Global Trustee and Fiduciary Services Bite-Sized Issue 8 2023

Global Trustee and Fiduciary Services Bite-Sized | Issue 8 | 2023 2 QUICK LINKS ANTI-MONEY LAUNDERING CBDC COSTS & CHARGES CRYPTOASSETS CULTURE & CONDUCT CYBERSECURITY EMIR FINTECH FSB FUND LIQUIDITY MIFID II/MIFIR SUSTAINABLE FINANCE/ ESG AUSTRALIA ASIA IRELAND NORTH AMERICA UNITED KINGDOM CBDC Lessons Learnt on CBDCs On 11 July 2023 the Bank for International Settlements (BIS) published a report, which was submitted to the G20 finance ministers and central bank governors, showing how the BIS Innovation Hub is helping central banks on their central bank digital currency (CBDC) journeys and discusses the lessons learnt so far. The BIS Innovation Hub has conducted 12 CBDC projects that cover retail and wholesale, both in a domestic and cross-border context. For domestic use cases, two projects investigate wholesale CBDC (wCBDC) and five look at retail CBDC (rCBDC). Across borders, four experiments look at wCBDC and one looks at rCBDC. For each category, the key insights and lessons learnt are presented from the perspectives of desirability, feasibility and viability. For the different types of CBDC the report finds: • Wholesale CBDCs will be driven by the public and private sector’s quest to shape the future of trading and settlement. • A retail CBDC is a complex undertaking, and not only for the central banks. The Hub’s projects focus on individual aspects to shed light on these complexities. In particular, they are experimenting with (i) the most promising CBDC model, a two-tier model with public-private partnership; (ii) the most fundamental feature, privacy, and (iii) the greatest challenge, cyber security. • Cross-border CBDC arrangements are novel territory, and more complicated than their domestic counterparts. Common platforms are likely to have more upside and bring potential operational efficiencies compared with current arrangements, but hub-and-spoke designs provide more flexibility for domestic systems and are thus easier to contemplate at least in the short run. By leveraging new technologies, central banks can provide new solutions to many “old” operational challenges and policy questions. Link to the Report here Making Headway – Results of the 2022 BIS Survey on Central Bank Digital Currencies and Crypto On 10 July 2023 BIS published a paper summarising the findings of its latest survey of central banks on their views and plans regarding CBDCs. The responses from 86 central banks show that the proportion engaged in some form of CBDC work has risen to 93% and that the work on retail CBDC is more advanced than on wholesale CBDC. In addition, the paper shows that most central banks see potential value in having both a retail CBDC and a fast payment system, and that there could be 15 retail and nine wholesale CBDCs publicly circulating in 2030. The survey further shows that, to date, stablecoins and other cryptoassets are rarely used for payments outside the crypto ecosystem. Link to the Paper here COSTS & CHARGES ESMA Highlights Areas for Improvement in Firms’ Disclosure of Cost and Charges Under MIFID On 6 July 2023 the European Securities and Markets Authority (ESMA) published a Statement on its 2022 Common Supervisory Action (CSA) and on the mystery shopping exercise regarding compliance with disclosure requirements for costs and charges under MIFID II. Overall, ESMA found that firms comply with most of the elements of the ex-post cost and charges requirements under MiFID II. This level of compliance varies across Member States. The CSA exercise revealed certain shortcomings in information provided to retail clients and suggests areas for improvement regarding both disclosure format and content.