On Tuesday, 6 October, the European Finance Ministers gave their first impressions of the package of measures on digital finance, presented by the European Commission on 24 September (see EUROPE 12562/10). Unsurprisingly, much of the discussion revolved around the proposal for a tailor-made regulatory framework for crypto-assets (EUROPE 12567/2).
“There are special rules for ‘stablecoins’, such as Facebook’s Libra. These will be subject to more stringent requirements”, said Executive Vice-President Valdis Dombrovskis when presenting the package, already anticipating possible criticism from the German, French, Italian, Spanish and Dutch ministers, who were expecting a particularly strong reaction from the Commission on this point to protect the EU’s monetary sovereignty.
And it was indeed those ministers who came to the fore at the meeting. The French Finance Minister, Bruno Le Maire, considered that the Commission’s proposal only partially incorporated the requirements set out in the joint ministerial declaration of these countries, published in September at the informal Ecofin Council meeting in Berlin (see EUROPE 12558/2).
“The final regulation needs to have all guarantees in terms of monetary sovereignty and consumer protection. And I really think that we are not at the right level”, he said.
With the proposal currently on the table, Facebook, with its Libra cryptocurrency, could create money, he worried, calling for the text to be strengthened and to “stick to the requirements of the joint statement”.
Italian Minister Roberto Gualtieri also considered that the Commission’s proposal should be clarified and strengthened, in particular as regards the right of redemption and the quality of the underlying reserve. “The legislative proposal should avoid legislative arbitrage and address all possible concerns and risks for consumer protection and financial stability”, he said.
According to the Dutchman Wopke Hoekstra, in order to properly tackle ‘stablecoins’, it is necessary both to create “a solid legal framework that mitigates as many risks as possible” and to create a public alternative to these private initiatives.
Many ministers also mentioned the work of the European Central Bank (ECB) on the possible launch of a ‘digital central bank money’, which they are closely following. The monetary institute has not yet taken a decision, but published a report on Friday 2 October which identifies several scenarios in which the issue of a digital euro would be necessary.
“Digital euro is not going to be an option, at the end of the day, it will be an obligation in this increasingly digital world”, said ECB Vice-President Luis De Guindos.
Is a review of the PSD2 Directive premature?
The French, Dutch and Luxembourg ministers also warned against an overly premature review of the Payment Services Directive (PSD2), announced by the Commission in its strategy on retail payments (see EUROPE 12567/1).
The Commission intends in particular to make use of this review, which is to be launched at the end of 2021 and finalized in 2022, to take stock of the impact of strong customer authentication on the level of payment fraud in the EU, and to assess whether it would be appropriate for charges for traditional and instantaneous transfers to be the same.
“When it was adopted, it was the most modern piece of legislation in the field of e-payment”, Luxembourger Pierre Gramegna said, adding that more time would be needed to assess whether it still met its objectives.
The review is provided for in the Directive itself, Mr Dombrovskis noted, assuring listeners that it would of course take into account the experience gained from its application. (Original version in French by Marion Fontana)