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E-finance & development: policy issues

E-finance & development: policy issues. John Hawkins Bank for International Settlements*. Presentation to UNCTAD event on “E-finance for development” 19 March 2002, Monterrey, Mexico. *Opinions expressed in this paper are not necessarily shared by the BIS. Internet usage in 2000.

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E-finance & development: policy issues

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  1. E-finance & development: policy issues John Hawkins Bank for International Settlements* Presentation to UNCTAD event on “E-finance for development” 19 March 2002, Monterrey, Mexico *Opinions expressed in this paper are not necessarily shared by the BIS

  2. Internet usage in 2000

  3. Mobile phone and internet penetration in 2000

  4. Digital divide • between countries • within countries

  5. Payments issues • e-money • personal online payments

  6. Challenges for supervisors • internet-only banks? • “clicks and mortar” • competitors (eg telecoms) • new business models (eg aggregators) • operational risk (eg outsourcing) • cross-border issues • uncertainty

  7. Trading in traditional markets

  8. * * as e-trading has no physical marketplace

  9. Electronic trading a) Fragmentation and consolidation • fragmentation through new venues • links between markets (or search agents) • centralising previously OTC markets • need to understand NETWORK ECONOMICS

  10. Electronic trading b) Market access • simultaneous interaction(floor) • decentralised(telephone) • access in now a matter of choice • still role for dealers both (electronic)

  11. Electronic trading c) Transparency • electronic trading potentially much more transparent • but will this be realised? • and is it always desirable[means, not end]

  12. Electronic trading d) Trading costs • electronic trading lowers costs ( 30%) Explicit costs • big gains • STP the key Implicit costs • bid-ask spreads lower • market impact costs may be lower

  13. Further reading “Electronic finance”, BIS Papers 7, Nov 2001, (www.bis.org) “E-finance in emerging markets”, World Bank Financial Sector Discussion Paper 4, June 2001, (www.worldbank.org) “Electronic trading in wholesale financial markets”, Bank of England Quarterly Bulletin, March 2002, (www.bankofengland.co.uk)

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