Finally, further clarification should be made to differentiate ARTs referring to other crypto-assets from conventional financial instruments: an ART designed to maintain a stable value by referring to another crypto-asset, or a basket of crypto-assets, could be considered as a financial instrument (e.g. a crypto-asset tracking the value of another crypto-asset may be an exchange-traded fund (ETF)). Such an asset should be subject to the relevant EU legislation (such as the Markets in Financial Instruments Directive or the Market Abuse Regulation). 12. It would also be beneficial if the new European anti-money laundering authority were to supervise the riskiest crypto-asset providers, as this would help considerably in harmonising supervision across all EU Member States. 13. For a full overview of the effects on the monetary and financial system stemming from the introduction of a digital euro, see Panetta, F. (2021), “The present and future of money in the digital age”, lecture at Federcasse’s Lectiones cooperativae, Rome, 10 December. See also Adalid, R, et al. (2022), “Central bank digital currency and bank intermediation”, Occasional Paper Series, No 293, ECB, May. The analyses presented in this paper look at different approaches for assessing the effects of a digital euro on euro area banks. 14. Overnight retail (household and non-financial corporation) deposits make up around 40% of euro area banks’ total liabilities. Retail deposits are the defining feature of commercial banks – the receiving of deposits and repayable funds is the first criterion of a credit institution in EU law.
The views supporting Islamic finance state that Islamic financial institutions are more resilient to external shocks. Profit and loss sharing feature of the transactions in Islamic finance provides a protection to these institutions, apart from the capital. This feature of the Islamic financial institutions could transfer a negative shock on the asset side to the liability side. Furthermore, due to the fact that the investors (depositors) take on some part of the risk and do not have deposit insurance, they have more incentives to exercise tight oversight over these institutions. In addition, as compared to conventional banks, they have held a comparatively larger share of their assets in reserve accounts for the liquidity management. Thus, even if Islamic financial institutions have risky investments, these buffers make them more resilient to the negative external shocks. On the other hand, the opposing views claim that Islamic finance does not need to improve the financial stability. According to this view, profit and loss sharing feature of Islamic finance transfers the credit risk from Islamic institutions to their depositors, and therefore, motivates the excessive risk taking incentive of Islamic banks. While capital value and earnings of customers are not guaranteed in Islamic finance, this feature may increase moral hazard and motivation for excessive risk taking without adequate capital. 2  BIS Review 124/2009  During the recent financial crisis, Islamic financial institutions have demonstrated significant resilience. They have been less affected compared to the conventional financial institutions thanks to prohibitions on excessive leverage.