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Digital Finance in Europe: Law, Regulation, and Governance

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Global finance is in the middle of a radical transformation fuelled by innovative
financial technologies exploiting big data, cryptography, artificial intelligence
(AI) and machine learning, as well as new data sharing and distribution models.
The transformation is affecting the entire financial value chain from capital raising
and credit creation to payments and supply of financial services. Aided by an
unusual macroeconomic environment manifested in ever-rising asset prices, unprecedented
fiscal measures, and floor-breaking interest rates, the adoption of
new technologies has gathered pace in the course of the Covid-19 pandemic. For
example, just in a single week at the beginning of the pandemic the use of financial
applications in Europe increased by more than 70%.¹ While it is too early
to tell whether the rallying cryptocurrency markets or meme stock debacles represent
extreme signs of hubris or more fundamental structural changes in financial
markets, some signs are clear. The emerging generation of digitally savvy
retail investors is not only freer of home-country bias – the classic predicament of
the European „single financial market“ – but are also less likely to accumulate
their savings on sticky bank accounts. Beyond retail markets, institutional interest
and adoption of digital assets is also growing and more crypto firms and infrastructures
are being licensed to offer financial services, which further blurs the
boundaries between the crypto economy and traditional finance.
The post-Brexit EU, deprived of its global financial centre, cannot afford to
ignore the rising tide of digital finance. The Union is struggling to keep pace with
global innovation hubs, particularly when it comes to experimenting with new
digital forms of capital raising.² There is emerging consensus that the digital
transformation of the EU single financial market requires brave and radical action
that goes beyond isolated measures such as the 2nd Payment Services Directive³
that heralded the era of Open Banking and the 4th Anti-Money Laundering
Directive.⁴ Moreover, following a decade of centralisation and building of a single
rulebook for the EU financial markets, the Member States have little other choice
than to wait for the Commission’s initiative.

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Availability

Detail Information

Series Title

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Call Number

325 EMI d

Publisher

berlin / boston : Walter de Gruyter GmbH., 2022

Collation

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Language

English

ISBN/ISSN

978-3-11-074947-2

Classification

300

Content Type

text

Media Type

computer

Carrier Type

-

Edition

Cet.1

Subject(s)

Law, Regulation, and Governance

Specific Detail Info

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Statement of Responsibility

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