Monetary policy implications of financial innovation: In-depth analysis

In this policy brief, we argue that the financial innovations triggered by the FinTech industry have the potential to affect the transmission of monetary policy as well as the informational content of important monetary indicators. The growing FinTech industry could contribute substantially to the emergence of nonbank finance as a substitute for traditional commercial bank finance. While the overall effect of nonbank finance on monetary policy transmission is not yet clear, we argue that regulators and policy makers need to closely monitor the potential effects of FinTech on monetary policy transmission and to adequately adjust financial sector regulation.