Dynamic Financial Markets, Static Regulatory Frameworks

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As financial sectors around the world keep pace with rapidly changing consumer needs, creating new products, services and financial market players, regulatory frameworks are struggling to keep up due to slow-moving, legally defined entities. The tension between dynamic markets and static regulatory frameworks means risks may emerge faster than policies can be created to mitigate them and that new firms are operating outside regulatory boundaries.

In this paper, James A. Haley recommends a hybrid approach that maintains the current entities-based regulatory frameworks while promoting more consistent regulation across the financial system to address emerging systemic risks.

“The global economic landscape is on the brink of a monumental shift. The rapid emergence of digital assets, primarily via blockchain-based technologies, presents an unprecedented opportunity for emerging economies to challenge the entrenched dominance of the US dollar. But significant challenges remain.”

In this opinion, S. Yash Kalash describes how the BRICS+ nations — Brazil, Russia, India, China, South Africa and the recent additions of Egypt, Ethiopia, Iran and the United Arab Emirates — “increasingly view digital assets as an opportunity to recast the global order.”

“Robert Solow noted in the late 1980s that ‘you can see the computer age everywhere but in the productivity statistics.’ True then, true now. Artificial intelligence (AI) technologies are the new computer age. Everyone is talking about them; new models are being developed and released at lightning speed; millions if not billions of users are experimenting with them. Yet productivity in Canada and elsewhere continues to languish.” Against this backdrop, Canada’s promised investments in computing, including quantum, are welcome.

But, Robert Fay says, “a greater focus is required on investment in the intangibles that make these tangibles more effective. That is surely even more important today in a world where intangibles are a critical driver of economic growth.”
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Paul Samson spoke to The Hill Times about a recently released report from the Government of Canada on its public opinion research activities last year. Samson “expressed his skepticism about the value of public opinion research, particularly in the broader context of government decision-making,” describing it as “more of a political antenna.” Read his full comments here.

Canada’s industry minister announced in late June that the government may be undertaking a national security review of Vancouver-based Pan American Silver Corp.’s agreement to sell its stake in Peru’s La Arena gold mine to a subsidiary of China’s Zijin Mining Group. Aaron Shull told the CBC, “You could probably make a fairly compelling case that this is part of a strategic play on China’s part in Latin America,” and that Canada and other countries “have been making a lot of noise about being tougher on this type of stuff…what you’re seeing here is the…implementation of that sabre rattling in this kind of contested geopolitical environment.” Read the story here.

Artificial intelligence “has emerged as a transformative force with the potential to reshape whole societies. As its applications become increasingly integrated into our daily lives, it’s imperative that policy makers around the world cooperate to establish shared regulatory and legislative governance.”

As a growing patchwork of regulatory jurisdictions around the world bring burdensome complexity to the task of governing AI, Daniel Araya and Javier Ruiz-Soler argue only a cohesive global approach to regulation will ensure comprehensive oversight. They discuss the key elements of such a strategy, the likely limitations, and the role Canada could play, including working alongside a network of safety institutes to help to assuage growing concerns — particularly concerning AI ethics.

The Digital Policy Hub at CIGI is a collaborative space for emerging scholars and innovative thinkers from the social, natural and applied sciences. Here are the most recent working papers from the winter 2024 cohort of Hub fellows.

Matthew da Mota: “University of Toronto Libraries: A Case Study for AI Governance”

Paula Martins: “Applying a Tech Lens to the Right to Information: Part 1”

Follow the links on the Hub webpage to learn more about the Hub scholars and their work!

Sep. 9 – 10:00 a.m. EDT (UTC–04:00): Join us online to launch Robert Gorwa’s new book, The Politics of Platform Regulation: How Governments Shape Online Content Moderation, which examines the emerging domestic and international politics of online safety.

This virtual event will begin with Gorwa’s presentation on his key findings, followed by a Q&A session with attendees. CIGI Research Directors Tracey Forrest and S. Yash Kalash will facilitate.

Learn more and register here.
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