Trend Emerging financial systems harder to track, regulate and secure

Summary

The report sees new technologies enabling emerging financial systems that can be more efficient, accessible and secure than current ones. Over the past decade, digital and decentralised systems such as distributed ledger technology, decentralised finance and central bank digital currencies have been developed. Yet these systems make financial activity harder to track and regulate and may be more exposed to cyber attack. As global financial systems and products grow more complex and interconnected, the effects of bank failures and insolvencies are magnified, with the potential for lasting instability across an industry or the whole economy. The report argues that the complexity, anonymity and light regulation of cryptoassets have opened new channels for money laundering, sanctions evasion and the financing of organised crime, terrorism and fraud. It also points out that some blockchain processes use a great deal of energy and produce high carbon emissions.