This morning, the Financial Supervisory Authority held a well-attended meeting on the competitive environment of the financial system. The speakers were Jón Þór Sturluson, Deputy Director of the Financial Supervisory Authority, Gylfi Zoega, Professor of Economics and a member of the Monetary Policy Committee of the Central Bank of Iceland, and Kristrún Tinna Gunnarsdóttir, an economist at Oliver Wyman and one of the authors of the White Paper on a Vision for the Financial System. Páll Gunnar Pálsson, Director of the Competition Authority, also took part in a panel discussion.
In his speech, Páll Gunnar emphasised the importance of effective competition in the financial market. Effective competition not only leads to lower prices and better service, but is also a prerequisite for innovation and the best environment for optimisation available. Furthermore, there is an ever-widening consensus that effective competition supports financial stability. For this reason, the proposals of the White Paper Committee to enshrine in law a provision that the FME should have regard to competition in its work should be welcomed.
Páll Gunnar also discussed the importance of fostering customer scrutiny of banks and recalled the Competition Authority's measures aimed at this. Furthermore, Páll pointed to the importance of facilitating competition from fintech companies. It was important that Icelandic banks responded to the potential increased competition from fintech companies by advancing on the basis of new methods, rather than trying to prevent this new form of competition in the financial market from gaining a foothold.
Páll then went over the possibility of increased cooperation between the banks in infrastructure. It must be demonstrated that the benefits arising from such cooperation would be passed on to customers and society, and not go entirely to the banks and their owners.
The Supervisory Authority's views to the White Paper Committee:
The Competition Authority submitted detailed views to the White Paper Committee last summer, at its request. The Authority's submission is published in an appendix to the Committee's report, but is also available here .
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