Digital Finance, COVID-19 and Existential Sustainability Crises: Setting the Agenda for the 2020s

31 Pages Posted: 12 Feb 2021 Last revised: 27 Apr 2021

See all articles by Douglas W. Arner

Douglas W. Arner

The University of Hong Kong - Faculty of Law

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law

Andrew M. Dahdal

Qatar University - College of Law

Dirk A. Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance; Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC); European Banking Institute

Date Written: February 1, 2021

Abstract

This paper examines how the digital financial infrastructure that emerged in the wake of the 2008 Global Financial Crisis is being tested and leveraged to meet some of the financial, economic and health challenges presented by the COVID-19 pandemic. The origins of the 2008 crisis and the current crisis are different: the 2008 crisis was a financial crisis that spilt over into the real economy, while COVID-19 is a health and geopolitical crisis spilling over into the real economy. As such, COVID-19 – a pandemic and an existential sustainability crisis – requires different approaches. This paper explores the role of digital finance in this context on two levels. At the macro level, it identifies how digital finance has been used to address areas of systemic risk and underpin wider financial stability. At the micro level, it illustrates how digital financial tools can address a range of emerging challenges particularly relating to recovery. COVID-19 experiences are driving forward a range of efforts to build better infrastructure to address future crises, in particular interoperable electronic payments systems (including central bank digital currencies and other forms of sovereign digital currency), sovereign digital identification (particularly in the context of market integrity and non face-to-face transactions), and use of technology for regulatory, supervisory and compliance purposes, At the same time, we argue that digitization generally and of finance in particular driven by the COVID-19 crisis – while providing effective tools to support the response – have also raised new challenges, particularly around forms of TechRisk arising from control and use of data from both state and non-state actors. Looking forward, these are among the most significant challenges for policy, law and regulation in the 2020s.

Keywords: COVID-19; digital finance; fintech; regtech; suptech; electronic payments; central bank digital currencies; data; digitization; TechRisk; cybersecurity; data dominance; data protection

Suggested Citation

Arner, Douglas W. and Buckley, Ross P. and Dahdal, Andrew M. and Zetzsche, Dirk Andreas, Digital Finance, COVID-19 and Existential Sustainability Crises: Setting the Agenda for the 2020s (February 1, 2021). University of Hong Kong Faculty of Law Research Paper No. 2021/001, UNSW Law Research Paper No. 21-6, University of Luxembourg Law WPS 2021-003, Available at SSRN: https://ssrn.com/abstract=3783605 or http://dx.doi.org/10.2139/ssrn.3783605

Douglas W. Arner (Contact Author)

The University of Hong Kong - Faculty of Law ( email )

Pokfulam Road
Hong Kong, Hong Kong
China

HOME PAGE: http://hub.hku.hk/rp/rp01237

Ross P. Buckley

University of New South Wales (UNSW) - Faculty of Law ( email )

Sydney, New South Wales 2052
Australia

Andrew M. Dahdal

Qatar University - College of Law ( email )

College of Law
Doha, 2713
Qatar

Dirk Andreas Zetzsche

Universite du Luxembourg - Faculty of Law, Economics and Finance ( email )

Luxembourg, L-1511
Luxembourg

HOME PAGE: http://wwwen.uni.lu/recherche/fdef/research_unit_in_law/equipe/dirk_andreas_zetzsche

Heinrich Heine University Dusseldorf - Center for Business & Corporate Law (CBC) ( email )

Universitaetsstr. 1
D-40225 Düsseldorf
Germany
+49 211 81 15084 (Phone)
+49 211 81 11427 (Fax)

European Banking Institute ( email )

Frankfurt
Germany

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