With single monetary policy, commitment not to bail-out heavily indebted member states is necessary to eliminate potential for moral hazard. However, the actual euro-area experience demonstrates strong incentives for sovereign fiscal policies to “trespass” on the prudent fiscal stance, either in the expectations of non-enforcement of the no bail-out clause, with the implicit assumption that sovereign default will be politically unacceptable, or through a direct support of common monetary authority through special monetary operations. This uneasy triangle is usually referred to as the fiscal trilemma of the monetary union. Such a “holy trinity” makes impossible the cohabitation of the independent monetary policy of a supranational central bank, national fiscal sovereignty and the no bailout clause 15. In order to ease the frictions stemming from national fiscal policies, the monetary framework of the euro area was reconstructed by implementing the elements of the banking union (the Single Supervisory Mechanism and the Single Resolution Mechanism), setting up the European Stability Mechanism (ESM, previously the European Financial Stability Fund (EFSF)) as well as by starting the ECB’s quantitative easing program (QE). All these mechanisms should help to decouple bank distress and sovereign debt pressures. 16 The described trilemmas in the European economic and monetary framework, with the still absent synchronisation of real and financial cycles, have given birth to a specific quadrilemma that demonstrates difficulties faced by policy makers in the euro area.
How do we at the Banque de France and the ACPR, given our role and experience as a supervisor, plan to address these new challenges? This is what I would like to briefly discuss with you today, after a quick recap of the regulatory framework for open banking and the lessons that can be drawn from it to guide the development of open finance. Part I: Openness and security A- As regards the assessment of and lessons learned from the regulatory framework for open banking, I would like to start by recalling: 1- The key principles that governed the sharing of payment data: on the one hand, the creation of appropriate statuses and, on the other, the strengthening of security requirements for access. The creation of the payment service or electronic money service provider status has fostered the emergence of an open banking ecosystem. The introduction of an agent status has also contributed to this process, by creating a gradual – proportionate – regulatory framework: it thus allows emerging players to test the suitability of their services with the market under the aegis of a licensed institution, before applying for a license themselves, if necessary. 2 – These developments have led to the rapid growth of Fintechs, drawing on their competitive advantages: speed, agility and responsiveness to customer needs.