Faculty of law blogs / UNIVERSITY OF OXFORD

Digital Finance and Crises


Time to read

4 Minutes


Ross P Buckley
Scientia Professor and the KPMG Law – King & Wood Mallesons Professor of Disruptive Innovation at UNSW Sydney
Andrew M. Dahdal
Assistant Professor, College of Law, Qatar University
Douglas W Arner
Kerry Holdings Professor in Law, RGC Senior Fellow in Digital Finance and Sustainable Development, and Associate Director, HKU-Standard-Chartered Foundation FinTech Academy, University of Hong Kong
Dirk A Zetzsche
Professor of Law and ADA Chair in Financial Law (Inclusive Finance) at the Faculty of Law, Economics and Finance, University of Luxembourg
Julia Walker
Head of Government and Industry Affairs at Refinitiv
Janos N. Barberis
Senior Research Fellow, Asian Institute of International Financial Law, University of Hong Kong

The COVID-19 crisis is putting unprecedented strain on people, societies, markets, governments, and businesses. The human and financial costs are mounting, with increasingly significant impacts on the global economy, potentially the worst since the Great Depression. The greatest toll is likely to fall on those least able to bear it, with terrible damage to human development across the world.

The origins of the 2008 Global Financial Crisis and current crisis are different: 2008 was a financial crisis spilling over into the real economy. 2020 is a health and geopolitical crisis, spilling over simultaneously into financial markets and the real economy. The digital financial infrastructure that emerged in the wake of the 2008 Global Financial Crisis is being leveraged to overcome the immediate challenges presented by the pandemic and manage the impending economic fallout. The financial technology and supporting regulatory frameworks that have emerged in recent years offer powerful tools, solutions and policy capabilities to decision-makers currently trying to manage and steer a path through the pandemic and its associated consequences.   

Digital financial innovations can effectively facilitate macro-level policy calibration and also provide micro-level crisis alleviation measures. Although a crisis of this nature is unprecedented in living memory, 2008 taught policymakers that certain strategies are critical in addressing financial fallouts and reducing the economic and human impact. These core strategies are:

  1. ensuring sufficient liquidity to support market functioning and underpin demand;
  2. intensifying information exchange on financial / economic matters in an effort to ensure accurate information;
  3. heavy, temporary financial support for individuals; for small, medium and large enterprises to avoid loss of infrastructure and preserve the capacity for an orchestrated response (by avoiding mass insolvency); and, in some cases, for governments, particularly developing and emerging market countries.

In addition to these strategies and policy approaches, the idiosyncrasies of the coronavirus pandemic mean that new alternative and more acute measures are necessary, including:   

  1. directing financial resources to medical infrastructure;
  2. leveraging digital finance and payments to reduce human-to-human contact, while organizing support for the elderly and other digitally excluded people who would normally use physical channels;
  3. establishing a well-funded coordination body as a crisis management tool to ensure rapid information exchange relating to health care capacity, expertise, and resource availability (ventilators and personal protective equipment (PPE)); and
  4. directing financial resources to digital infrastructure and connectivity to support all other aspects of society and the economy, including, especially, the online facilitation of education and widespread work-from-home policies.

The implementation of these policies will require information silos to be overcome and financial resources to be rapidly deployed and accurately targeted. The data driven nature of digital financial services provides a vastly more powerful policy tool than existed in 2008. The digital nature of the real economy is presently also far more receptive and responsive to stimulus policies implemented across digital financial channels. While the Global Financial Crisis revealed to policymakers the strategies to pursue in response to economic crisis, the legacy of this pandemic may well be the (digital) means by which such policies can be rolled out.

In our recent paper, we have drawn together insights and examples of how those innovations are being used in the fight against the pandemic and its consequences. The human side of Fintech is most apparent in the contexts of enhancing the goals of greater financial inclusion, promoting sustainable development and achieving the UN Sustainable Development Goals. The coronavirus pandemic has brought this human side of fintech into much sharper focus.

Often in our darkest hours, the best of human nature can be seen. Compassion, ingenuity, selflessness and humour have all been amplified via digital channels in the last few weeks. Crowdfunding platforms, for example, have been inundated by communal financial support for individuals, healthcare workers, sports clubs and hospitals. Digital and contactless payment technologies have kept people safe and facilitate services in a global lockdown. Insurtech platforms have provided health and financial risk alleviation for those facing the uncertainty of COVID-19 induced illnesses. And the lifelines that are international remittances have been maintained (albeit reduced) by online means (with many providers waiving transfer fees).

For financial markets, the volatility of the global environment has underscored the speed and agility required to survive in the modern world of instantaneous finance. In this context, information fluidity and consequent price spreads have been a blessing for algorithmic high frequency trading platforms.  Witnessing retirements savings vanish as stock markets crash also encourages many people to consider taking more control of their financial fates through, for example, ‘robo-advisors’.

Even prior to the crisis, digital finance was becoming all pervasive. The reliable way in which digital financial channels have been used and have performed amidst the current circumstances only serve to show how essential these once novel innovations have become.

No one can predict the new world that will emerge post-crisis. How digital financial platforms (including their benefits and risks) will fit into that world will require focussed attention. Laws and regulations that pave the way for digital finance can no longer be seen as luxuries. The pandemic has shown that such measures are needed for the robustness and resilience of the macro economy, and to ensure individual commercial capacities and secure broader civic cohesion.


Ross Buckley is Scientia Professor, and the KPMG Law – King & Wood Mallesons Professor of Disruptive Innovation and Law at the University of New South Wales, Australia.

Andrew M. Dahdal is Assistant Professor, College of Law, Qatar University, and Section Head, Law and Policy, Centre for Law and Development.

Douglas W. Arner is Kerry Holdings Professor in Law and Director, Asian Institute of International Financial Law, Faculty of Law, University of Hong Kong.

Dirk A. Zetzsche is Professor of Law, ADA Chair in Financial Law (Inclusive Finance), Faculty of Law, Economics and Finance, University of Luxembourg.

Julia Walker is Head of Government and Industry Affairs at Refinitiv.

Janos Barberis is Head of Entrepreneurship & Academic Board Member, CFTE and a Senior Research Fellow, Asian Institute of International Financial Law & PhD Candidate at the University of Hong Kong.


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