EC Vice President Speaks on the Future of Fintech in Baltics and EU
The EC Vice President Valdis Dombrovskis spoke about the future of fintech in Europe during a conference in Latvia. He emphasized that promoting fintech is an important part of the work of EC to complete the Capital Markets Union, as it can facilitate cross-border transactions, diversify access to funding, and contribute to deeper and more integrated capital markets.
The EC Vice President added that EC "takes very seriously any threat to financial stability or investor protection." He then outlined the work of EC in the area of fintech, including the fintech Action Plan, which is based on the feedback received on how to best enable a dynamic EU fintech sector. The Action Plan has the three main goals of helping innovative businesses models scale up across the single market, encouraging the uptake of new technologies in the financial sector, and increasing cyber security. With respect to the first goal of scaling up business models, he discussed the role of crowdfunding and regulatory sandboxes. EC has put forward a legislative proposal for an EU license for crowdfunding. This would allow both lending and investment-based crowdfunding platforms to operate across the EU, based on a single authorization, thus eliminating the need to comply with 28 different sets of requirements. EC will also present a blueprint with best practices on regulatory sandboxes, which have, in general, "proven very effective both for companies and supervisors."
Toward the second goal of facilitating the uptake of new technologies, EC plans to set up an Expert-Group to look into possible regulatory obstacles to financial innovation and to review the EU rules that pre-date the emergence of digital technologies. EC will also establish an EU FinTech Lab, for supervisors to engage with technology providers in a neutral space. He then discussed the need to tackle obstacles hindering companies from using services such as cloud computing, particularly the barriers to the cross-border flow of data and inconsistent rules on the outsourcing of activities to the cloud. He added that the upcoming General Data Protection Regulation will help in this, by establishing the free movement of personal data across the EU. Additionally, last year, EC came forward with additional proposals to remove data localization requirements. As part of the fintech Action Plan, EC will also invite ESAs to explore the issuing of guidelines to facilitate the use of cloud services. He highlighted the need to further monitor crypto-assets and initial coin offerings. Thus, EC has established an EU Blockchain Observatory and Forum to report on the challenges and opportunities of crypto-assets later this year.
With respect to the third goal of increasing cyber security, the EC Vice President added that strong cyber resilience requires a collective approach. To this end, EC will organize a public-private workshop to address barriers to information-sharing among market participants on cyber threats. EC has also asked ESAs to consider issuing guidelines for how supervisors should deal with information technology risks and advise EC on the need for potential legislation. Additionally, as part of the Action Plan on Consumer Financial Services, EC is working to promote cross-border retail financial services in Europe. Next week, EC plans to propose to make cross-border payments in euros cheaper in non-euro countries, which means that those payments will be priced the same as domestic payments in the national currency. Mr. Dombrovskis concludes that, with these initiatives on fintech, EC is "setting a clear direction for the Baltics and for Europe: to remain at the peak of global financial innovation, competition, and consumer-friendliness."
Related Link: Speech
Keywords: Europe, EU, Banking, Securities, Fintech, Regulatory Sandbox, Action Plan, Cyber Risk, EC
Previous Article
APRA Updates the List of D2A Validation and Derivation RulesRelated Articles
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
BIS Bulletin Examines Cognitive Limits of Large Language Models
The use cases of generative AI in the banking sector are evolving fast, with many institutions adopting the technology to enhance customer service and operational efficiency.
ECB is Conducting First Cyber Risk Stress Test for Banks
As part of the increasing regulatory focus on operational resilience, cyber risk stress testing is also becoming a crucial aspect of ensuring bank resilience in the face of cyber threats.
EBA Continues Momentum Toward Strengthening Prudential Rules for Banks
A few years down the road from the last global financial crisis, regulators are still issuing rules and monitoring banks to ensure that they comply with the regulations.
EU and UK Agencies Issue Updates on Final Basel III Rules
The European Commission (EC) recently issued an update informing that the European Council and the Parliament have endorsed the Banking Package implementing the final elements of Basel III standards