The evaluation of the European Union’s alignment with global financial infrastructure standards has become a crucial topic of discussion. The focus primarily lies on the implementation of the Principles for Financial Market Infrastructures (PFMI), established to ensure the safety and efficiency of financial systems worldwide. The examination conducted by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) zeroes in on systemically important payment systems (PSs) and central securities depositories/securities settlement systems (CSDs/SSSs). By assessing the EU’s legal, regulatory, and oversight frameworks as of a few years ago, the inquiry sought to determine the degree of compliance with PFMI standards. As the financial landscape evolves, understanding how well these standards are integrated within the EU’s monetary and securities systems remains vital.
EU Compliance with PFMI Standards
The assessment revealed that the European Union’s implementation of PFMI standards is predominantly complete and consistent for both payment systems and securities depositories/settlement systems. This finding underscores the EU’s commitment to maintaining robust financial market infrastructures that align with international best practices. Nonetheless, the analysis did identify areas needing improvement, specifically in risk management and governance, where implementation was deemed only broadly or partly consistent. This suggests that while a strong framework exists, enhancements are still required to achieve optimal alignment. Divergences were also noted across different regulatory frameworks within the EU, including notable differences between the euro area, Sweden, and the overarching EU-wide regime. These distinctions were methodically evaluated, highlighting the complexities inherent in achieving uniform compliance across diverse jurisdictions within the union.
Future Considerations and Ongoing Efforts
The report’s findings showed that the EU generally aligns with global standards in financial systems. However, it acknowledged that changes since the original review could influence current compliance. The report didn’t cover developments after the assessment date and omitted a separate evaluation for the United Kingdom, which was part of the EU at the time of the review. These gaps highlight the ever-changing nature of financial systems and the constant need for updates to align with evolving standards. The ongoing efforts by CPMI and IOSCO are crucial to monitoring and promoting the implementation of international financial infrastructure standards, ensuring the EU and other regions stay committed to financial stability and efficiency. To sustain its alignment with PFMI standards, the EU needs to address the identified areas for improvement and keep up with global advancements. This proactive approach will help effectively support the international financial ecosystem and maintain the EU’s role as a leader in financial regulation and stability.
