Digital Finance Package: Commission sets out new, ambitious approach to encourage responsible innovation to benefit consumers and businesses

(Chronis Yan, Unsplash)

This article is brought to you in association with the European Commission.


The European Commission has today adopted a new Digital Finance Package, including Digital Finance and Retail Payments Strategies, and legislative proposals on crypto-assets and digital resilience. Today’s package will boost Europe’s competitiveness and innovation in the financial sector, paving the way for Europe to become a global standard-setter. It will give consumers more choice and opportunities in financial services and modern payments, while at the same time ensuring consumer protection and financial stability.

Today’s measures will be crucial in supporting the EU’s economic recovery as it will unlock new ways of channelling funding to Europe’s businesses, while also playing a key role in delivering the European Green Deal and the New Industrial Strategy for Europe. By making rules safer and more digital friendly for consumers, the Commission aims to boost responsible innovation in the EU’s financial sector, especially for highly innovative digital start-ups, while mitigating any potential risks related to investor protection, money laundering and cyber-crime.

Valdis Dombrovskis, Executive Vice-President for an Economy that works for People, said: “The future of finance is digital. We saw during the lockdown how people were able to get access to financial services thanks to digital technologies such as online banking and fintech solutions. Technology has much more to offer consumers and businesses and we should embrace the digital transformation proactively, while mitigating any potential risks. That’s what today’s package aims to do. An innovative digital single market for finance will benefit Europeans and will be key to Europe’s economic recovery by offering better financial products for consumers and opening up new funding channels for companies.”

Today’s Digital Finance Package consists of a Digital Finance Strategy, a Retail Payments Strategy, legislative proposals for an EU regulatory framework on crypto-assets, and proposals for an EU regulatory framework on digital operational resilience.

A Digital Finance Strategy: towards a European financial data space – new ways of channelling funding to SMEs – better financial products for consumers

The aim of today’s Digital Finance Strategy is to make Europe’s financial services more digital-friendly and to stimulate responsible innovation and competition among financial service providers in the EU. It will reduce fragmentation in the digital single market, so that consumers can have access to financial products across borders and that Fintech start-ups scale up and grow. It will ensure that EU financial services rules are fit for the digital age, for applications such as artificial intelligence and blockchain. Data management is also at the heart of today’s strategy. In keeping with the Commission’s broader Data Strategy, the objective of today’s measures is to promote data sharing and open finance, while maintaining the EU’s very high standards on privacy and data protection. Finally, the strategy aims to ensure a level playing field among providers of financial services, be they traditional banks or technology companies: same activity, same risks, same rules.

A Retail Payments Strategy: modern and cost effective payments

Today’s strategy aims to bring safe, fast and reliable payment services to European citizens and businesses. It will make it easier for consumers to pay in shops and make e-commerce transactions safely and conveniently. It seeks to achieve a fully integrated retail payments system in the EU, including instant cross-border payment solutions. This will facilitate payments in euro between the EU and other jurisdictions. It will promote the emergence of home-grown and pan–European payment solutions.

Legislative proposals on crypto-assets: seizing opportunities and mitigating risks

The Commission has today proposed for the first time new legislation on crypto-assets (a digital representation of values or rights that can be stored and traded electronically). The ‘Regulation on Markets in Crypto Assets’ (MiCA) will boost innovation while preserving financial stability and protecting investors from risks. This will provide legal clarity and certainty for crypto-asset issuers and providers. The new rules will allow operators authorised in one Member State to provide their services across the EU (“passporting”). Safeguards include capital requirements, custody of assets, a mandatory complaint holder procedure available to investors, and rights of the investor against the issuer. Issuers of significant asset-backed crypto-assets (so-called global ‘stablecoins’) would be subject to more stringent requirements (e.g. in terms of capital, investor rights and supervision).

The Commission is also proposing today a pilot regime for market infrastructures that wish to try to trade and settle transactions in financial instruments in crypto-asset form. The pilot regime represents a so-called ‘sandbox’ approach – or controlled environment – which allows temporary derogations from existing rules so that regulators can gain experience on the use of distributed ledger technology in market infrastructures, while ensuring that they can deal with risks to investor protection, market integrity and financial stability. The intention is to allow companies to test and learn more about how existing rules fare in practice.

Legislative proposals on digital operational resilience: closing the door to cyber attacks and enhancing oversight of outsourced services

Technology companies are becoming more and more important in the area of finance, both as IT providers for financial firms, as well as providers of financial services themselves. Today’s proposed ‘Digital Operational Resilience Act’ (DORA) aims to ensure that all participants in the financial system have the necessary safeguards in place to mitigate cyber-attacks and other risks. The proposed legislation will require all firms to ensure that they can withstand all types of Information and Communication Technology (ICT) – related disruptions and threats. Today’s proposal also introduces an oversight framework for ICT providers, such as cloud computing service providers.

