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Brussels, |
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In March 2018 the European Commission adopted an action plan on FinTech to foster a more competitive and innovative European financial sector. The action plan sets out 19 steps that the Commission intends to take to:
These initiatives mainly aim to enhance supervisory convergence toward technological innovation and prepare the EU financial sector to better embrace the opportunities brought by new technologies. This should enable innovative digital finance solutions to be rapidly rolled out across the EU and benefit from the scale economies of the single market, while preserving financial stability and ensuring consumer protection. The action plan is part of the European Commission's efforts to build a capital markets union and a true single market for consumer financial services. It is also part of its drive for a digital single market. Read More.... |
The Digital Finance Strategy outlines key directions for Europe to facilitate the digital evolution of finance while managing associated risks. The strategy focuses on four primary priorities: eliminating fragmentation within the Digital Single Market, adapting EU regulations to foster digital innovation, advancing data-driven finance, and addressing challenges tied to digital transformation, including bolstering digital operational resilience in the financial system.
Embracing digital finance promises to unleash European ingenuity and create avenues to enhance financial offerings, especially for underserved individuals. It introduces innovative ways to funnel funding towards EU enterprises, particularly small and medium-sized businesses. By elevating digital finance, Europe can bolster its economic recovery strategy and broader transformation efforts. This move opens new pathways to mobilize resources in support of the Green Deal and the New Industrial Strategy for Europe. With digital finance fostering cross-border transactions, it holds the potential to fortify financial market integration within the banking and capital markets unions, thereby reinforcing Europe's economic and monetary unity. |
On 31 May 2023, the EU adopted the Regulation on Markets in Crypto-Assets (MiCA).
MiCA enters into force at some point between mid-2024 and early 2025. Cryptoassets not covered by MiCA include emerging trends like the DeFi (Decentralized Finance) sector and non-fungible tokens (NFTs). The DeFi industry represents a novel approach to financial services, bypassing traditional intermediaries and relying on automated protocols, as defined by the European Central Bank. MiCA's scope excludes several aspects of the digital asset realm, as highlighted by María José Escribano. DeFi, non-fungible tokens, security tokens, and cryptoasset finance fall into this category. Security tokens already have their tailored regulations, while the distinctive features of the others necessitate further analysis for creating suitable regulatory frameworks to address their associated risks. Nonetheless, MiCA is undeniably a positive step toward robust consumer protection while mitigating potential threats to financial stability. Conversely, non-fungible tokens are unique and indivisible representations of digital assets, such as art, videos, tweets, and more. Unlike interchangeable cryptocurrencies, NFTs are one-of-a-kind and linked to distinct assets. Additionally, Central Bank Digital Currencies (CBDCs) are also outside MiCA's jurisdiction. |
On 30 May 2023, the EU adopted also a Regulation on a Pilot regime for market infrastructures based on distributed ledger technology, and amending Regulations (EU) No 600/2014 and (EU) No 909/2014 and Directive 2014/65/EU.
The regulation aims to establish a temporary European Union (EU) pilot regime for financial services based on distributed ledger technology (DLT). Its goal is to eliminate regulatory obstacles for the issuance, trading, and settlement of certain crypto-assets that qualify as financial instruments, while allowing regulators to gain experience with DLT technology. Key points of the regulation include: - Covering the granting, withdrawal, and modification of permissions for DLT market infrastructure. - Defining conditions for operators of DLT market infrastructure, including technology use rules, clear information provision, secure IT arrangements, risk management, and cooperation with relevant authorities. - Limiting admission to trading or recording on DLT market infrastructure to specific financial instruments, such as shares, bonds, securitized debt, and units in collective investment undertakings, within defined value limits. |
The ever-increasing dependency of the financial sector on software and digital processes means that information communication technologies (ICT) risks are inherent in finance.
