Digital Finance and the Future of the Global Financial System: Disruption and Innovation in Financial Services PDF
Preview Digital Finance and the Future of the Global Financial System: Disruption and Innovation in Financial Services
Routledge International Studies in Money and Banking DIGITAL FINANCE AND THE FUTURE OF THE GLOBAL FINANCIAL SYSTEM DISRUPTION AND INNOVATION IN FINANCIAL SERVICES Edited by Lech Gąsiorkiewicz and Jan Monkiewicz Digital Finance and the Future of the Global Financial System This book offers an in-depth analysis of the most salient features of contemporary financial systems and clarifies the major strategic issues facing the development of digital finance. It provides insight into how the digital finance system actually works in a socioeconomic context. It presents three key messages: that digital transformation will change the financial system entirely, that the State has a particularly important role to play in the whole process and that consumers will be offered more opportunities and freedom but simultaneously will be exposed to more risk and challenges. The book is divided into four parts. It begins by laying down the fundamentals of the subsequent analysis and offers a deep understanding of digital finance, including a topology of the key technologies applied in the transformation process. The next part reviews the challenges facing the digital State in the new reality, the digitalization of public finance and the development of digitally relevant taxation systems. In the third part, digital consumer aspects are discussed. The final part examines the risks and challenges of digital finance. The authors focus their attention on three key developments in financial markets: accelerated growth in terms of the importance of algorithms, replacing existing legal regulations; the expansion of cyber risk and its growing impact and finally the emergence of new dimensions of systemic risk as a side effect of financial digitalization. The authors supplement the analysis with a discussion of how these new risks and challenges are monitored and mitigated by financial supervision. The book is a useful, accessible guide to students and researchers of finance, finance and technology, regulations and compliance in finance. Lech Gąsiorkiewicz is an Associate Professor at the Faculty of Management, Warsaw University of Technology, Warsaw, Poland. Jan Monkiewicz is Professor of Financial Management at the Faculty of Management, Warsaw University of Technology, Warsaw, Poland. Routledge International Studies in Money and Banking Financialization, Financial Literacy, and Social Education Edited by Thomas A. Lucey Moral Hazard A Financial, Legal, and Economic Perspective Edited by Juan Flores Zendejas, Norbert Gaillard and Rick Michalek Mergers, Acquisitions, and International Financial Regulation Analysing Special Purpose Acquisition Companies Daniele D’Alvia Pension Fund Capitalism The Privatization of Pensions in Developed and Developing Countries Leokadia Oręziak Central Banks in Organizational Networks Entangled Market Actors Christoph F-D. Wu Responsible Finance and Digitalization Implications and Developments Edited by Panu Kalmi, Tommi Auvinen and Marko Järvenpää Digital Currencies and the New Global Financial System Edited by Ranjan Aneja and Robert Dygas Negative Interest Rates and Financial Stability Lessons in Systemic Risk Karol Rogowicz and Małgorzata Iwanicz-Drozdowska Digital Finance and the Future of the Global Financial System Disruption and Innovation in Financial Services Edited by Lech Gąsiorkiewicz and Jan Monkiewicz For more information about this series, please visit: www.routledge.com/Routledge- International-Studies-in-Money-and-Banking/book-series/SE0403 Digital Finance and the Future of the Global Financial System Disruption and Innovation in Financial Services Edited by Lech Gąsiorkiewicz and Jan Monkiewicz First published 2023 by Routledge 4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2023 selection and editorial matter, Lech Gąsiorkiewicz and Jan Monkiewicz; individual chapters, the contributors The right of Lech Gąsiorkiewicz and Jan Monkiewicz to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloguing-in-Publication Data Names: