Trust and security are paramount for the financial sector, especially with digital technologies and the set of challenges it presents. Whilst new technologies have raised safety concerns, they can also present solutions. An example of this technology is blockchain. The distributed ledger technology's transparency, decentralized nature and security offer advantages for financial data security.
Blockchain and the European Union
Financial institutions and regulators, and intergovernmental organisations understand the significance of blockchain technology. The European Union has several initiatives and programmes that have blockchain at the centre. Recognising the potential of blockchain, the European Commission unveiled its Blockchain Strategy in 2018. This strategy aims to harness the technology's potential to drive innovation and efficiency across various sectors, including finance. It also aims to establish a gold standard for blockchain in Europe, which includes cybersecurity and data protection. The strategy focuses on funding research and development projects; creating a regulatory framework that fosters innovation while mitigating potential risks and collaborating with international partners to develop global standards for blockchain technology.
Building the Infrastructure: EBSI and the EU Blockchain Observatory and Forum
In addition to the Blockchain Strategy, the EU has established two key initiatives. The first is the European Blockchain Services Infrastructure (EBSI). The EBSI is a project of the European Blockchain Partnership, whose membership includes the 27 EU member countries, Norway, Liechtenstein and the European Commission. It aims to create a shared infrastructure for public administrations across Europe to develop and deploy blockchain-based services, and its case uses include the financing of small and medium-sized enterprises (SME) through the peer-to-peer network.
The second initiative is the European Union Blockchain Observatory and Forum. The forum acts as a central hub for different stakeholders in industry, academia, and policymakers to discuss blockchain developments, promote knowledge building, identify emerging challenges and support Europe as a global leader in blockchain technology. While not directly connected to finance, the Forum produces reports, conducts workshops and hosts in-person and virtual forums. All these activities promote the adoption and development of blockchain and its usage for public services, education, governance and finance.
The Future of Blockchain in Europe
Blockchain technology is still in its early stages, but its potential to transform financial data security is undeniable. By promoting innovation and collaboration, the European Commission's initiatives are paving the way for a more secure and trustworthy digital financial landscape. As blockchain continues to evolve, we can expect even more exciting applications that empower individuals and institutions to manage their financial data with confidence.
Photo by Shubham Dhage on Unsplash
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