The FinTech Working Group convened for the fifth time and welcomed invitees Nouriel Roubini, Professor of Economics at New York University’s Stern School of Business, Jorg Kukies, State Secretary at the German Federal Ministry of Finance and Stuart Levey, CEO of Diem (formerly the Libra Association). Discussion focused on crypto-assets and their regulation in the EU.

MEPs also asked whether the ECB should accelerate its digital currency project. In light of actions by third countries and big tech, MEPs emphasised the need to curb anti-competitive behaviour and take active measures to prevent foreign players from dominating the financial services and e-commerce sectors, as well as restricting their access to the personal financial data of EU citizens. Consequently, unregulated stablecoins may threaten financial stability and consumer protection. Participants asked numerous questions on how to establish a prudential regulatory framework, which would tackle abuses, preserve the level playing field, and boost innovation.

Background information

In recent years, EU and global financial supervisory and regulatory institutions have created units to study developments and trends in the diverse financial technologies (FinTech) sector. In light of this, the FinTech Working Group was established by the Economic and Monetary Affairs Committee (ECON) at the end of 2019 and is chaired by Stasys JAKELIŪNAS (Greens/EFA, LT) with MEPs from most political groups.

Main goals

• Better understand FinTech complexities, potential benefits and risks
• Monitor developments
• Help ECON members make informed decisions
• Help ECON members in deliberation of recent legislative proposals from the European Commission in the digital finance sector

Meetings organised

Five group meeting have now taken place in which a number of institutions have been represented including: the European Commission, the European Central Bank, the Bank for International Settlements, the Financial Stability Institute, the Sveriges Riksbank (the central bank of Sweden), and the BEUC. Economists from academia have already contributed to group discussions and will continue to do so.

Key issues being discussed

• Significant benefits, risks and synergies in various FinTech areas.
• Regulatory and supervisory awareness and readiness for FinTech developments.

Are there risks of supervisory competition and regulatory arbitrage with regards to FinTech – especially at member state level – and if so, how are they dealt with in order to preserve the integrity of the EU single financial market? Is FinTech sometimes used to avoid increased regulatory requirements in matters of capital, know-your-customer (KYC), anti-money-laundering (AML) and other areas and how can this be prevented?

Are consumers well protected against innovative and potentially aggressive and manipulative advertising and sales techniques used by some of the FinTech companies? Is business conduct supervision capable of dealing with these risks at the EU and national levels?

What are the potential benefits, risks, and implications of BigTech (Google, Facebook and others) entering/merging with FinTech for EU and global financial stability, monetary sovereignty, and policy transmission?

What are the possibilities and risks of existent and developing crypto-assets, and how to best regulate them?

What is the status of Central Bank Digital Currency projects that are being actively developed in the EU and globally? What implications might they have for payment and banking systems, as well for financial stability and monetary policy transmission efficiency?

The Group web page includes summaries of the meetings and material presented by the speakers.