Gąsiorkiewicz, Lech, editor. | Monkiewicz, Jan, editor. Title: Digital finance and the future of the global financial system : disruption and innovation in financial services / edited by Lech Gąsiorkiewicz and Jan Monkiewicz. Description: Abingdon, Oxon ; New York, NY : Routledge, 2023. | Series: Routledge international studies in money and banking | Includes bibliographical references and index. Identifiers: LCCN 2022007883 (print) | LCCN 2022007884 (ebook) | ISBN 9781032205489 (hardback) | ISBN 9781032205496 (paperback) | ISBN 9781003264101 (ebook) Subjects: LCSH: Finance--Technological innovations. | Digital currency. | International finance. | Financial services industry. Classification: LCC HG173 .D54 2023 (print) | LCC HG173 (ebook) | DDC 332--dc23/eng/20220217 LC record available at https://lccn.loc.gov/2022007883 LC ebook record available at https://lccn.loc.gov/2022007884 ISBN: 978-1-032-20548-9 (hbk) ISBN: 978-1-032-20549-6 (pbk) ISBN: 978-1-003-26410-1 (ebk) DOI: 10.4324/9781003264101 Typeset in Bembo by MPS Limited, Dehradun To Ania and Grażynka our beloved wives for their continuous support and inspiration Jan Monkiewcz, LechGąsiorkiewicz Contents List of figures ix List of tables xi List of contributors xii Digital finance: basic terminology by Jan Monkiewicz and Marek Monkiewicz xiii Preface by Stanisław Owsiak xix Introduction 1 LECH GĄSIORKIEWICZ AND JAN MONKIEWICZ PART I Fundamentals 11 1 Digital finance: systemic framework 13 JAN MONKIEWICZ AND PAWEŁ GOŁĄB 2 Datafication – economization and monetization of data 33 KAROL MAREK KLIMCZAK AND JAN MAKARY FRYCZAK 3 Key technologies in the digital transformation of finance 45 KATARZYNA ROSTEK PART II Digital State: tasks and tools 65 4 National digital sovereignty: what is at stake? 67 MAGDALENA WRZOSEK 5 The state in the era of digital revolution and digital finance 93 MAREK RATAJCZAK viii Contents 6 Digitalising the public financial system: the road ahead 109 JOANNA WĘGRZYN AND AGATA ZACZEK 7 Digitalisation of the tax system 123 JOANNA WĘGRZYN AND MARLENA SYLIWONIUK PART III Financial consumer in digital space: new issues and approaches 143 8 Ethics in digital finance: towards a new paradigm of self-regulation 145 PAWEŁ SKUCZYŃSKI 9 Consumer protection in the financial market in the era of digital transformation 161 EWA KORNACKA AND MAREK MONKIEWICZ 10 Digital exclusion in the financial system: emerging agenda 180 BOGUMIŁ CZERWIŃSKI PART IV Risks and challenges of digital finance 197 11 Systemic and cyber risk: the two monsters of financial system 199 ADAM GŁOGOWSKI 12 Financial supervision in digital age: innovations and data abundance 213 JAN MONKIEWICZ Index 226 Figures 0.1 Valuation of tangible versus intangible assets in S&P 500 companies, 1975–2018 3 0.2 Use of the word FinTech in world literature 5 1.1 The three dimensions of digital transactions 15 1.2 Digital finance cube 16 1.3 Digital financing scheme 18 1.4 Algorithmic trading and other investment forms 19 1.5 Diagrams of three different network structures: centralised (1), decentralised (2) and distributed (3) 22 1.6 Interaction between Cyber and Financial Network (schematic diagram) 30 3.1 The radar chart – results comparison of two analyzed cases 52 3.2 The heat map – results distribution in relation to the two differentiating criteria 52 3.3 The dashboard – interactive overview of indicators and reports 53 3.4 The participation of various analysis types in the decision-making process 55 3.5 Framework for in-memory technology agility 60 4.1 History of UN GGE groups 75 7.1 Diagram of the cyberspace tax system 127 7.2 Structure of labour taxation, unemployment rates and aging populations in high income and low- & middle-income countries 2005–2019 133 7.3 Structure of the share of income and indirect taxes in high and lower income countries 2008–2019 135 7.4 Possible scenarios for changes in fiscal policies related to social and economic changes in the development and wide use of the potential of technology 137 9.1 Division of personal data according to GDPR 170 9.2 Basic principles of data processing according to GDPR 170 10.1 Percentage of residents using online financial products in selected Central European countries in 2010–2019 (%) 188
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