Background

Today’s Digital Finance Package builds on the work carried out in the context of the FinTech Action Plan of 2018 and the work of the European Parliament, European Supervisory Authorities (ESAs) and other experts. While preparing the Digital Finance Package, the Commission engaged with stakeholders and the public in many ways. The Commission organised Digital Finance Outreach events, a series of events with stakeholders that took place in Member States and in Brussels in spring 2020. The Commission had also organised three public consultations to gather feedback from a broad range of stakeholders[1].

In the area of retail payments, the Payment Services Directive 2 (PSD2) was already an important step at legislative level. However, PSD2 will be reviewed in Q4 2021, and adjusted where necessary, in order to support the implementation of the retail payments strategy policies. The Commission had also published a public consultation for a Retail Payments Strategy for Europe in the first semester of 2020. The Commission took into account the responses to the consultation when shaping the EU actions in the area of retail payments.

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

How can coronavirus lockdowns end safely and effectively? – WHO briefing

These 5 industries can drive digital financial inclusion

Can we balance conservation and development? Science says yes

Tartu Call for a Healthy Lifestyle shows concrete results for EU citizens

UN chief calls for ‘solidarity, compassion and action’ on World Refugee Day

Digital business is Europe’s best hope to get back to growth

How Bangladesh’s leaders should respond to the economic threats of COVID-19

Will CETA be implemented after eight long years or it will be vetoed by the EU citizen?

Mobile health: The future of global healthcare

Brexit: European Commission publishes Communication on preparing for the UK’s withdrawal from the EU

Instability in Africa’s Sahel, spreading outwards, Security Council told

London to say hello or goodbye to Brussels this week

Pesticides: MEPs propose blueprint to improve EU approval procedure

EU shapes its ambitious strategy on India

Climate change update: consistent global actions urgently needed as we are running out of time

Why are so few women buying into Bitcoin?

The West is struggling to hit its climate targets. What would the developing world do differently?

3 ways to stop COVID-19 from drying up start-up talent pools

Want a more inclusive society? Start with mobility

As Yemen relief operations face funding gap, timing of surge in violence ‘couldn’t be worse’

A European student just sets the question of the day: What kind of education policies are missing in Europe?

From diamonds to recycling: how blockchain can drive responsible and ethical businesses

Despite falling attacks, ISIL terrorists remain ‘global threat’: UN report

European Union policy for improving drought preparedness and mitigation

Parliament adopts new rules for short-stay visas

‘Passport to dignity’ that schools represent may expire fast, without emergency funding warns UN Palestine refugee agency

Precision medicine should be accessible to all

We have to fight for a fairer tech industry for women

Madrid is banning high-polluting vehicles from the city centre

Tuesday’s Daily Brief: Disability inclusion, minimum wage, and LGBTI rights in Botswana

The untold story of who caused and who pays for the economic crisis

“Will TTIP solve the massive EU-US unemployment? Absolutely not!” A revealing Sting Exclusive with Tim Bennett from the Transatlantic Business Council

The financial future of Eurozone on the agenda of Friday’s ECOFIN council

Sign language protects ‘linguistic identity and cultural diversity’ of all users, says UN chief

Here are 4 tips for governing by design in the Fourth Industrial Revolution

Italian voters put again the European Peoples in the Brussels picture

Menu for change: why we have to go towards a Common Food Policy

Aid convoy for north-east Syria postponed over security concerns – UN relief chief

The European Sting at the Retail Forum for Sustainability live from Barcelona

Human Rights Council election: 5 things you need to know about it

Meet the man who drove from the Netherlands to Australia without visiting a gas station

Is there a way out of the next financial crisis? Can more printed money or austerity save us all?

How India’s government can build better contracts with blockchain

How to unleash the potential of regions like São Paulo

How bad could British healthcare get for its citizens abroad post-Brexit?

A Sting Exclusive: “The Digital Economy and Industry are no longer opposing terms”, Commissioner Oettinger underlines live from European Business Summit 2015

Going climate-neutral: expert-group recommendations to help energy-intensive industries contribute to the EU’s 2050 target

COVID-19: MEPs want safe vaccines, full transparency and liability for companies

How do we make artificial intelligence more humane?

Drone regulation is necessary to democratize the sky for humanity

EU-China: Council authorises signature of the agreement on geographical indications

5 shocking facts about inequality, according to Oxfam’s latest report

Sri Lankan authorities must work ‘vigorously’ to ease simmering ethno-religious tensions, urges UN rights expert

It’s time to build a responsible media supply chain

The ECB still protects the banks at the expense of the EU taxpayers

Commission considers anti-dumping duty on Chinese solar glass imports

Explained, the economic ties between Europe and Asia

EU budget deal struck with Parliament negotiators

Myanmar willing to repatriate ‘verified returnees’ from Bangladesh

From farms to supermarkets: MEPs approve new EU rules against unfair trading

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s