Regulatory Macro-Themes for 2019

During the build-up to 2019, both markets and banks have seen history-in-the-making level changes in several key areas.  I've compiled a list of the top three macro-scale themes on this year's agenda for financial regulators around the world:


Crypto-regulation:

Oversight committees and regulatory bodies are struggling to keep pace with the day-to-day changes in the crypto space.  Last September, a panel of industry experts suggested that smaller governments (like Malta and Estonia) are quickly and efficiently facilitating digital processes to oversee crypto transactions and investments; while larger governments (most notably the United States with its Regulation D) are lagging behind.  In the UK, The FCA (Financial Conduct Authority) has only recently begun discussions to decide which cryptocurrencies should be regulated, and in which ways.  Developments in this segment includes the rapid expansion into crypto tools like security tokens, utility tokens, and ICO's which are akin to crypto-crowdfunding; additional info on these here.

Central Banking Policy: 

World leaders meeting in Davos, Switzerland are discussing ways for central banks to manage post-crisis monetary policy.  2019 will most likely be a year of fiscal tightening in developed economies, applying pressure to borrowing costs and upward inflation.  A World Bank report indicates the world's major central banks are discontinuing the QE lending practices, and trade conflicts between major economies could escalate, both of these causing the outlook for global economic growth to taper down:

Anti-Money Laundering & Anti-Terrorism Financing: 

There is a a litany of evidence to suggest that increased legislation and budget toward AML and CFT to not have any notably effect on battling the amount of crimes being committed in money laundering and terrorism financing; one paper suggests this is primarily due to lack of cross-border information sharing.  Ultimately, regulators need to get creative because the existing strategy is not working.  Empirical case evidence even shows that the biggest private banks (who ironically have the most oversight coverage) have the largest concentration of these crimes.  The manner in which regulators choose to tackle this area in 2019 will either signal an era of punitive accountability, or it will do very little to deter these crimes.  You can check out the European Commission's policy page on AML here.