EC Library Guide on fintech: Selected reports

Selected think tank reports

Decentralised finance good technology, bad finance
Demertzis, M. and Martins, C., Bruegel, 2023.

The emergence of cryptocurrencies/crypto assets has allowed the provision of a new form of financial services, including payments and loans, known as decentralised finance (DeFi). Crypto assets currently represent only about 1 percent of total global financial assets and it is unlikely, in its current form, that DeFi will become a substitute for the traditional financial system, for three reasons. First, while decentralisation is very innovative, in practice the technology required to replace the role of intermediary is slow and costly in terms of energy use. This has led some crypto networks to adopt more centralised solutions to the problem of verification. Second, the automaticity behind the transactions does not allow for any legal recourse. If something goes wrong, there is no way to stop or reverse a transaction once it has been initiated. It is very difficult to imagine DeFi scaling up without the ability to challenge outcomes.
more...less...
Third, and perhaps most importantly, DeFi is for the most part self-referential. Crypto assets are exchanged for other crypto assets without being employed in activities that stimulate economic growth by creating jobs or facilitating investment. It is not likely for DeFi to grow enough to replace traditional finance unless it helps growth. Nevertheless, the technology that enables DeFi and crypto assets, distributed ledger technology (DLT), is very innovative and has managed to remove the intermediary without compromising the safety and finality of financial transactions. Hence, it is likely that the technology behind crypto assets and DeFi will feed into the mainstream and offer efficiency gains.
A look into FinTech’s role in digital transformation and regional cooperation in the EU-Mediterranean and neighbouring regions
Hussein Eltayeb Yassien, M., European Institute of the Mediterranean, 2022.

This policy brief aims to discuss how international development actors -international non-governmental organizations and regional cooperation agencies- could capitalize on the existing development projects and programmes to shift the paradigm of development cooperation. The paper focuses on FinTech’s role in digital transformation.
Out of the shadows embracing RegTech solutions in the NBFI sector
Saunders, N., PfEU - A Path for Europe, 2021.

The Shadow Banking sector in the EU has grown significantly over the past two decades, establishing itself as a concern for regulators following the global financial crisis. This policy paper evaluates the potential risks the sector presents, as well as the complexities for regulators in adequately addressing these risks. In aid of mitigating a number of these issues, the paper suggests the adoption of RegTech solutions.
Regulación de las fintech en la Unión Europea tendencias y líneas difusas
Aben, J. and Etti, P., Barcelona Centre for International Affairs, 2022.

La digitalización, las tecnologías innovadoras en los servicios financieros y los nuevos modelos de negocio aspiran a un mercado sin fronteras. Las tecnologías financieras (Fintech) quieren ser un actor más en dicho mercado. A fin de aumentar la integridad del mercado común y el volumen del mercado de capitales de la UE, las nuevas iniciativas legislativas se han elaborado para homogeneizar el terreno de juego de todos los participantes y repensar los conceptos tradicionales de flujos de capitales e instrumentos y riesgos asociados a la apertura del mercado de capitales a nuevos participantes. Servicios financieros como las plataformas de crowdfunding están transformando el concepto servicios, mientras que los riesgos relacionados con las operaciones digitales de los servicios financieros sitúan al mismo nivel a todo el mundo de las finanzas digitales. Al respecto, este artículo examina los esfuerzos de la UE por crear un entorno jurídico sin costuras.