Story perspectives

Asset Managers Disrupt Banking: Regulatory Concerns Rise

9/3/2025

Summary

Story summary

The financial system is shifting towards asset managers and tech platforms managing liquidity and payments, reducing traditional banks' roles.
This transition raises regulatory concerns due to the absence of deposit insurance and oversight for these entities.
Rapid capital flows and real-time trading increase financial shocks, challenging existing regulatory tools.
The current policy framework may inadequately address risks in a fragmented financial landscape.

History

Historical Context

The Glass-Steagall Act of 1933 established a separation between commercial and investment banking to stabilize the financial system after the Great Depression. This legislation aimed to protect depositors and prevent the risky behaviors that contributed to the 1929 stock market crash. Today, the rise of asset managers and tech platforms without traditional oversight raises concerns reminiscent of past financial crises, necessitating updated regulatory frameworks.

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Story summary

The financial system is shifting towards asset managers and tech platforms managing liquidity and payments, reducing traditional banks' roles.
This transition raises regulatory concerns due to the absence of deposit insurance and oversight for these entities.
Rapid capital flows and real-time trading increase financial shocks, challenging existing regulatory tools.
The current policy framework may inadequately address risks in a fragmented financial landscape.

1 / 2