FinTech Global Regulatory Round-up – w/e 15 October 2021

G7: Principles for retail CBDCs and statement on CBDCs and digital payments (including stablecoins)

The G7 has published a set of Public Policy Principles for Retail Central Bank Digital Currencies (CBDCs) alongside a G7 Finance Ministers and Central Bank Governors’ Statement on CBDCs and digital payments.

The 13 principles are intended to articulate the 'foundational issues' that a CBDC must demonstrate, if it is to command users' trust and confidence. These include the preservation of monetary and financial stability, protection of users’ privacy, strong standards of operational and cyber resilience, the avoidance of financial crime and sanctions evasion, and environmental sustainability. Additionally, the principles address the opportunities which CBDCs present to advance public policy goals, including in respect of innovation and digital economy, financial inclusion, and reducing frictions in cross-border payments. The principles represent the G7's initial views on CBDCs.

In the statement, the G7 Finance Ministers and Central Bank Governors also address stablecoins and other forms of digital payment, committing to 'international co-operation to ensure common standards for the regulation of stablecoins'. [14 Oct 2021]

#DigitalPayments

#Stablecoins

FSB: Progress report and targets – G20 Roadmap for Enhancing Cross-Border Payments

The FSB has published a progress report on the first year of the G20 Roadmap for Enhancing Cross-Border Payments alongside targets for enhancing cross-border payments.

A key early action under the Roadmap, the targets focus on improving the end-user experience.  An implementation approach for monitoring progress toward the targets will be developed in 2022. End-2027 has been set as the common target date across the individual targets, with the exception of the remittance cost target, where a 2030 date has already been set as a United Nations Sustainable Development Goal (UN SDG) and endorsed by the G20.

Other work under the Roadmap in 2020-2021 has focused on the foundational elements for future actions, including stocktakes and analyses of both existing and emerging payments systems and arrangements. These stocktakes have covered topics such as: existing standards, guidance and data frameworks; operating hours of and access to payment systems; common elements of service level agreements/schemes; the use of payment-versus-payment (PvP) mechanisms; the interlinking of payment systems; and CBDC design.

The next stage of work in 2022 includes the development of specific proposals for material improvements of underlying systems and arrangements, as well as the development of new systems. [13 Oct 2021]

#Payments

IMF Global Financial Stability Report October 2021: Covid-19, crypto and climate

The International Monetary Fund (IMF) has published its Global Financial Stability Report. The report presents:

• the IMF's assessment of the risks to financial stability in the wake of Covid-19;
• analysis of financial stability and related challenges in the crypto ecosystem with policy recommendations to address those challenges; and
• analysis of the role which the global investment fund sector can play to support transition to a green economy. [13 Oct 2021]

FSB: Letter to G20 on enhancing resilience in NBFI and addressing challenges in cross-border payments

The FSB has published a letter from Randal Quarles, FSB Chair, to G20 Finance Ministers and Central Bank Governors ahead of their meeting on 13 October. The letter focuses on two key areas of the FSB’s work on which the FSB has submitted reports to the upcoming G20 meeting. These include developing a more resilient non-bank financial intermediation (NBFI) sector and addressing challenges in cross-border payments. [11 Oct 2021]

BoE speech: Impact of crypto on financial stability

The BoE has published the remarks delivered by Sir Jon Cunliffe, Deputy Governor - Financial Stability, at Sibos. Sir Jon focused on the impact of crypto on the stability of the UK financial system. He assessed growth and developments in both unbacked and backed crypto-assets, and briefly addressed the emergence of decentralised finance (DeFi).

Sir Jon concluded that while the financial stability risks from the application of crypto technologies are limited at the moment, this looks likely to change. Though regulators in many jurisdictions have commenced work on standards, efforts should, 'be pursued as a matter of urgency'. [13 Oct 2021]

#DeFi

HMT: UK Secondary Capital Raising Review launched

Following on from Lord Hill's Review of the UK Listing Regime, HM Treasury (HMT) has announced the launch of the UK Secondary Capital Raising Review with the establishment of an expert group and the release of a call for evidence. The expert group will make recommendations for improving the capital raising process for UK listed companies; it will consider both regulatory barriers and the role of technology.

