The European Central Bank (ECB) plans to create licensing guidelines for financial technology firms.
“At the ECB, we are, for instance, devising a guide on licensing that also covers fintechs,”said Daniele Nouy, the ECB’s top bank supervisor. “This guide will be published shortly for the purpose of a public consultation.”
The ECB official also said that digitalization broke current chain of banking operation and didn’t allow new companies which offer very specific services to enter the market. “They no longer have to set up fully fledged banking operations. The technical and financial hurdles have become a bit lower; the market has become more contestable,” Nouy added.
The fintech sector is considered as the fastest growing sector today, and financial sector has to divide market share with it in the sphere of lending and investments. For example, fintech companies attracted $6.5bn in the first half of this year.
That’ why the main reason of fintech licensing guidelines is to protect current payments system and to save Central Banks’ control in the financial sphere.
Central Banks didn’t worry too much about fintech innovations from the beginning of fintech companies’ development. However, fintech industry, ranging from mobile payment apps to ‘cryptocurrencies’ like bitcoin, became the most progressive and profitable sphere.
No wonder that Central banks are looking measures to outlaw or limit usage of FinTech innovations. One of the measures was ban by People’s Bank of China all Initial Coin Offerings (ICOs) in the country on Monday. The bank announced ICO as an illegal method of raising money.
According to the Bank’s representative, along with the securities and other government agencies, any individuals or organisations that have completed ICO fundraising should make arrangements to return the funds.
By the way, the Bank of Japan (BOJ) and the European Central Bank (ECB) brought into challenge the possibility of Distributed Ledger Technology (DLT) to provide the world’s biggest payment systems.
Report of these banks shows that although many banking institutions have been already adopting blockchain technology for their transaction, there is no supreme confidence that technology may right now meet the needs of large financial institutions and national banks.