Among all the guidelines that the Monetary Fund made for the Argentine economy, the organization included a serious recommendation about the financial system: requested that the Government “level the playing field for banks and fintech” in regulatory matters, an argument that is repeated from the banking sector and that has been the workhorse between both segments.
In the Staff Report that the international organization released this Monday, it included a section that refers to the monetary and exchange policies that Argentina agreed to take and refers to the need to “lower” regulations for the banking sector in order to level them with those that currently apply to virtual wallets.
“Further rationalization of the regulations of the banking system is necessary to strengthen monetary transmission and the allocation of private credit,” the document highlights. “After actions taken to simplify regulations, authorities plan to continue making banking regulations more flexible, while modifying regulatory frameworks to ensure a level playing field between Fintech companies and traditional banking institutions“.
Specifically, what was agreed with the Fund and is in the Central Bank’s roadmap is to move towards “regulatory convergence”: that is, in practice, banks and fintech are governed by the same rules even though the heart of their business is different.
For years now, private banks operating in Argentina have raised their voices about “asymmetries” in regulation that “benefit” financial companies of technological origin. “At ADEBA we always ask for the same thing: “A framework of competition on equal terms”. That is our main sectoral claim. It doesn’t seem like a lot to ask,” the president of the Banking Association, Javier Bolzico, said last week at an entertainment for journalists.
The Fund document highlights some “deregulations” that have already been made on the business of banks: the elimination of mandatory minimum interest rates on deposits and most limits on bank lending rates, the limit on access to repo contracts, the reduction of credit incentive plans and the elimination of mandatory loans to SMEs.
“While there has been progress There is still much to improve in terms of competition on equal terms.s”, Bolzico assured on that occasion and added: “There are still regulatory asymmetries that allow different actors to provide the same services, but observing different rules and regulatory burdens. “A basic principle of competition is not met: equal service, equal regulation.”
Sources from the financial sector explained that the intention of the current Central Bank is not to raise the regulatory framework that already exists for virtual wallets, but on the contrary, to remove the excess of regulations that still govern traditional banking. The organization holds weekly meetings with all actors in the financial ecosystem, banks, virtual wallets and payment service processors.
The Central wants to put aside the dichotomy of Banks or Fintech and advance joint solutions for the entire digital payment system, in order to begin to outline an Open Finance scenario, as other countries in the region have, among which stands out Brazil.
One of the main points of dispute is the tax burden that the different players in the system must face. On the one hand, banks point out that companies like Mercado Pago benefited from the tax exemptions that the unicorn had under the framework of the Knowledge Economy Law. On the other hand, Marcos Galperín’s fintech reported that last year alone he contributed US$3.4 billion to the country in taxes, both those paid by the company and those it withholds from its users.
Another of the central topics of the discussion is the possibility of “opening” the payment of salaries, retirements and social plans to virtual wallets, which is highly resisted among traditional banks.
