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
    News

    APRA Decides to Standardize Submission Date for Quarterly Reporting

    APRA announced the standardization of quarterly reporting due dates for authorized deposit-taking institutions.

    May 11, 2021 WebPage Regulatory News
    News

    Bundesbank Publishes Supporting Documentation for Reporting by Banks

    Bundesbank published a list of "EntryPoints" that are accepted in its reporting system; the list provides taxonomy version and name of the module against each EntryPoint.

    May 11, 2021 WebPage Regulatory News
    News

    ECB Working Group Publishes Recommendations on EURIBOR Fallbacks

    The private sector working group of ECB on euro risk-free rates published the recommendations to address events that would trigger fallbacks in the Euro Interbank Offered Rate (EURIBOR)-related contracts, along with the €STR-based EURIBOR fallback rates (rates that could be used if a fallback is triggered).

    May 11, 2021 WebPage Regulatory News
    News

    EBA Publishes Phase 1 of Reporting Framework 3.1

    EBA published the phase 1 of its reporting framework 3.1, with the technical package covering the new reporting requirements for investment firms (under the implementing technical standards on investment firms reporting).

    May 10, 2021 WebPage Regulatory News
    News

    APRA to Finalize Capital Adequacy Standard Revisions by January 2022

    Asia Pacific Australia Banking APS 111 Capital Adequacy Regulatory Capital Basel RBNZ APRA

    May 10, 2021 WebPage Regulatory News
    News

    ESMA Issues Guidelines on Outsourcing to Cloud Service Providers

    ESMA published the final guidelines on outsourcing to cloud service providers.

    May 10, 2021 WebPage Regulatory News
    News

    EBA Publishes Data on Deposit Guarantee Schemes

    EBA published annual data for two key concepts and indicators in the Deposit Guarantee Schemes (DGS) Directive—available financial means and covered deposits.

    May 10, 2021 WebPage Regulatory News
    News

    OSFI Sets Out Plan for Future Guidance on Managing Technology Risk

    OSFI has set out the schedule for release of draft guidance on the management of technology risks by federally regulated financial institutions and private pension plans.

    May 10, 2021 WebPage Regulatory News
    News

    MAS Updates Housing Loan Rules, Proposes Corporate Governance Guidance

    MAS updated rules for new housing loans by banks and finance companies.

    May 10, 2021 WebPage Regulatory News
    News

    HKMA Publishes Guideline on Sustainable Finance Grant Scheme

    HKMA published a statement on the 100% Personal Loan Guarantee Scheme and a guideline on the Green and Sustainable Finance Grant Scheme (GSF Grant Scheme) as announced in the 2021-22 Budget.

    May 09, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6959