Featured Product

    ECB Responds to EC Proposal on New Digital Finance Strategy

    August 27, 2020

    ECB published a response to the EC consultation on the new digital finance strategy for EU. ECB broadly supports the priority areas identified by EC in the consultation document to foster the development of digital finance in EU. These priorities have increased in importance in the light of the recent COVID-19 crisis and involve ensuring financial services regulatory framework is fit for the digital age; enabling consumers and firms to reap the opportunities offered by the EU-wide Single Market for digital financial services; promoting a well-regulated data-driven financial sector; and enhancing the digital operational resilience framework for financial services.

    Regarding the priority that relates to enhancing the digital operational resilience framework, ECB has provided a separate contribution in the context of the specific consultation launched by EC on this matter. With respect to the other priorities of EC, ECB considers the following:

    • With regard to ensuring the fitment of regulatory framework, important areas for improvement would be to enhance clarity on the application of existing laws and regulations to innovative technologies and related business models and to diminish the fragmentation resulting from different legal and regulatory frameworks and industry standards across EU member states, with the aim to foster the Internal Market, the pan-European application of standards, and a level playing field. In this regard, targeted amendments to legislation, interpretative guidance, and a periodic review of existing rules would be useful to ensure that the EU framework remains effective and technology neutral. While ECB sees some benefits in bespoke regimes for nascent technologies, such as distributed ledger technology, these will have to be balanced against the risks of their leading to a complex and potentially inconsistent regulatory framework.
    • With regard to facilitating the use of digital financial identities throughout EU, ECB fully endorses the mandatory use of unique identifiers, based on internationally recognized global standards, including legal entity identifiers (LEIs), unique transaction identifiers (UTIs), and unique product identifiers (UPIs). 
    • ECB supports the need for enhanced cooperation throughout EU on different schemes, such as regulatory sandboxes and innovation hubs, and acknowledges the benefits of fostering an open dialog between supervisors and supervised entities. This may encourage banks (and other financial entities) to launch innovative solutions, while being able to monitor the accompanying risks in a controlled environment.
    • ECB considers that open finance can have implications for the supervised banks, at both entity and systemic levels, and also for the nature of the cooperation between these banks and new potential actors, such as third-party providers. In this respect, ECB is adapting its supervisory approach toward the regulated entities to the new landscape that the revised Payment Services Directive (PSD2) has enabled. While open finance and the use of alternative data (such as data from public sources) can enable the modernization of banks’ internal processes, it should be ensured that customer data sharing, also with third-party providers, meets clear legal requirements and fulfills security standards.


    Related Link: ECB Response (PDF)


    Keywords: Europe, EU, Banking, Digital Finance Strategy, Fintech Action Plan, Regtech, Regulatory Sandbox, Bigtech, Cloud Service Provides, Distributed Ledger Technology, Artificial Intelligence, ECB

    Related Articles

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8699