ECB supports LEI and enhanced reporting
A recent European Commission (EC) consultation on LEI & enhanced reporting – designed to inform the new EU digital finance strategy – has been considering amendments to the EU regulatory framework in response to rapidly evolving financial-technology landscape.
Many of the technologies used today didn’t exist when current regulations were written. As such, the European Central Bank (ECB) has underlined the importance of effective monitoring in its response to the EC consultation paper.
One clear route to more effective monitoring and uniform application of standards is through the introduction of a real-time European business register, containing information on the structure and identity of institutions via the Legal Entity Identifier (LEI).
The ECB sees mandatory use of identifiers based on internationally recognised global standards as crucial to ensuring that the region reaps the benefit of digitisation. The LEI, alongside unique transaction identifiers (UTIs) and unique product identifiers (UPIs), would help European regulators properly monitor complex international markets, ensuring a level-playing field across the EU and a pan-European application of standards.
The ECB’s strong support for expanded use of LEIs within the EU is interesting and important – although with businesses today often operating globally, effective regulatory monitoring would, eventually, require extensive LEI use to spread beyond Europe’s borders.
Unsurprisingly, we note that there is a need for more comparable and more accessible business reports from private companies, to support improved credit provision, supplier and customer confidence. In other words, there is a need to expand the use of Inline XBRL amongst business registrars.