15 - Emerging Regulatory Challenges

Summary

The environmental concern and its social side effects will be at the core of regulatory authorities’ agenda on top of short-term efficiency objectives in the foreseeable future. The steady growth of ‘big data’, of digitalization and of the new data-processing technologies will change the way firms and governments use and share information in the design, compliance and enforcement of regulation. The institutional environment of regulation will need to evolve to correct institutional mistakes of the past and to internalize the impact of the data revolution on the distribution of regulatory mandates across agencies and across sectors within countries and across countries. Non-traditional financial actors will press regulators to internalize more systematically financial markets’ concerns in the design of regulation in exchange for their willingness to help close the financing gap of many regulated industries. Keeping the right balance between the return-on-investment objectives of non-traditional financial actors, investment targets, users’ needs and taxpayers’ benefit is a challenge for the regulators of the future. Tools emerging from applied research in behavioural economics will offer new alternative regulatory tools to improve the effectiveness and targeting of regulation.