The existing regulatory and supervisory framework may not fully capture and address these new developments.
Technological innovation is
transforming financial services at an unprecedented speed, by
facilitating new business models and services and the entrance of new
market participants. Covid-19 is accelerating this shift and the
digitalisation of financial services. These changes bring a host of
opportunities, including the prospect of better financial services for
businesses and consumers and greater financial inclusion. Yet, they
raise challenges as well, as they can contribute to introduce or
exacerbate new risks. Also, the existing regulatory and supervisory
framework may not fully capture and address these new developments.
In September 2020, the European Commission (EC) published a digital
finance package with the aim to embrace digital finance in the EU.
Following on the package, in February 2021, the EC set out a request for
technical advice to the European Supervisory Authorities (ESAs) on
three main issues, namely (i) the growing fragmentation of value chains
in finance, (ii) digital platforms and (iii) groups combining financial
and non-financial activities. In particular, the ESAs are requested to
assess the regulatory and supervisory challenges brought by these
developments and the way in which they could be addressed. ESMA is
seeking feedback from external stakeholders to inform its work on the
matter.
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