Featured Product

    Benoît Cœuré of ECB Speaks on Future of FMIs

    June 26, 2018

    Benoît Cœuré of ECB spoke at the Central Bank Payments Conference on the future of financial market infrastructures. He discussed the challenges of digital innovation and highlighted that the payment systems need to be more efficient and safer, which can be done by making retail payment systems instant and available 24/7, by modernizing the real-time gross settlement (RTGS) systems, and by enhancing cyber resilience.

    Mr. Cœuré noted that the central banking community, CPMI, and the Markets Committee are monitoring how technologies, such as DLT, may serve the wider public. With bitcoin and other crypto assets, large and unpredictable price swings and outright cyber heists have been seen, which may expose people to the risk of losing their savings. This demands that central banks take these risks seriously. However, the possible adverse financial stability implications of introducing central bank digital currencies call for the greatest caution, while the underlying DLT that would enable these digital tokens to be introduced are still immature, costly to maintain, and possibly prone to vulnerabilities. Given the prevailing flaws, central banks should pursue a two-track strategy. First, they should continue to study new technologies closely and experiment and engage with the industry. In case of ECB, a DLT infrastructure within the EU central bank community has already been established, which currently serves as a learning tool. ECB has also teamed up with the Bank of Japan on the Stella project—a series of studies on the potential use of DLT for financial market infrastructures. The second part of the strategy should draw on less-disruptive existing technologies to make the payment systems more efficient and safer. 

    To make retail payments systems instant and available 24/7, instant payment solutions have been implemented, or are in the process of being developed, in many countries worldwide. Later this year, ECB will launch the TARGET Instant Payment Settlement (TIPS) service. To counter the fragmentation risk arising from the development of national or closed-loop solutions that are not interoperable, the European payments industry is launching a truly pan-European instant payments scheme. Improvements here are the best way of rising to the challenges arising from the currently unsafe crypto assets. Next, he mentioned that a key element of many RTGS system modernization projects is implementing a messaging standard that works across the globe. Of course, migrating from a legacy payment standard incurs costs. So, as with any other technological upgrade, it is important that a critical mass moves toward the new standard. He gave the example of implementation of the ISO 20022 standard and offering multi-currency functionalities in infrastructures. In the near future, both payment and securities settlement services will also undergo a technical and functional consolidation. The new service is scheduled to go live in November 2021.

    Moreover, Mr. Cœuré mentioned that modernization of systems must go hand-in-hand with increasing their cyber resilience. To this end, CPMI and IOSCO had published guidance on cyber resilience for financial market infrastructures back in June 2016. Then, last month, CPMI issued a strategy for reducing the risk of wholesale payments fraud. The strategy aims to galvanize wholesale payment systems, network messaging providers, banks, overseers, and supervisors to work together in strengthening the security of the financial ecosystem and its endpoints, all of which are being increasingly exploited by adversaries. At ECB, steps have been taken to put these initiatives into practice and to strengthen cyber resilience more broadly. ECB introduced the cyber resilience oversight expectations, established the Euro Cyber Resilience Board for pan-European Financial Infrastructures, introduced a European Framework for Threat Intelligence-Based Ethical Red Teaming (TIBER-EU), and adopted the aforementioned CPMI wholesale payments security strategy as the competent authority for two wholesale payment systems in the euro area—TARGET2 and EURO1. All of these efforts are multilateral and predicated on strong cross-country collaboration. To deal with the emerging challenges and risks in this area, "we need strong multilateral cooperation more than ever," concluded Mr. Cœuré.

     

    Related Link: Speech

    Keywords: Europe, EU, FMI, PMI, DLT, Cyber Resilience, Payment Systems, Fintech, Regtech, ECB

    Related Articles
    News

    APRA Consults on Standard for Reporting of COVID-19 Loans

    APRA issued a letter to authorized deposit-taking institutions announcing its intent to formalize the capital measures and reporting requirements for COVID-19 loans through temporary legislative instruments.

    August 13, 2020 WebPage Regulatory News
    News

    EBA Consults Industry on Use and Uptake of Regtech Solutions Across EU

    EBA is inviting relevant stakeholders, such as financial institutions and information and communication technology (ICT) third-party providers, to share their views and experience on the use of regtech solutions through its regtech industry survey.

    August 12, 2020 WebPage Regulatory News
    News

    FCA Finalizes Guidance to Extend Measures for Insurers Amid COVID

    FCA finalized the guidance extending measures to help customers that hold insurance and premium finance products and are in temporary financial difficulty because of COVID-19 crisis.

    August 12, 2020 WebPage Regulatory News
    News

    BoE Clarifies Approach to Treatment of Payment Holidays on Form PL

    BoE published a statistical notice (Notice 2020/9) explaining the approach for treatment of payment holidays on the profit and loss return or Form PL.

    August 11, 2020 WebPage Regulatory News
    News

    FASB to Conduct Post-Implementation Review of CECL Standard

    FASB announced the launch of its new Post-Implementation Review (PIR) web portal.

    August 11, 2020 WebPage Regulatory News
    News

    EBA Guidance on Impact of CRR Quick-Fix on Reporting and Disclosures

    EBA revised the draft implementing technical standards on supervisory reporting as part of the reporting framework 3.0.

    August 11, 2020 WebPage Regulatory News
    News

    ECB Examines ICAAP Practices of Banks in EU

    ECB published report that presents a summary of the analysis conducted on the internal capital adequacy assessment process (ICAAP) practices of a sample of 37 "significant" banks.

    August 11, 2020 WebPage Regulatory News
    News

    EC Proposes to Amend Rules for Financial Benchmarks

    EC published a proposal for a regulation that amends the Benchmarks Regulation (2016/1011) regarding the exemption of certain third-country foreign-exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation.

    August 11, 2020 WebPage Regulatory News
    News

    PRA Suspends Relevant Guidance Levels on Fixed Rate Lending Limits

    PRA published a letter from Mel Beaman, the Director for UK Deposit Takers, to suspend the relevant guidance levels on fixed rate lending limits in the “Specialist Sourcebook” for an initial period of six months, running from August 01, 2020 to January 31, 2021.

    August 11, 2020 WebPage Regulatory News
    News

    BoE Provides Reporting Update on Form AS and Form FV

    BoE updated the known issues document for the statistical reporting Forms AS and FV.

    August 10, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5671