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Financial regulations Updated: 23 May 2018

BBVA calls for new digital regulatory framework

José Manuel González-Páramo took part in a panel discussion on the future global financial regulation at the spring meeting of the IIF (Institute for International Finance) in Brussels. In his opinion, the new regulatory framework should be based on five pillars: 1) focus on risks and activities rather than institutions themselves, 2) have an holistic approach, 3) be transversal and coordinated, 4) be flexible y 5) have a skeptical approach to technology with regulators focusing not on technology itself but on its use and effects.

A new regulatory system would help overcome obstacles such as a lack of global and transversal coordination, BBVA’s Executive Member of the Board, Head of Global Economics, Regulation and Public Affairs said. José Manuel González-Páramo pointed out the need for greater coordination not only among the regulatory authorities but also the public and private sector as a whole.

The BBVA executive explained that “new technologies blur the boundaries between sectors”. The new regulatory challenges also do not recognize boundaries. “Understanding this is crucial”, he said.

José Manuel González-Páramo identified as immediate priorities protection, adequate access to data, promoting the use of the cloud, a common action front against cybercrime, strengthening the payments system and a level playing field for banks and new entrants. That is, apply the same rules to the same activity.

New technologies blur the boundaries between sectors. The new regulatory challenges also do not recognize boundaries. Understanding this is crucial

José Manuel González-Páramo, BBVA’s Executive Member of the Board, Head of Global Economics, Regulation and Public Affairs, during his speech at the IIF panel - BBVA

Change as well by regulators and supervisors

The BBVA executive also emphasized the need for the authorities to adopt internal changes to adapt to the challenges posed by the digital disruption of the financial sector.

He said the authorities need to work at enhancing their knowledge and skills regarding innovation. Using technologies such as big data and machine learning is basic in helping them carry out their duties. This makes it vitally important to provide regtech solutions and use technology applied to regulatory compliance.

He also pointed to the importance of regulatory sandboxes in the development of new products and services while maintaining financial stability and helping the authorities better understand innovation. The way to make this happen is through open dialog among consumers, regulators and industry.

Keys lie in confidence and data

In the question and answer session, José Manuel González-Páramo referred to the importance of data as a valuable asset for companies and the importance of maintaining the confidence of clients in order for them to agree to the use of their data, which they trust “you will protect and use for the agreed ends.” Data in combination with the use of artificial intelligence will give rise to products tailor-made for customers. “If you create value-added, you enhance trust. Therein lies success,” he said.

It's important to maintain the confidence of clients in order for them to agree to the use of their data, which they trust you will protect and use for the agreed ends

The BBVA executive mentioned the second European Payments Service Directive (PSD2) and General Data Protection Regulation (GDPR) which comes into effect this week in Europe. He called for security and traceability standards of the highest level to ensure the confidence of consumers.

González-Páramo shared the roundtable with Sylvie Matherat, Deutsche Bank Chief Regulatory Officer and Member of the Management Board; William Coen, Secretary General of the Basel Committee on Banking Supervision; Olivier Guersent, Director General FISMA, European Commission and Andrés Portilla, Managing Director of Regulatory Affairs at the IIF, who moderated the discussion.

José Manuel González-Páramo during the IIF panel in Brussels - BBVA