- Regulation in Argentina: is a fintech law necessary?
- An alternative perspective joins the debate between banks and fintech, focusing on innovation and competition
The progress of fintech companies in various sectors of the Argentine financial system highlights the need for a regulatory framework that balances innovation, competition, interoperability between players, and user security. This does not necessarily imply the creation of a specific law or the elimination of significant regulatory asymmetries.
This is the view expressed in the report “Innovation and Regulation in the Financial System”, prepared and published by the Fiscal Affairs Center. Its director, Roberto Arias, an economist specialized in fiscal, taxation, and social security issues, and former Deputy Secretary of Tax Policy, presents these insights.
A framework to promote competition and access
The report emphasizes the importance of fostering competitive and accessible markets, ensuring that entry and exit barriers do not limit the diversity of services offered by fintechs. Argentina’s current regulations need adjustments to accommodate new business models that guarantee the protection of financial consumers.
Arias highlighted that financial system regulation must be continuously updated due to its rapid evolution: “Regulations should be oriented towards a more open system, promoting greater interoperability between products and services to continue the progress made in recent years.”
Prudential regulation: differences from banks
Regarding regulatory treatment, the document states that fintechs do not require the same prudential regulations as banks, since they do not engage in intermediation between savings and investment—a high-risk activity that is subject to micro and macroprudential regulations.
This view contrasts with the perspective of the Argentine Banking Association, which argued that some fintechs operate in a “gray area” regarding financial intermediation. However, the Fiscal Affairs Center’s report argues that the impact of fintechs on monetary policy and financial stability will remain limited as long as they do not engage in direct intermediation. Therefore, it rejects the need for a specific law, considering that the current powers of the Central Bank of the Argentine Republic and the National Securities Commission are sufficient to oversee non-bank entities.
Key points for regulation in Argentina
The report proposes a series of measures to strengthen the regulatory framework for the sector, including:
- Promoting innovation and competition
It is essential to ensure competitive markets and prevent the concentration of power by large players. The report recommends establishing full interoperability between all electronic payment methods and avoiding discrimination in access to regulated financial services, regardless of the type of entity offering them. - Reviewing regulatory burdens
Although significant regulatory asymmetries are not identified, the report highlights that traditional financial institutions face an excessive burden that should be reviewed to balance the competitive environment. - Reforms to the deposit insurance scheme
The report suggests equating the coverage between bank accounts (CBU) and virtual accounts (CVU) in the event of liquidity problems or insolvency of the institutions. It also proposes greater clarity in information regarding daily balances in CVUs and expanding investment options from digital wallets. - Boosting Open Banking
As a long-term goal, the report suggests moving towards an open finance system that allows users to share their information securely with third parties. This will require collaboration between the public and private sectors, along with solid technical standards in interoperability and security.
A joint challenge for the future
The document concludes by emphasizing the importance of creating a regulatory framework that facilitates harmonious development between banks and fintechs, promoting an inclusive and modern financial ecosystem. Coordination among all relevant players will be key to achieving these objectives and positioning Argentina as a leader in financial innovation.
