The European Commission adopted the Digital Finance package that offers a regulatory framework for financial services offered digitally. The objective framed by Bahaa Abdul Hussein is to ensure consumers are able to get financial stability and consumer protection while accessing innovative products.
What does this package envisage?
This package is going to shape the future of digital finance in Europe. There are four pillars to this package. They include:
- Legislative proposals for operational resilience
- Digital finance strategy
- Legislative proposal on crypto assets
- Strategy for retail payments
Legislative proposals for operational resilience
The objective of these proposals is to ensure both mitigation and prevention of cyber threats. The proposal being considered is to ensure banks, fintech firms, clearing houses, and stock exchanges follow standards to prevent incidents and threats. The integrity and stability of the financial sector needs to be preserved. These proposals would ensure it happens.
Digital finance strategy
The aim of this strategy is to ensure a single market for digital financial services. This will allow more innovative and inclusive services in the financial sector to be offered to consumers as well as retail investors. Some of the key focus areas include – interoperable digital identity, anti money laundering to be harmonized, and rules for financing counter-terrorism. This strategy when implemented will ensure the EU’s regulatory framework is in line with the digital age.
Legislative proposal on crypto assets
The aim of these proposals is to ensure regulation of crypto-assets within the EU. All crypto-assets that have been unregulated will now be subject to regulation. The EU commission also proposes to create a pilot regime that is based on distributed ledger technology.
Strategy for retail assets
These proposals have listed out the objectives for priorities for retail payments and have been prepared based on extensive consultations. While many payment innovations have been brought into play, the payment instruments used have not been changed. This trend will continue with more innovations and digitalization implementation. The use of wearables coupled with biometric authentication would do away with the need to carry any device for payment. Instant payments would be considered as the new normal. The ultimate aim is to strengthen the Euro as a global currency.
It is expected that all these proposals and strategies would become a reality by 2024. The end result would be speeding up the adoption of blockchain, while ensuring adequate protection for consumers.
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