The stunning demise of Germany’s Wirecard AG could lead to a revamp of some of the rules governing the international payments sector, which has seen rapid growth in recent years, though a key player says it is still too early to say.
Agustin Carstens, general manager of the Bank for International Settlements (BIS), said Tuesday (June 30) his organization will examine how “non-bank participants and payment service providers can be incorporated into the whole scheme,” Reuters reported, raising the idea the current regulatory framework be broadened to include more players.
The payments sector, which has seen some of the most explosive growth of any segment of financial services, has expanded beyond banks to FinTech firms and apps on mobile phones for sending and receiving payments.
But whether new regulations are needed is another matter, Carstens said.
“As more details transpire, I think that we will be able to pinpoint if or not further supervisory or regulatory action is needed,” the BIS head said.
German payment processing firm Wirecard AG last week filed for court protection from its creditors after revelations that more than $2 billion could not be found, blowing a massive gap in the company’s balance sheets.
In particular, an auditor disclosed $2.1 billion in deposits, that on paper were supposed to have been stashed away in two banks in the Philippines, were nowhere to be found.
Law enforcement officials in Singapore, Munich and the United Kingdom have launched investigations while founder and now former CEO Markus Braun has been arrested and faces charges of misrepresenting Wirecard’s accounts and market manipulation.
Shares of Wirecard AG hit a high of $190.30 a share on Aug. 1, 2018, but have since declined precipitously, with the company dogged for years even before its latest disclosure by allegations of fraud.
The stock price of the once high-flying company had fallen to $5.73 a share on Monday.