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The economic and financial crisis, especially the sovereign debt crisis, discovered many deficiencies and weaknesses in the banking sector in the European Union (EU). The need for special surveillance and supervision of cross-border banking cooperation and termination of the toxic link between sovereign debt and banking sector have accelerated the process of forming and establishing a Banking Union (BU). An integrated financial framework has been established in which the European Central Bank (ECB) through the Single Supervisory Mechanism (SSM) has a key role and the responsibility for the overall supervision of the banking sector of the euro zone. The Single Resolution Mechanism (SRM) and schemes of the Single Deposit Guarantee Mechanism (SDGM) are under the national supervisory authorities while the European Banking Authority (EBA) is responsible for developing the Single Rules. From the new architecture is expected the preservation of the single market and a common currency, breaking “toxic connections” between sovereign debt and banks, mitigation and removal of financial instability and economic growth. The research shows that the BU together with the ECB in a certain sense, also contributes to the normalization of credit and financial conditions in the single mark. Estimates through SSM, conducted by the ECB and the EBA, during, 2014 and 2015 on 107 banks in 21 countries indicate progress toward solvency and resilience of the banking system of the euro area. Despite some initial success the entire project BU seems to have missed on opportunities, resulted in late reactions, and was too complex to be feasible. The political will of national governments to give up sovereignty over its banking sector and transfer competencies to the supranational institutions is a key factor in the success or failure of a BU. It seems so but past experience indicates that there is no political willingness to solve problems. Mainly most of the government avoids cleaning a hidden “skeleton in closets” due to lack of means for recapitalization while some are trying for loans from the ECB to help their banks. The ECB plays a key oversight role at the EU level and has too much power, which can cause risks caused by conflicting goals. The ECB is losing the role of the final refuge of liquidity, which is the main disadvantage of a BU. The SSM is susceptible to criticism due to difficulty in operation because of slow incorporation of European legislation into national law. Slow implementation carries risks of fragmentation of the market, regardless of the responsibility of the ECB. The financial capacity of the temporary agreement with the SRM is insufficient in solving the crisis of more banks while procedural application is complex and time-consuming. Planned backstop with a centralized resource is a resolution that is insufficient for solving the failure of big systemic banks, which are too big to bail. The heterogeneity of the existing Deposit Guarantee Schemes (DGS) and the banking systems of the member states of the euro zone caused controversy in terms of setting of common insurance schemes. The procedures for the recovery and resolution of critical banks are problematic.

Product intervention power is introduced under the markets in financial instruments regulation (MiFIR) and packaged retail and insurance-based investment products (PRIIPs) Regulation for all EU Member States and gives National Competent Authorities (NCAs), European Securities and Markets Authority (ESMA), and European Banking Authority (EBA) powers to monitor financial products (and services) under their supervision and to “temporarily” prohibit or restrict the marketing, distribution, or sale of certain financial instruments, or to intervene in relation to certain financial activities or practice. This extends the supervisory measures defined in MiFID II to any PRIIPs (including insurance-based investment products “IBI products”) that would not otherwise fall under the scope of MiFID II. Product intervention power is given to the NCAs, and in order to use power, it requires to take the specifics of the individual case into account and a series of conditions, criteria, and factors to fulfill. Moreover, ESMA and the EBA have a type of control function and ability to override national regulators on product. The aim of product intervention powers is to ensure strengthening of investor protection, but given the potential significant impact of this power, calls into question of possibility to delay innovation and slow down product developments on the capital market.

This paper provided an overview of supervisory measures on product intervention, that is, scope of the product intervention power, criteria, factors, and risks which have to be taken into consideration when using this regulator’s tool.

The purpose of this chapter is to determine the future trends in the retail payment market in Malta, and the manner in which the major stakeholders are set to respond to the potential that innovative technology within this area is unlocking. Stakeholders strive to keep abreast with developments within this ambit, in pursuit of implementing a proactive approach within their respective roles.

The objective of this study is achieved through a series of semi-structured interviews with the major stakeholders in the local retail payment market, mainly Financial Services Regulators, Supervisors and overseers as well as the Maltese Financial Services licence holders.

The evolution in the retail payment landscape witnessed in recent years exposes immeasurable challenges to Malta’s financial services sector and the economy at large. The conclusions derived from this research dovetail with the thorough literature review conducted, in exploring the manner in which such trends are envisaged to unfold within this sector. This study explores the legislative framework and regulatory regime, both current and proposed, which lay the foundations for the interplay between the respective stakeholders.

This study reveals the approach taken by the various stakeholders, as they each respond to such developments in the retail payment sphere. These are predominately driven by market forces endowed with a mix of opportunities, as each stakeholder strives to remain resilient towards future industry challenges. This research is conducive towards enhancing the much needed clarity and awareness in the local retail payment market, and promotes the use of innovative, secure and cost-efficient retail payment methods.

In the last decades, many of the most talented and promising young graduates in the developed economies have joined the financial industry. Simultaneously, ill-designed incentives’ schemes have favored the development of a culture in which excessive greed, free-riders’ behavior, unreasonable appetite for risk, and short-term decision making have endangered the economy and, potentially, have laid the foundations for financial, economic, social, and environmental crises.

In this chapter, we review current challenges in the financial industry from the lens of human and social capital. We examine some of the factors that allowed unethical behavior and a short-term financial focus in the financial sector, examining how compensation and an extremely competitive culture became key elements that favored greedy and manipulative behavior and ultimately generated socially harmful human and social capital in the financial sector. Finally, we discuss the emergence of a number of game-changers (namely, Brexit, FinTech, the growing relevance of ethical standards, and the increasing participation of women and millennials in the industry) that might represent potential promotors of change and help restructure and reshape the financial industry.

The hefty fines levied on credit institutions in recent years for cases of misconduct, including poor behavioural standards, operational control deficiencies and regulatory breaches more broadly, has been defined by regulatory authorities and the financial sector more broadly as ‘conduct risk’. There is no official definition of conduct risk, as conduct risk profiles are unique to each firm and, therefore, there can never be a one-size-fits-all framework in place. Conceptually, conduct risk is a broad notion that touches every part of an enterprise framework, including culture, customer contact, corporate governance, ethics and integrity, conflicts of interest and compliance, amongst others. As a result, credit institutions tend to associate conduct risk with regulatory censure, financial detriment, poor customer outcomes, and, importantly, reputational damage. In light of the significant consequences of misconduct, recent regulatory measures have sought to specifically target these drivers. In this chapter the author discussed the regulatory spotlight on conduct risk, which continues to top the regulators’ agenda in view of its seriousness and considered the role of the board in managing conduct risk, whilst elaborating on the importance of board evaluations in this respect.

This chapter introduces the fundamentals of portfolio and financial consumer protection from frauds in the cryptoasset space. Cryptoassets pose new risks to portfolios and financial consumers: idiosyncratic risks stemming from their unique features and systematic risks arising from transitioning from centralized to decentralized finance. Market experience indicates that these risks threaten every portfolio and financial consumer holding cryptoassets. In the consumer protection framework, cryptoasset risks are higher than traditional asset risks. Cryptoassets fall outside the regulatory domain in many jurisdictions. Moreover, their decentralized nature, technological attributes, and the momentum of financial technology cause asymmetric technology, disarming system-based portfolio and consumer protection mechanisms against frauds and abuses. Hence, the idiosyncratic and systematic risks of cryptoassets highlight the importance of developing more vigilant self-protection mechanisms.