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Digital Finance Strategy

Context

Technology is transforming the provision of financial services and many elements of the current financial system. All financial activities are concerned and can potentially reap the benefits of digitalisation.

Technologies such as cloud, AI and DLT help to improve existing financial services and processes, increasing their efficiency, facilitating their cross-border provision and increasing the agility of financial service providers. These technologies also support financial innovation, facilitating the introduction of new services and operating models, enhanced personalisation, as well as the reduction of time to market and barriers to entry into the market. Technologies such as AI and ML also facilitate reporting, supervisory processes and support AML and fraud detection. The COVID-19 crisis moreover shows the role that digitalisation potentially plays in terms of business continuity.

These new technologies may however pose new challenges in terms of accountability and exposure to cyber-risk and may raise issues with regard to appropriate data use, sharing and sovereignty.

Their cross-border development in the EU may also be hindered by insufficient harmonisation of legal requirements. This requires taking the necessary steps to ensure the right conditions are in place to take advantage of digitalisation and manage any related risks.

The European Commission proposed in September 2020 a Digital Finance Strategy (DFS) aiming to support the digital transformation of the EU financial sector. The objectives of the DFS initiative are to adapt the financial regulatory and supervisory framework to the increasing digitalisation of the EU financial sector, identify measures that may support a further digitalisation of the sector, remove potential obstacles to digitalisation and also address possible new risks and level playing field issues related to this digital transformation. The DFS is completed by four legislative proposals focused on specific areas of digitalisation: MiCA (regulation on markets in crypto-assets), a DLT pilot regime, DORA (the Digital Operational Resilience Act) and a retail payments strategy for the EU.

Contributions to the policy debate

Extracted from the main Eurofi publications (Regulatory Updates, Views Magazines and Conference Summaries)

Public and private
sector views

Public authority views

M. Haag - DG for Financial Stability, Financial Services and Capital Markets Union, European Commission - Promoting the digital transformation of Europe’s financial services sector: harnessing opportunities and managing risks - April 2021 new

R. Peres Jorge - Portuguese Securities Market Commission (CMVM) - Regulatory crossroads in digital finance - April 2021 new

S. Raspiller - French Treasury, Ministry of the Economy, Finance and the Recovery Plan, France - The European Union should offer new digital opportunities in financial services and payments - April 2021 new

F. Restoy - Financial Stability Institute (FSI) - Fintech regulation: how to achieve a level playing field - April 2021 new

M. Ross - Ministry of Finance, Estonia - Opportunities and challenges of the European Digital Finance Strategy - April 2021 new

H. Waiglein - Federal Ministry of Finance, Austria - DFS – striking a balance between fostering innovation and a level playing field - April 2021 new

U. Bassi - European Commission - Towards a new digital finance strategy for Europe - September 2020

M. McGrath - Department of Finance, Ireland - Encouraging innovation alongside fostering digital inclusion and protection - September 2020

L. Mörttinen - Ministry of Finance, Finland - Effective digitalization of financial services requires a comprehensive approach to systemic risk - September 2020

Dr. M. Pleyer - Federal Ministry of Finance, Germany - Europe’s Single Digital Financial Market - Picking up speed in rapid waters - September 2020

V. Šapoka - Minister of Finance, Republic of Lithuania - Digitalisation: the right way forward - September 2020

C. San Basilio - Spanish Treasury - EU leadership in Fintech. How can new technologies help develop the CMU? - April 2020