Digital Finance Strategy of EU - I

Digital Finance Strategy of EU - I

The European Commission recently adopted the „Digital Finance Package” regulation for establishing a more digital friendly and safe financial market and covering digital finance strategy and legislative proposals on crypto-assets in order to guarantee digital resilience of the whole European market. The package announced under the extraordinary pandemic conditions because the European Union (EU) sees a more digital financial sector as a key for economic recovery strategy to decrease the social and economic damages of the coronavirus pandemic which caused the largest GDP drop by over 12%, ever recorded for the 19 EU countries using the Euro as fiat currency. 

The three main targets of the package are as follows:

• Establishing the “Digital Single Market” for the European consumers,
• Building the EU’s regulatory framework for digital innovation, and
• Promoting data-driven finance.

The digital single market refers to the coverage of the EU countries without internal borders or other regulatory obstacles to the free movement of digital services. The EU also aims a digital single market strategy which is supported with common technical specifications to reduce costs, improve safety, enhance competition, and increase the acceptance of innovations by European stakeholders.  This aim will preferably decrease the transition period from a physical currency to a cryptocurrency.

The main motivation for establishing a data-driven finance is to convert the increasing volume and the complexity of financial data to a solid advantage for the EU market to feed the digital single market strategy. With a data-driven finance, the EU aims to:

• Optimise financial performance of every EU member,
• Build a fact-based decision-making system within national authorities,
• Have a deeper visibility into financial operations,
• Integrate stronger and more predictive early-warning capabilities,
• Increase the level of automation and use advanced technologies to improve efficiency and flexibility with the aim of generating real value and insights for Euro Zone.

The European Commission considers the crypto assets as digital representations of values and rights which are transferred and stored electronically. Within the EU Digital Finance Package, the Commission proposed a pilot regime for market infrastructures to try out to trade and settle transactions in financial instruments in only crypto-asset form as well. So, it has been aimed at increasing the use of DLTs (Distributed Ledger Technology) in recording the transactions of shares or bonds.

With the Digital Finance Package, the European Commission positioned crypto assets as a cornerstone of a fully digital European financial market and increased the reputation of crypto assets in the eyes of national supervisory authorities and current players of financial markets. We will touch more points upon “The Digital Finance Strategy of the European Union” and other markets in the following articles. For any further questions, please reach us via contact@cryptoindexseries.com or visit our CryptoIndexSeriesTM Platform for better analysis of the crypto market space.

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