Statement by Mr. Boyko Atanasov, Chairman of the Financial Supervision Commission in the quarterly bulletin of the Association of Banks in Bulgaria

Financial Supervision Commission – committed to sustainable results in digitalisation, green investments and regulatory amendments

Boyko Atanasov

In the context of post-Covid pandemic, the global digitalisation, the European Green deal, the outbreak of military actions in Ukraine, and on the threshold of our accession to the Eurozone, the Financial Supervision Commission  (FSC) continues to work for the continuous stability of the insurance market in Bulgaria, for establishing innovations in the regulation of capital markets, as well as, for complete austerity measures and absolute transparency of the actions and processes of the pension insurance market.
The development trend of the capital market is in the direction of digitalization and creation of conditions for more participants and reduced administrative burden. The positive interconnection between innovation and financial technology has already changed the appearance of the typical consumer behaviour and thinking, and this process has led to new opportunities for the implementation of optimized business models. At the same time, we, the financial sector participants, have the mission to analyse and forecast the potential risks. In this direction precisely, the FSC focuses its activity to balance between the promotion of innovation by the investment companies and the consumers’ protection from the negative aspects that the new online space implies.
In view of achieving results regarding the adopted development strategy, the Financial Supervision Commission went through specific steps such as evolving the financial literacy of the financial services’ consumers and investors, improving the communication process by holding regular meetings with FinTech companies to discuss minimum risks and maximum benefits from technology, promoting development of startup companies by activating the possibilities of the created Innovation Hub, as well as, adapting the new regulatory framework for collective financing. Together with the participants of the non-banking financial sector, we create a sustainable and favourable environment for innovative business with an emphasis on the need for partnership between the national regulator and the business.
Dynamics in technology development and digitalisation play a key role in changing consumer attitudes and growth expectations. The role of the FSC is to provoke the achievement of synchronicity between the regulatory requirements and their implementation in the digital environment, with the ultimate goal being to reduce the administrative burden. Part of the concrete results are the functioning Innovation Hub, the providing of a single point of contact with FinTech companies and the amended regulations for accessibility of small and medium enterprises to the capital markets. The mobile application of the FSC, the establishment of a unified information system for submitting and receiving information from supervised entities in electronic standardized format are in the process of creation.
One of the most important developments in the current situation is the proposal of the European Commission to introduce the European single access point (ESAP), the framework, which would integrate innovations in order to reduce administrative burdens. Its aim is to provide centralised public access to all the necessary information in terms of financial services. The ESAP aims at providing easy, fast and comparable access to data on European companies for the investors, thus facilitating the access to financing of European companies. ESAP is expected to contribute to the further integration of financial services and capital markets within the EU single market and to promote the development of smaller national capital markets and economies by providing greater visibility for them. FSC, in line with the European Commission, will ensure the application of the future legislation and will create conditions for the realization of the ESAP project.
The “Green deal” is another topic of great importance for both FSC and the EU. Environment, social responsibility and transparent governance are already an integral part of the strategic programs of the institutions and regulators in Europe. In accordance with the objectives of the EU, at national level FSC provides support through concrete actions in directing national and European financing sources for more sustainable economy, planning instruments for post-crisis business recoveries and balancing regional development.
I do believe, and I see the concrete results, that the Bulgarian regulator in the non-banking financial sector strategically arranges its actions in supporting the achievement of the "Green Deal" goals. In this line of thinking, all of us, as a society, have the responsibility of focusing on renewable energy, energy efficiency, green buildings, clean transport and products created by the circular economy. Following the adoption of the European Green Deal, FSC's focus will be on financial risks to institutions and the financial system, as well as on sustainability risk (ESG risks).
When it comes to achieving sustainable targets, examples are always important. Green bonds are an appropriate financial instrument for large-scale sustainability projects, by giving access to a stable instrument for financing EU-taxonomy compliant green projects. On the other hand, investors in such bonds will be able to more easily assess and compare the sustainability of their investments, which will reduce risks and strengthen their confidence in the market. The new EUGBS voluntary standard will be open to all EU and non-EU issuers, including corporations, financial institutions and issuers of covered bonds and asset-backed securities, as well as governments and other public authorities.
In this regard, the challenges for the FSC to exercise its supervisory powers over capital market participants in compliance with the requirements set out in the Sustainable Finance Legislation Package, namely the Sustainable Finance Disclosure Regulation (SFDR), the Climate Benchmarks Regulation and the Taxonomy Regulation, are essential.
FSC is also a major participant in the process of creating the National Plan for the Introduction of the Euro in Bulgaria. The vision of FSC for this key process for the Bulgarian economy includes systematization of the necessary measures and actions in connection with the currency conversion of financial instruments. We intend to carry out the necessary monitoring of the expected stages for the adaptation of the clearing and settlement systems to work with the euro.
In the context of the current complicated international situation caused by the war in Ukraine, as well as the sanctions and restrictions imposed by the EU, USA, Canada and UK, upon the Russian Federation, the Russian Central Bank, and on various credit institutions, companies and natural persons, the FSC took prompt measures, whereat it published recommendations and guidelines addressed to the investment, insurance and social insurance sectors, through which it demanded from them to exercise extreme caution and perform intensive risk management policy before start investing in financial instruments issued by issuers connected to the Russian Federation.
The challenges we rise to, provoke our caution and concentration when trying to attain the goals set in order to enhance the consumer protection as well as to encourage the investors in a stable, well-regulated and transparent non-banking financial sector.
Against the background of this worldwide transformation, the FSC commences a new strategic period from 2022 to 2024. The change for the regulatory body includes long-term planning, a strong expert team, as well as decisiveness for developing innovations in the sphere of digitalization and the regulations on capital market development. The whole process will go along with a constructive dialogue which is planned to be conducted with all interested parties in the processes regulated by the FSC.
An important aspect of the development of the Bulgarian capital, insurance and social insurance market relates to the active and effective business communication aimed at developing conceptions and sustainable strategies. The goal we pursue is to provide predictability of our actions and to act impartially when taking decisions concerning the development of Bulgaria.