The Rise of Digital Finance and Systemic Risk: Implications, Challenges, and Coping Strategies

Abstract

With the continuous development of Internet technology, digital finance has become increasingly popular. The digital transformation of finance has brought huge shocks to the traditional financial industry. This paper aims to examine the interrelationship between digital finance and systemic risk and explore in depth its implications for the global financial system's stability. This paper examines key areas such as digital payments, P2P lending, and virtual currencies. Due to the rapid development of digital finance, while bringing great efficiency improvements, new systemic risks also follow. This study attempts to suggest a range of regulatory and risk management strategies. These strategies are designed to deal with the systemic risks brought about by digital finance so as to ensure the stability and sustainable development of the financial system. This study is expected to provide strong references and recommendations for the financial industry and policymakers to realize the potential value and impact of digital finance while protecting financial stability.