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1. European Financial Policy: Context and Objectives

The European Union is undergoing a phase of profound reforms in the financial sector, with the aim of combining stability, competitiveness, and innovation.


Between 2024 and 2026, fundamental changes will take shape: the new fiscal framework, the full application of Basel III, the start of crypto-asset regulation (MiCA), the entry into force of the DORA regulation for digital resilience, the strengthening of anti-money laundering rules with the new European Authority (AMLA), and a growing commitment to sustainable finance.

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This evolution responds to three strategic priorities:

  • Financial Stability: Strengthen banks, markets, and common rules to prevent crises.

  • Sustainability: Integrate ESG factors into economic and financial decisions.

  • Digital Innovation: Clearly regulate new instruments (crypto, DLT, digital payments).

  • Key Updates and Milestones:

    • March 2024: AIFMD II strengthens the regulation of alternative funds.

    • June-December 2024: Final phases of MiCA implementation on crypto-assets.

    • January 2025: Application of the new prudential regime (CRD VI/CRR III) for banks. DORA enters into force for ICT risk management in financial services.

    • March 2025: The European Anti-Money Laundering Authority (AMLA) becomes operational.

    • Q2 2025: Proposal on PSD3 for payment services expected.

    • April 2026: Deadline for transposition of AIFMD II.

    • July 2026: Deadline for transposition of the anti-money laundering package (AMLD VI).

    • Biennium 2025-2026: Implementation of the new fiscal rules (reformed Stability Pact), with monitoring of objectives via MTFSP.

2. Fiscal Framework and New Budgetary Rules

The reform of the Stability Pact, which entered into force in 2024, introduces an approach based on national medium-term plans for debt reduction and expenditure management.


The historical objectives remain (deficit below 3% and debt close to 60% of GDP), but with greater flexibility and attention to investments.

  • Monitoring will be entrusted to the new Medium-Term Fiscal Structural Plans (MTFSP), with transparency tools that strengthen trust between Member States and markets.

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3. Basel III and Prudential Requirements

The Basel III package (via CRR III Regulation and CRD VI Directive, published on 19 June 2024) aims to strengthen the solidity of the European banking system, reducing the probability of systemic crises and harmonising rules between Member States. Supervision and competition conditions are standardised, with particular attention to the management of emerging risks, including ESG (environmental, social, and governance) risks.

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Main Objectives

  • Strengthening the resilience of the banking sector and greater financial stability.

  • Reduction of variability in capital requirements between banks and EU countries, improving comparability and transparency.

  • Progressive integration of ESG risks into the prudential framework, with EBA guidelines and revision of risk models.

  • Strengthening of powers and harmonisation in supervision, including the regulation of branches of non-EU banks.

  • The main novelties

    • Output Floor: Introduction of a minimum constraint on capital calculated with internal models, at least 72.5% of that required by the standardised method. It will be applied progressively: starting from 50% in 2025 and reaching 72.5% in 2030, to reduce unjustified variability between banking institutions.

    • Operational Risk: New standardised method that more sensitively accounts for historical losses incurred by banks.

    • ESG Risks: Progressive integration of environmental, social, and governance factors, both as credit risks and as information obligations, within the prudential framework. The EBA will provide dedicated technical standards and guidelines.

    • Market Risk (FRTB) and CVA: The new framework for market risks will be operational from 2026, with updates also to credit valuation adjustment (CVA) risk requirements.

    • Supervision of branches of non-EU banks: Strengthening of the regulation for branches of third-country banks operating in the EU, to ensure a level playing field and transparency.

    • Proportionality: Smaller and local banks request and obtain various forms of simplification (calibration of requirements), to avoid excessive burdens relative to their operational size.

    • New requirements on crypto-assets and shadow banking: Provisions introduced to complete the prudential framework, also for emerging phenomena.

     

    Implementation Timeline

    • 9 July 2024: Formal entry into force of the CRR III / CRD VI texts.

    • 1 January 2025: General application of the new CRR III rules (some provisions already apply from July 2024).

    • 1 January 2026: Start of the new framework for market risks (FRTB) and the CVA component.

    • 10 January 2026: Deadline for the national transposition of the CRD VI Directive by Member States, with some specific exceptions.

    • 11 January 2027: Full application of the rules for branches of third-country banks.

     

    For Italy, the challenge is to reconcile the strengthening of stability with the need not to excessively constrain the capacity to provide credit to households and SMEs, monitoring the effects of the new rules on growth and the national productive system.

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4. Digitalisation of Finance (MiCA, DORA, DLT, PSD3)

Digitalisation is now an integral part of European finance. The EU has adopted a regulatory package governing crypto-assets, digital resilience, and payment services, with the aim of fostering innovation and trust.

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  • MiCA (Markets in Crypto-Assets): Rules for crypto-assets and stablecoins.

  • DORA (Digital Operational Resilience Act): In force from January 2025, imposes requirements for ICT risk management.

  • DLT Pilot Regime: Experimentation for market infrastructures based on blockchain technology.

