This paper was produced under the Funding Australia’s Future project which aims to better understand the changing dynamics of the financial system and its impact on future economic growth. The research from Stage Four explores the growth of fintech, its implications on the structure of the financial sector and the value it can produce for the broader Australian community through increased competition in the financial services sector.
For (non-government) cryptocurrencies to be broadly accepted forms of digital money they will need consumer trust and confidence. Whether their enabling technologies can achieve these without the involvement of financial institutions and government is an open question.
Building consumer confidence in new digital currencies will require participation of intermediary institutions and a much greater level of regulation than currently exists.
In response to concerns about existing forms of cryptocurrencies, governments are likely to investigate or implement their own digital currencies to prevent disruption to sovereign money and the ability to manage the wider economy.
The Australian Centre for Financial Studies (ACFS) initiated the Funding Australia’s Future project in late 2012 to undertake a stocktake of the Australian financial system, and its role and challenges in facilitating future economic growth within the wider economy.
In an economy which has enjoyed 26 years of consecutive economic growth and showed a resilience through the Global Financial Crisis which was the envy of many nations, the financial sector has played an important role. The past decade, however, has been one of significant change. The growth of the superannuation sector, the impact of the GFC, and the subsequent wave of global re-regulation have had a profound effect on patterns of financing, financial sector structure, and attitudes towards financial sector regulation. Identifying the extent to which these changes are transitory or likely to be more permanent is crucial to understanding how financing patterns and the financial sector will develop over the next decade or so.
The Funding Australia’s Future project is in four stages, the fourth of which explores the growth of fintech, its implications on the structure of the financial sector and the value it can produce for the broader Australian community through increased competition in the financial services sector.