The government is grappling with how to ensure that consumers and businesses using new financial technology services are safe without stifling the innovation behind the platforms.
Officials, who were speaking at an event on Thursday hosted by the Brookings Institution in Washington, discussed the challenges policymakers face in balancing those priorities.
Mark Warner, a Virginia Democrat who sits on the Senate Banking Committee, said reforms after the crisis could serve as a guide for regulating financial technology, or fintech.
{mosads}“The Dodd-Frank Act brought us consumer protection and safety and soundness provisions,” Warner said during a panel discussion. “How do those fit into the fintech world?”
The answer remains to be seen as the government catches up to the fast growing financial technology sector. Several agencies in the last year have stepped up efforts.
The Federal Reserve has established industry task forces to find ways to make the payments system in the United States both faster and more secure. The central bank is also studying ways for financial companies to use blockchain, an emerging technology used in digital currencies.
“What matters to us as policymakers and regulators is not only whether the migration to a new technological platform increases or reduces risks but also whether risks are rendered more or less opaque and how they are distributed among and between financial intermediaries and end users,” Federal Reserve Governor Lael Brainard said at an industry conference last week.
In May, the Treasury Department published a white paper on online lending platforms. The paper cited both opportunities and challenges for the government in how to oversee the new technology. It recommended agencies coordinate on developing policies for the sector.
“Treasury believes it is important to consider policies that could minimize borrower risks and increase investor confidence in a less favorable credit environment,” the department said.
The Office of the Comptroller of the Currency issued a report on responsible innovation by banks that demonstrated how the government is trying to seek balance with the industry.
“Innovation is not free from risk, but when managed appropriately, risk not should impede progress,” Comptroller Thomas Curry wrote in the report published for comment in March.
Adrienne Harris, who sits on the White House National Economic Council, emphasized that the focus for both the government and the industry should be on serving consumers.
“You should always be thinking about end consumers,” said Harris, who also serves a special assistant to President Obama. “How is what you are doing, whether you are a regulator or a policymaker or an innovator, benefiting end consumers? How can we best serve them?”
At the other end, Anjan Mukherjee of the Treasury Department said his agency is responsible for allowing innovation to thrive while ensuring that companies follow the law.
“Our role at Treasury is to foster innovation in a way that supports our policy objectives, which include consumer and business access to credit, and crack down on innovation when it runs afoul of the law,” said Mukherjee, who is a counselor to Treasury Secretary Jacob Lew.
This story was updated on Oct. 14 at 2:17 p.m.