  • PSD3 (Payment Services Directive 3): The proposal will strengthen European open banking.

    • MiCA (Markets in Crypto-Assets Regulation)

      • Defines a uniform legal framework for crypto assets, stablecoins, and crypto service providers.

      • Introduces authorisation, governance, and transparency requirements for issuers.

      • Strengthens investor protection and financial stability, reducing the risks of fraud and speculation.

      • Application was gradual between June and December 2024, as planned.

      • Link to the Regulation

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    • DORA (Digital Operational Resilience Act)

      • In force from 17 January 2025.

      • Establishes a single legal framework for the management of ICT risks in the financial sector, which includes banks, insurers, fintechs, and other financial operators.

      • Includes obligations for ICT risk management, resilience testing (including penetration tests), mandatory notification of significant incidents, and regulation of critical third-party providers such as cloud and data centres.

      • Key objective: Ensure the operational continuity of the European financial system even in the face of serious incidents or cyber-attacks.

      • The regulation involves over 20 categories of financial entities and provides for sanctions for non-compliance.

      • Detailed technical standards (RTS and ITS) are foreseen, entering into force progressively in 2024-2025 with the support of the European Commission and Supervisory Authorities (EBA, ESMA, EIOPA).

      • Link to the Regulation

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    • DLT Pilot Regime

      • Experimental regulation for the use of blockchain technology in market infrastructures (e.g., trading and settlement of securities).

      • In force until 2026, with the possibility of extension or transformation into a permanent regime.

      • Aims to test new solutions without compromising market stability.

      • Link

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    • PSD3 (Payment Services Directive 3)

      • Will update and expand the regulatory framework for payment services, focusing on open banking, interoperability, security, and consumer rights.

      • The objective is to stimulate innovation in digital financial services, increase competition, and improve transparency, with impacts on banks, fintechs, and SMEs.

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    Implications for banks, fintechs, and SMEs

    • Opportunities for innovation and new business models.

    • Need to adapt to more stringent compliance requirements.

    • Potential increase in competition and transparency in digital financial services.

5. Alternative Investment Funds (AIFMD II)

The  AIFMD II  directive, which entered into force in March 2024, represents a significant update to the European regulatory framework for alternative investment funds (hedge funds, private equity, real estate funds, credit funds, etc.).


The objective is to strengthen investor protection, improve risk management, and promote more harmonised supervision at the European level.

  • The main novelties introduced by the directive include:

    • Liquidity Risk Management

      • Strengthened stress testing obligations and plans for managing liquidity crises.

      • Specific supervision for funds investing in illiquid assets (e.g., real estate, infrastructure).

    • Loan-originating funds

      • New rules for funds that grant loans directly to companies.

      • Limits on the level of leverage.

      • Requirements to ensure that loans are granted prudently and do not destabilise markets.

    • Depositaries and Sub-depositaries

      • Strengthened role of depositaries, with greater clarity on responsibilities.

      • Opening, under certain conditions, to the possibility of appointing depositaries in Member States other than that of the manager (cross-border depository regime).

    • Transparency and Reporting

      • More detailed information on investments, risks, and costs, for the benefit of institutional investors.

      • Stricter notification obligations towards national authorities and ESMA.

    • Cross-border Cooperation

      • Strengthening of cross-border supervision and coordination between Member States.

      • Objective: Reduce regulatory arbitrage and increase the coherence of the European fund market.

     

    Timeline

    • March 2024: Entry into force of the directive.

    • April 2026: Deadline for transposition by Member States.

     

    Implications

    • For managers: Increased compliance obligations, particularly for those managing credit funds.

    • For investors: Greater guarantees of transparency and protection.

    • For markets: A more harmonised and stable framework, favouring European integration.

6. Anti-Money Laundering and the European Authority AMLA

The European anti-money laundering package, composed of the sixth anti-money laundering directive (AMLD VI) and the AML regulation (AMLR), establishes a single, harmonised framework for the prevention of money laundering and terrorist financing, aiming to fill the gaps of the previous fragmented national system.

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The Anti-Money Laundering Authority (AMLA) is a new decentralised agency of the European Union, headquartered in Frankfurt, operational from 1 July 2025.

  • AMLA has the task of directly supervising high-risk cross-border financial operators, with powers of immediate intervention in case of acute danger.


    It coordinates and harmonises the implementation of AML/CFT rules among the competent national authorities, facilitating cooperation and information exchange.


    AMLA works in synergy with the Financial Intelligence Units (FIUs) of the Member States to enhance joint analysis and the management of money laundering and terrorist financing cases.

Main novelties and key points of the AML package

  • Introduction of a Single Rulebook that replaces divergent national regulations with uniform rules directly applicable across the EU.

  • Strengthening of transparency obligations, access to centralised registers (e.g., bank accounts, beneficial owners), and cooperation between authorities.

  • The extension of the scope of AML/CFT obligations includes new sectors and categories of operators (for example, football professionals).

