With the development of information technology and the deepening of economic financialization, financial technology (known as either FINTECH or TECHFIN) is becoming increasingly controversial in economic development. Recently, Zhou Xiaochuan, the former governor of the People's Bank of China, has expressed his views on the combination of information technology and finance.
Zhou Xiaochuan believes that the financial industry can be viewed as part of the information industry in the broader sense. The financial industry regards information processing as a means and a tool, and not to mention technological support for finance. At the same time, the financial industry relies heavily on the development of the information industry. Indeed, some people in the IT industry believe that the financial industry itself is the information industry. Financial products such as pricing, trading, and other financial activities rely heavily on analytical decisions that are in turn based on data, rendering them part of the information processing industry. Concerning the development of information technology, Zhou believes that it is still in a linear development track, and the boundaries between the financial and information industries are increasingly blurred. In addition, there is a tendency for deeper integration between the two. Zhou pointed out that from a global perspective, although technology is developing rapidly, there is a lack of truly disruptive innovations. Most of such innovations belong to a sort of linear development. If there is a disruptive innovation, it would subvert not only technology application but also the framework of the entire social structure, including public policy and the existing financial regulatory system.
ANBOUND's research team is of the opinion that Zhou's view involves the financial industry from a larger system and a broader perspective. The main points of Zhou's view concern the impact of information on the financial industry. He used information technology as for an example: information technology is based on social information, therefore information has rather a far-reaching impact on all sectors as well. The principle that information affects multiple industries applies equally to the financial industry as well. It appears that the financial industry is developing into a relatively independent system. This means that the larger and more independent it becomes, the more it will be influenced and dominated by information, not unlike what other ordinary industrial sectors are going through at the moment. At this time, the financial industry is no longer a conventional industry with clear boundaries, but a large system closely related to the socio-economic system and strongly influenced by external information. This is the concept of "Macro Finance" proposed by ANBOUND's chief researcher Chan Kung.
Further observation reveals that the contemporary development of the financial industry takes place in a world of overissued currency and capital surplus. With the inflation of the financial asset bubbles, the financial industry has formed a huge market that is relatively independent and interconnected, as well as one that interacts with the global economy and society. This trend of economic, technological, social, geopolitical and financial integration is the development trend of Macro Finance. All this while, the interaction between finance and the world is ubiquitous, and the development of information technology has only helped in strengthening this trend.
On the one hand, monetary and financial transactions are becoming more and more abstract, as they are not only divorced from the gold and silver standards, but also from banknotes and material goods, rendering them digital. Financial products and financial assets have also become more complicated and independent and are detaching from the real economy. This makes them relatively more independent in terms of their prices and valuations. As huge amounts of assets in this market continue to circulate, trade, and form changes in the numbers of financial accounts, the value of abstraction increases as well. On the other hand, with technological development, the financial industry has become increasingly influential on the economy, trade, and human activity. It is increasingly difficult to get rid of such influences, be it in consumption, travel or wealth accumulation. This also means that our dependence on finance is getting stronger by the day. The impact of changes in the financial market on the real economy is growing prominent as well. In other words, the financial industry is becoming more powerful than ever, and its voice in economic activities is becoming louder. As a result, the governments now increasingly cater to the needs of financial markets and financial industries when it comes to formulating policies.
Therefore, any discourse about information technology, global trade, and the world economy is inseparable from the context of "Macro Finance." ANBOUND also mentioned that on the one hand, in this age where Big Financial integrations are taking place, the state's intervention in the market has become unprecedentedly powerful. This explains why Trump and the governments of other countries continue to intervene in central banks' monetary policy. On the other hand, the excess liquidity has already allowed the power of financial discourse to be transferred to buyers' hands. In this situation, whoever has "good assets" has the right to speak. This is reflected in the current digital economy, international trade and global financial market investments in the form of the pursuit of funds and the distortion of asset prices.
While promoting the development of the financial industry, information technology also poses challenges to financial markets and financial regulation. Some Internet development models also affect financial stability and security. As Zhou has pointed out, to achieve a "winners take all" position enterprises might spend huge sums of money in the process of competition and trying to occupy market share. This practice can lead to unfair competition and market distortions. If this happens in the financial world, the losses will probably build-up to an unbearable level and may even trigger a financial crisis. Zhou believes that on the one hand, the financial access policy should define the boundaries of the financial industry and avoid Big Tech taking advantage in this. In reality, those in the FINTECH (or TECHFIN) are not interested in obtaining financial licenses, yet they wish to do business related to finance. At the same time, classified financial licenses are difficult to be obtained and they are costly, as they are subject to stricter supervision. They also need to prevent the use of third-party payment (or P2P, etc.) that nominally provides financial services, but in reality, aims to make money from customers' pockets. The relevant authorities need to take preventions and take such distorted motives into consideration when it comes to designing policies.
It should be emphasized that the unprecedented interrelationship between the financial industry and the economic-social systems has brought us a new perspective to help us re-examine finance. If an industry or industrial sector has developed into an "optimal structure," then there will be nothing much to study about the industry or the internal operations of the industrial sector. On the contrary, the influence and impact of external factors have played a crucial role. These are new characteristics of the current financial industry, and they hold the key to understanding the concept of Macro Finance.
Final analysis conclusion:
Re-examining the relationship between the financial and the information industries and studying the development of digital currency, the supervision of financial technology should be based on the background of Macro Finance. The regulation of Macro Finance brought about by the development of information technology actually presents a risk control issue. In the new world of Macro Finance, having new measures and a new policy support system have become a necessity. This new policy system is even more challenging in the context of excess global liquidity and the digital economy's search for financial breakthroughs.
