European Union Strengthens Oversight of Digital Assets
Date: 2023-12-09 Author: Dima Zakharov Categories: BUSINESS, IN WORLD
ECB's Expanded Mandate
The ECB's new mandate includes overseeing banks' transition strategies towards a carbon-neutral economy over the next three decades. Furthermore, the ECB's jurisdiction now extends to supervising crypto asset services held by banks.
Climate and Environmental Risks
The reform also empowers the ECB to oversee banks' operational leasing businesses. The ECB will have broader authority to intervene when it detects inadequate management of climate or environmental risks, which could potentially threaten financial stability.
Addressing Transition Risks
This expansion of authority aims to alleviate tension among European banking regulators regarding the extent of the ECB's role in climate-related matters. Some officials in the supervisory board have expressed concerns that overly aggressive actions could exceed the ECB's mandate, as reported by Bloomberg last year.
Regulatory Clarity
The coordinated reform ensures that the ECB can regulate bank subsidiaries offering cryptocurrency services, adopting a broader definition of what should fall under its supervision. This step was proposed last month by the outgoing head of ECB banking supervision, Andrea Enria, as an "urgent issue."
Shifting Focus of Creditors
These new powers come as creditors are becoming less hesitant about cryptocurrencies, including Bitcoin, due to associated risks and money laundering concerns. Instead, many are now looking to engage in custody and other activities related to this asset class.
European
Additionally, the European Union will grant the ECB the authority to oversee banks' operational leasing businesses, providing companies with a way to lease assets without adding them to their balance sheets. The central bank is already responsible for monitoring banks' financial leasing.