  • Introduction of limits and greater obligations for cash operations and crypto-asset transfers, with identification obligations above certain thresholds (e.g., crypto transactions ≥ €1000).

  • The deadline for the full implementation of the national directives and regulations is set for 10 July 2027, with some derogations for specific areas such as real estate registers (by 2029).


    AMLA will progressively expand its direct supervision activity, starting with around 40 high-risk institutions from 2028, while currently it mainly exercises coordination and harmonisation functions.


    The AML package and the creation of AMLA represent a qualitative leap towards a single, more effective and less fragmented European system, with significant impacts for financial operators, non-financial entities, and supervisory authorities.

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    For more information click here.

7. Capital Markets Union and Regulatory Simplification

Capital Markets Union and Regulatory Simplification

The project of  Capital Markets Union (CMU), launched in 2015 and now in a relaunch phase, is central to integrating European financial markets and reducing regulatory fragmentation between Member States.


The 2025 - 2026 biennium will be decisive: the European Commission and the Council have set ambitious objectives to strengthen access to capital, particularly for SMEs and growing companies, and to simplify rules for the benefit of financial operators.

  • The main axes of European action are:

    • Access to capital for SMEs and innovative companies

      • Creation of a new category of "mid cap" companies (companies of intermediate size between SMEs and large corporations), with proportionate regulatory requirements.

      • Revision of listing rules to make admission to regulated markets and multilateral trading facilities simpler and less burdensome.

      • Tax incentives and dedicated instruments to channel private savings towards productive investments.

    • Regulatory simplification and reduction of bureaucracy

      • Introduction of an SME Listing Act with ad hoc rules for listed SMEs.

      • Reduction of duplicate reporting obligations and simplification of prospectuses.

      • Development of digital tools to standardise and automate procedures, in line with the "digital by default" principle.

    • Single Institutional Unit (SIU) and integrated governance

      • Creation of a common institutional unit at EU level to coordinate and simplify supervision processes, reducing divergences between Member States.

      • Strengthening the role of ESMA in cross-border supervision.

      • Promotion of more uniform rules on insolvency and taxation of financial products.

    • Strategic autonomy and reduction of external dependencies

      • Strengthening European financial infrastructures to reduce dependence on non-EU markets (particularly the UK and USA).

      • Initiatives to strengthen euro capital markets, with more attractive instruments for global investors.

     

    Timeline

    • 2025: Legislative package for CMU 2.0, including measures on SME listing and prospectus simplification.

    • 2026: Full implementation of the reforms with transposition by Member States and first assessments of the impact of the "mid cap" category.

     

    Implications

    • For Italian SMEs: Greater opportunities for financing through capital markets, with less dependence on bank credit.

    • For investors: More transparency and diversification of investment opportunities.

    • For the European market: Towards an integrated, competitive, and resilient ecosystem, capable of retaining capital in Europe and financing the green and digital transitions.

8. Sustainable Finance and ESG Reporting

The European Union is recognised as a global leader in sustainable finance regulation. Through an integrated set of regulatory instruments –  CSRD (Corporate Sustainability Reporting Directive), SFDR  (Sustainable Finance Disclosure Regulation) and the EU Green Taxonomy   – the EU directs capital towards sustainable activities, favouring the green and digital transition.

  • The main regulatory directions:

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    Corporate Sustainability Reporting Directive (CSRD)
    Significantly extends sustainability reporting obligations to European companies, involving large companies, listed companies, and progressively until 2028, listed SMEs. The directive requires compliance with the new European Sustainability Reporting Standards (ESRS), with key indicators on emissions, governance, social rights, diversity, and supply chains. In 2025, an Omnibus package of simplifications and extensions is expected, which will lighten the burden for companies, particularly SMEs.

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    Sustainable Finance Disclosure Regulation (SFDR)
    Obliges fund managers and institutional investors to classify products based on their degree of sustainability (Article 6, 8, or 9), increasing their transparency towards end investors. A review is underway to improve its clarity, comparability, and effectiveness against greenwashing.

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    EU Green Taxonomy
    Establishes common criteria to define whether an economic activity is environmentally sustainable, covering key sectors such as energy, construction, transport, and manufacturing. Recent 2025 updates introduce simplifications for reporting, greater proportionality, and the possibility of reporting "partial alignments" for companies in the process of environmental transition.

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    Proportionality and impacts on SMEs
    The Commission has adopted specific measures to simplify ESG reporting obligations for SMEs, reducing costs and complexity while maintaining the ambition of the climate and social objectives.

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    Application Timeline

    • 2024: Start of obligations for large companies already subject to the NFRD.

    • 2025–2027: Progressive extension to other operators.

    • 2028: Full application of the CSRD to listed SMEs.

     

    Implications
    For companies, increased transparency and investments in data collection systems and ESG governance. For investors, more reliable information to direct capital towards sustainable activities. For the European market, consolidation of global leadership in the green economy, supporting the Green Deal and climate neutrality by 2050.

Further insights on the financial dossier and useful links:

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