During the latter part of 2019, a new virus that we now know as COVID-19 struck the global community, leaving it at a standstill for months. The worst part about this virus is that it stuck around throughout all of 2020 and it is still here in 2021.
The lockdown that was introduced to the whole world as a result of COVID-19 really affected every part of our lives – financially, economically, mentally, and emotionally. The most affected area by far is the economy. The majority of countries went into a tailspin of what could be considered a recession.
The United States has experienced an economic crisis several times throughout its history, but today’s unique challenges require a different financial regulation approach. The absence of technological policies, lack of data privacy regulation, deregulated areas of the financial industry, and the nebulous industry/agency relationship create hurdles for maintaining financial stability.
Without correcting financial regulation, introducing digital assets and technology conglomerates to the financial sector, the result will be unknown global pressure exacerbated by legislative deficiencies, drastically increasing systemic financial risk.
The nation’s recovery path from the current economic position requires much more than the path before the COVID-19 pandemic, and financial regulations that foster transparency and ensures stability will allow for much-needed innovation and growth while maintaining resiliency.
Lastly, leveraging technological solutions to superficially broaden the agency’s workforce to meet the scale required for adequate supervision of financial institutions is required. Oversight agencies will need to increase their monitoring capabilities by upgrading infrastructure and supervisory technological capabilities to assess increased transaction volume risk accurately.
As the speed and digitization of financial services increases, supervisory technology, and financial regulation need to evolve in tandem and the near-term priorities for financial stability include closing policy deficiencies, prioritizing data transparency and modernizing regulation, and upgrading supervisory infrastructure and systems.