional supervision to "Augmented Oversight." As decentralized payment systems and challenger FMIs begin to handle systemic volumes, the guests argue that the old binary of "regulated vs. unregulated" is failing.

The discussion centers on the Principles for Financial Market Infrastructures (PFMIs) and whether these global standards are "tech-neutral" enough to govern systems that have no clear legal entity or central headquarters. From the systemic risk posed by global stablecoins to the jurisdictional challenges of overseeing foreign-based platforms with local impact, Patrick and Claudine outline a future where central banks must use the very technologies they monitor—such as DLT and high-speed analytics—to maintain the integrity of the wholesale payment layer.

The session covered:

Supervision vs. Oversight: Clarifying the distinction between direct supervision of entities and the broader, system-wide oversight of payment flows and infrastructures.
The Concept of "Augmented Oversight": Moving beyond manual reporting to an automated, "always-on" monitoring model that uses technical APIs to observe decentralized networks directly.
PFMIs in a DLT World: Analyzing whether the current Principles for Financial Market Infrastructures are fit-for-purpose when applied to "leaderless" or decentralized business models.
Stablecoins as FMIs: Exploring the regulatory rationale for treating systemic stablecoins as payment systems, regardless of their technical "wrapper."
The Global Reach Problem: How central banks can enforce operational resilience standards on challenger FMIs that operate cross-border and across multiple regulatory "safe harbors."
Wholesale Resilience: Why the "decentralized" nature of new platforms is often cited as a strength for resilience, yet introduces new risks in terms of governance and finality.

Watch on Demand:

Listen on: Spotify | Apple Podcasts | Amazon Music