Policy Conservatism and the Wirecard Scandal

Germany is considered the European FinTech champion. The recent Wirecard Scandal has raised concerns over Germany’s financial policy approach and sheds light into how financial crime can be hidden behind innovation. The aim of this chapter is to explain why and when German officials have applied a conservative approach towards financial technologies both from an historical perspective and through policy analyses. In doing so, the chapter case study is the recent Wirecard Scandal. I apply a political economy framework to shed light on the influence of regulation on innovation and the tight network of regulators and financial actors in the innovation system of Germany. Results show that regulatory avoidance can be hidden behind German’s regulatory architecture where the centralization of powers within BaFin supervisory authority limited the foresight of the Wirecard Scandal.