The call for evidence will run until 16 November 2021. The Review will report to HM Government (HMG) in the Spring of 2022. [12 Oct 2021]

#Listing

HMT/PSR: Payments Landscape Review - HMT response to Call for Evidence and PSR policy statement on consumer protection in interbank payments

HMT has published its response to the Call for Evidence on the Payments Landscape Review. In its response, the government sets out its vision for a payments sector 'at the forefront of technology, ensuring consumer protection and choice, operational resilience, competition, and harnessing innovation'. The government has identified four priority areas and actions for government, regulators and industry, including:

• strengthening consumer protections within Faster Payments;
• unlocking the future of Open Banking enabled payments;
• enhancing cross-border payments; and
• future-proofing the regulatory and legislative framework that governs payments.

The PSR has published a policy statement on consumer protection in interbank payments (PS21/2). The policy statement summarises the responses to CP21/4 and sets out the PSR's plans to ensure that Faster Payments, and the service providers that use it, continue to innovate in ways that work well for consumers and businesses. [11 Oct 2021]

#OpenBanking

EIOPA highlights European cyber security month

The European Insurance and Occupational Pensions Authority (EIOPA) has published an article which discusses the continuing risk that cyber attacks pose for insurers, highlighting the reasons why insurers are a target for cyber attacks and the consequences of cyber incidents  The article marks October as European cyber security month, and includes links to a number of information sources and resources for insurers. [15 Oct 2021]

EBA: Guidelines on the security of internet payments repealed

The European Banking Authority (EBA) has repealed its Guidelines on the security of internet payments. These Guidelines were issued before the revised Payments Services Directive (PSD2) came into force in 2016 and have since then been superseded by PSD2 and the related EBA instruments developed in support of PSD2. [14 Oct 2021]

ESMA: Key priorities in relation to data

ESMA has published a speech by Natasha Cazenave, ESMA Executive Director, on ESMA's key priorities in relation to data in 2022, including:

• standardising data to support effective supervision and reduce costs;
• ensuring data quality that informs ESMA's and national competent authorities' (NCA's) decisions; and
• using new technologies to improve supervision of financial markets.

Ms Cazenave also outlined how ESMA will support the European Commission’s (EC) efforts in three major cross sector projects: the Capital Markets Union, the Sustainable Finance agenda and the Digital Finance package. [11 Oct 2021]

#DigitalFinance

FSTB publishes paper outlining policy initiatives for upcoming meeting of LegCo Panel on Financial Affairs on 18 October 2021

The Financial Services and the Treasury Bureau (FSTB) has published a paper outlining its policy initiatives for the upcoming meeting of the Legislative Council (LegCo) Panel on Financial Affairs on 18 October 2021.  They form part of the initiatives announced by the Hong Kong Chief Executive in her recent Policy Address on 6 October 2021 (see our previous update).

The FSTB focuses on two major policy initiatives – financial stability and promoting market development. The FSTB's initiatives in relation to fintech include:

• actively seeking innovation, including enhancing the position of Hong Kong as a green and sustainable finance hub, promoting fintech development, and making strategic investments with the Hong Kong Growth Portfolio; and
• nurturing talent to prepare for the future, including developing a qualifications framework for the fintech sector, strengthening support for the development of financial talents, and adding financial professions to the talent list of Hong Kong.

Other ongoing initiatives include the expansion of Hong Kong's network of comprehensive avoidance of double taxation agreements, and improving service efficiency and enhancing digitalisation of public services.  [11 Oct 2021]

#FinTech

MAS: Second consultation on proposed revisions to Guidelines on BCM

The Monetary Authority of Singapore (MAS) has issued a second consultation on proposed revisions to its Guidelines on Business Continuity Management (BCM). This second consultation includes revisions to address feedback received from the first consultation published in 2019 and incorporates key learnings from Covid-19. It builds on the policy intent from the first consultation to further emphasise the need for financial institutions to take an end-to-end view in ensuring the continuous delivery of critical business services, and introduce principles and practices that financial institutions can implement to strengthen operational resilience.

Feedback to the consultation is requested by 15 November 2021. MAS notes that while this second consultation is on-going, financial institutions should continue to refer to the 2003 guidelines and supplementary guidance.  [15 Oct 2021]