Gillmore Centre Network
Using data in regulation: regulators are trying to become more data-led, but are they paying attention to the essentials?
One of the main objectives of the UK Financial Conduct Authority's (FCA) Business Plan 2024/2025 is to enhance its data-driven regulatory capabilities by automating analytics tools for quicker detection and response to consumer harms and collaborating with firms on safe AI deployment.
Regulatory authorities, particularly central banks, have increasingly aimed to be "data-led." The FCA and others have hired data scientists, partnered with cloud providers, created data lakes and scanned the internet for online investment scams. Using tools such as Python to scrape information from websites is a core part of any data science course, but what about the transaction, accounting and risk data reported by banks and financial institutions every day? Is it being used effectively and is it even usable?
Zero-sum thinking and regulatory policy
The concept of a zero-sum game is most closely associated with Hungarian-American mathematician John Von Neumann, who wrote about it in the context of the mathematics of games. A zero-sum game is one in which there can be no net creation of wealth. It can only be redistributed among the players. This article looks at whether the idea of a zero-sum game can be applied as a tool to help shape and clarify thinking about regulatory policy.
Why commercial banks should be concerned about a digital pound
The project was wound down in 2022 but interest in the concept remains. In February 2023, the Bank of England and HM Treasury published a consultation paper to seek feedback from the public on a set of design proposals for a digital pound. No final decision has been made on the introduction of a digital pound, but there is a clear direction of travel.