Title page 1

Contents 6

Abstract 4

Acknowledgements 5

Abbreviations and acronyms 8

Executive summary 9

1. Introduction 11

Opportunities and challenges flowing from the digital transformation 12

Learning from the regulation of financial markets 12

Methodology 13

The experience of responding to the Great Financial Crisis 14

The emergence of Digital Finance 14

Crystallising six challenges to the regulatory framework 15

2. Asymmetry of information between market participants and regulators 17

Case study 1: Over-the-counter (OTC) derivatives reporting 18

Case study 2: Disclosure and reporting of "stablecoin" reserves 18

Relevance for regulatory governance of the digital economy 19

Lessons for regulatory design and delivery 22

3. Understanding new forms of systemic risk 24

Case study 3: Uncertainty as a trigger 25

Case study 4: Concentration risk 26

Case study 5: Financial risk propagation through social media 26

Relevance for regulatory governance of the digital economy 27

Lessons for regulatory design and delivery 29

4. Adjusting, repurposing and newly designing regulation 31

Case study 6: Lack of capacity to anticipate systemic risk 32

Case study 7: Formalistic vs substantive focus of regulation 33

Case study 8: Improvised and pre-specified crisis response 33

Relevance for regulatory governance of the digital economy 34

Lessons for regulatory design and delivery 35

5. Innovation and path dependency 38

Case study 9: The difficult rolling back of the wheel 38

Case study 10: Diverging regimes for similar risks 39

Relevance for regulatory governance of the digital economy 40

Lessons for regulatory design and delivery 41

6. Regulatory effectiveness 42

Case study 11: Institutional design and clarity of the mandate 42

Case study 12: Resource constraints and regulatory capacity 43

Case study 13: Supervisory methodologies 44

Case study 14: Intervention thresholds and enforcement discretion 45

Case study 15: Horizontal regulation and sectoral boundary challenges 46

Relevance for regulatory governance of the digital economy 46

Lessons for regulatory design and delivery 48

7. Regulatory and supervisory co-ordination and alignment 50

Case study 16: Voluntary information sharing frameworks 50

Case study 17: Reducing information asymmetries by binding co-operation mechanisms 51

Case study 18: Common standard and divergent implementation 52

Relevance for regulatory governance of the digital economy 53

Lessons for regulatory design and delivery 54

8. Conclusion: Lessons for the transition to the digital economy 56

Structural parallels between financial regulation and the governance of the digital economy 57

Amplification of regulatory challenges in digital economy contexts 57

Resource implications for effective digital economy governance 58

References 59

Table 8.1. Overview of lessons learnt 56