Policy Conservatism and the Wirecard Scandal

This chapter delves into the German FinTech industry, highlighting the conservative regulatory approach of the government and the pivotal Wirecard scandal. It explores how the German government has maintained a neutral stance towards technological innovation, relying on established banks to influence policymaking. The chapter argues that this approach has led to the selection of national winners rather than fostering open markets. The Wirecard scandal is presented as an exogenous shock that exposed the limitations of Germany's regulatory environment. The chapter also presents three key findings: the centralised model of financial regulation, the focus on financial stability over innovation, and the barriers to new entrants created by regulatory avoidance. The methodology includes a case study of the Wirecard scandal and interviews with key stakeholders. The chapter concludes with implications for future regulatory practices and the need for cooperation across organisational boundaries to address global policy problems.