Current issues of payments and financial market infrastructures
financial distress or is at the point of failure. The regulation contains uniform procedures and sets of rules that allow the restoration of the normal operation of the central counterparty or ensure that the resolution of the central counterparty in the case of a failure does not cause any disruption in the functioning of financial markets or does not cause losses to the economy. As central counterparties play key roles in the financial systems, the objective of the framework is that they work out measures with which they can terminate financial difficulties and can maintain their critical functions in the case of a resolution. Another objective is to help authorities in managing the problems caused by financial difficulties. Central counterparties have to prepare a recovery plan, which they have to update and review regularly, especially when significant deterioration takes place in their financial position. The recovery plans have to provide a comprehensive description of the measures needed for the central counterparty to restore its viability, and need to contain incentives that guarantee a fair distribution of losses between the central counterparty and market participants. The primary objective of a resolution is the preservation of critical functions and to avoid the harmful effects on financial stability, for which the resolution authority has to prepare an adequate resolution plan. And the plans also have to be approved by the resolution college, which is to be newly set up. In addition, the new regulation authorises ESMA to create regulatory technical standards and ESMA recommendations, thus contributing to supervisory convergence. ESMA set up a separate working group to coordinate working processes and work out the rules. The MNB is also represented in this group, and thus it may influence legislation in a way that is favourable for the Hungarian capital market and KELER CCP. Due to the high number of provisions and recommendations to be formulated on the basis of the mandate stemming from the regulation, the ESMA working group prioritised the recovery related works, whereas the regulations related to resolution will be worked out in 2021 H2. The regulation obliges central counterparties to separate a capital element of adequate size, which can only be used in a recovery situation prior to the contributions of customers. The size of the capital element is not expected to be large enough to cause deterioration in the capital position of KELER CCP, but at the same time it will also mean an extra buffer for market participants, resulting in an increase in the resilience of KELER CCP. For the competent authorities it will create the possibility of early intervention and the introduction of restrictions, which will be even more instrumental in stabilising the financial position. It will also be possible to pay financial compensation in
certain cases, provided that the central counterparty uses the market players’ contributions as well to cover losses. In addition, the ESMA working group will develop factors and indicators to be contained in the recovery plan, and their sufficient strictness will ensure that the central counterparty may perceive the risks stemming from financial difficulties and loss events and be able to manage the situations that evolved adequately and in due course.
4.3 PAYMENT ASPECTS OF CENTRAL BANK DIGITAL CURRENCY AND CURRENT ISSUES RELATED TO THE DISTRIBUTED LEDGER TECHNOLOGY AFFECTING FINANCIAL INFRASTRUCTURES At international level, increasing attention is focused on the issue of making central bank digital currency widely available as a response, inter alia, to the spreading of crypto-assets, which fall partly or completely outside the regulatory and supervisory framework, and to the expansion of FinTech and BigTech actors in payments. Ensuring the efficient, reliable and smooth execution of payments is one of the basic tasks of a central bank. At the same time, with the spreading of digitalisation and the faster and faster changes affecting payment services in parallel with that, as well as with the ensuing appearance and gaining ground of new actors, compliance with this requirement poses increasingly great challenges to central banks all over the world. Already now there are various types of monies (such as cash, money on central bank accounts, money on accounts at commercial banks, electronic money) circulating in the economy, with an extreme variety of services linked to them. At the same time, almost without exception, in some form they are parts of payments, whose rapid, cost-effective and, most of all, safe operation is of key importance in terms of the functioning and competitiveness of the economy as well. Nevertheless, the newly appearing virtual tokens and crypto-assets as well as some of the actors offering them fall outside the existing regulatory and supervisory framework partly or completely, i.e. outside the powers of central banks, hampering the performance of the basic central bank task related to the smooth execution of payments. Therefore, in order to control market developments, central banks throughout the world participate in an increasingly active manner in the initiation, shaping as well as coordination of development projects related to payments. There are various related areas, starting from regulation, through the supporting of innovation and competition under controlled circumstances, to direct intervention into development processes. As a result of technological development, which already allows central banks to keep separate accounts
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