EU takes step towards sustainable systems and Fintech

EPA-EFE/OLIVIER HOSLET

European Commission in charge of the euro and social dialogue Valdis Dombrovskis and European commissioner in charge of jobs, growth, investment and competitiveness Jyrki Katainen (R) give a press conference on the Capital Markets Union in Brussels, Belgium, 08 Mach 2018.

EU takes step towards sustainable systems and Fintech


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The EU Commission has presented a package of measures to deepen the Capital Markets Union with a focus on sustainable finance, innovative financial services (Fintech) and crowdfunding. 

The latest package is the first in a series of interventions on behalf of the EU executive in the struggle to make the bloc’s financial system more sustainable. The Commission intends among other things to introduce a classification or definition of ‘sustainability’ and to introduce a label for ‘green financial products’.

The EU will focus and support more on environmentally friendly investments in the future. As part of this strategy, capital requirements for banks could potentially be eased by lending to sustainable projects. Concrete legislative proposals could follow in the coming months. “Moving towards a greener and more sustainable economy is good for job creation, for people and for our planet,” said the European Commission Vice-President Valdis Dombrovskis.

According to the Commissioners that presented the package, the proposals “will enable investors and every citizen to make a positive choice – by using their money with greater responsibility and supporting sustainability.”

Both professional investors and asset managers will be required to take greater account of sustainability in their investments. The European Commission also wants to examine whether the capital requirements of banks could also be fine-tuned with regard to sustainable factors.

This step is quite controversial, as it would mean that the capital requirements in the future would also focus on factors other than risks. While sustainable investments are not less risky, per se, the strategy introduces another factor to assess investment strategies. On the other hand, this readjustment could lead to more sustainability without creating new risks to financial stability.

On Fintech, the financial technology sector, the European Commission has announced a total of 23 measures that will relate to Blockchain and other technologies where cryptocurrencies including Bitcoin and Ethereum are based. The Berlaymont said a number of times aim to focus more on the development of these technologies, while taking a closer look at their opportunities and risks.

The Commission is considering to look closer on a simplified regulatory and supervisory framework for these companies, in the form of “sandboxes”, so as not to weaken their innovative strength, the greatest fear of the blockchain community.

In the field of crowdfunding, the Commission presented a comprehensive proposal for a regulation that would, for the first time, establish a European legal framework for this form of financing, aiming to simplify the operation within the digital single market via a cross-border EU passport for crowdfunding platforms.

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