On 14 December 2022, the EU adopted a Regulation on Digital Operational Resilience for the Financial Sector and amending Regulations (EC) No 1060/2009, (EU) No 648/2012, (EU) No 600/2014, (EU) No 909/2014 and (EU) 2016/1011. This Regulation is part of the Digital Finance Package, which aims to support digital finance innovation while managing associated risks.: aligned with EU digital priorities, it includes a new digital finance strategy, regulations for crypto assets and distributed ledger technology, and amendments to financial services rules. The focus of this Regulation is on enhancing digital resilience and operational stability in the financial sector. Knowing the risks posed by reliance on digital technologies (ICT), EU decided to address them through standards and coordination. Despite previous efforts, ICT risks challenged the EU financial system's resilience. Post-2008 crisis reforms improved financial resilience but didn't fully address digital operational resilience. Existing measures had limitations, such as divergent approaches, incomplete ICT risk coverage, and sector-specific variations. |
Some legislative texts have been amended to make the provisions of regulation (EU) 2022/2554 complete.
The particular aim of the Directive (EU) 2022/2556 is to establish legal certainty regarding crypto assets and to achieve the objectives of reinforcing digital operational resilience. This entails creating a temporary exemption for multilateral trading facilities and modifying or clarifying specific provisions within existing EU financial services directives. Read more... |
The EU's retail payments strategy seeks to enhance the European payments market, enabling Europe to fully capitalize on innovation and the advantages brought about by digitalization.
In 2020, the European Commission published a Communication on a Retail Payments Strategy for the EU, centered around three key areas:
This Strategy identifies key priorities and objectives for retail payments in Europe over the four years to come, based on extensive input from all stakeholders and taking in full consideration the outcome of the public consultation. To achieve these objectives, the Commission is committing to a number of important actions. The Commission encourages all stakeholders, at national and EU level, to engage actively in the implementation of this strategy. |
On 28 June 2023, the European Commission presented a "single currency package" that comprises two proposals.
1. The first proposes a potential new digital form of the euro, complementary to physical cash, which could be issued by the European Central Bank in the future. 2. The second aims to maintain access to and usability of euro banknotes and coins throughout the euro area for individuals and businesses. The euro has long stood as a symbol of European unity and strength. Over more than two decades, people and businesses across the euro area have become accustomed to using euro coins and banknotes for transactions. While a majority of individuals (60%) express a desire to retain the option of using cash, an increasing number are favoring digital payment methods, utilizing cards and applications issued by banks and digital financial entities. To reflect these evolving trends, the Commission introduces two sets of measures. These measures aim to ensure that people have both payment alternatives available when using central bank money – namely, physical and digital euros. The package includes a legislative proposal to establish the legal foundation for a potential digital euro, designed to complement existing euro banknotes and coins. This proposal seeks to provide individuals and businesses with an additional choice, enabling secure, affordable, and widely accepted digital payments using a form of public money within the euro area. Should the proposal receive approval from the European Parliament and Council, the ultimate decision to issue the digital euro would rest with the European Central Bank. Furthermore, the package includes a legislative proposal concerning the legal status of euro cash as a means of payment. This proposal aims to safeguard the role of physical cash, ensuring its broad acceptance and accessibility for transactions across the euro area. |
On 28 June 2023, the European Commission presented a legislative proposal on the Financial Data Access.
The European Commission is introducing proposals to modernize the digital landscape of payments and the broader financial sector. These measures aim to enhance consumer protection, promote competition in electronic payments, and allow secure data sharing to enable consumers to access a wider range of improved and cost-effective financial products and services. The proposals prioritize consumers' well-being, competition, security, and trust. The payment services market has evolved significantly, with electronic payments in the EU rising steadily to €240 trillion in 2021, partly accelerated by the COVID-19 pandemic. Digital technology has facilitated the entry of new providers, particularly those offering 'open banking' services involving secure data sharing between banks and fintech companies. However, more complex forms of fraud have emerged, impacting consumer security and trust. In response, the proposed package aims to ensure the EU's financial sector remains adaptable to the ongoing digital shift and its associated risks and opportunities, especially for consumers. The Commission suggests two sets of measures: |
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