Regulatory Handbook:The Enabling Regulation of Digital Financial Services

Present approaches to regulating Digital Financial Services (DFS) have limited the opportunities for the deepening of financial inclusion, and suggest an urgent need to reconceptualise regulatory approaches.

This handbook, in response to these challenges, aims to provide policy makers and financial regulators in emerging markets a practical and comprehensive guide on how to effectively regulate DFS. It analyses why the regulation of DFS requires a different approach to the regulation of other financial activities, and outlines key elements of a new regulatory paradigm going forward. This handbook offers regulators policy recommendations to help achieve the following objectives:

- Enabling regulation to build sustainable DFS ecosystems;

- Understanding the mechanics of different DFS models and developing risk-based regulatory frameworks;

- Protecting customers’ funds from insolvency, liquidity and operational risks;

- Regulating the use of agents and understanding factors that shape the liability chain;

- Building effective consumer protection frameworks;

- Balancing the implementation of appropriate anti-money laundering/countering the financing of terrorism (AML/CFT) measures and the promotion of financial inclusion; and

- Enhancing oversight of payment systems and promoting interoperability and inclusive finance. 

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