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In order to compete with the US and China, the EU is making legislative changes to safeguard its climate of innovation. Zosia Wanat reports.

There is a growing awareness in the EU that if it is to join the global race towards innovation and technology leadership, it has to do so now.

In the first quarter of 2018 the community of 28 European countries has intensified its efforts towards making the continent more innovative. In a series of new proposals for regulations, strategies and roadmaps, the European Commission, the EU’s executive body, has taken steps towards creating a friendlier regulatory environment for technologies such as blockchain, artifical intelligence (AI) and financial innovation.

The EU and its member states have for years worked on innovation under umbrella programmes like Horizon 2020 or R&D investments  but now they will try to pull all their resources together.

“There is a good basis for the co-operation but the scale is important. We need to accumulate all the resources: on the European level, the national level and the business level,” said Martin Kern, director at the European Institute for Innovation.

The latest document published by the commission is the EU AI strategy. The document includes the increase of investment in AI research by €20bn by the end of 2020. As access to data is crucial for AI technologies, it also proposed concrete pieces of legislation to open up more data for re-use and measures to make data sharing easier.

Earlier this year, the commission set up a fintech strategy that includes solutions to help businesses across the continent to develop innovative financial services in friendly regulation settings. This includes, for example, gathering good practice on implementation of regulatory sandboxes, regulatory environments favourable for innovation, similar to the scheme introduced by the UK’s Financial Conduct Authority.

Apart from non-binding strategies and recommendations, the action plan enforces a concrete proposal for new legislation regarding crowdfunding, a new method of financing that connects investors and projects . When passed by the Parliament and the council, which represents the member states, the new regulation will introduce a pan-European label that will help European crowdsourcing platforms work cross-border.

The EU has also set up fintech laboratory, where national and european financial authorities will be able to discuss regulatory issues with business, and a blockchain observatory, an initiative to monitor the developments on the distributed ledger systems.

“We want to build on Europe’s substantial talent base and excellent start-ups to become a leading world region that will develop and invest in the rollout of blockchain,” Andrus Ansip, commissioner of the digital single market said in a statement.

One of the reasons for that is the race with Europe’s global competitors, especially the US and China. Europe has seen several start-up success stories, such as Estonian fintech Transferwise, the UK’s Revolut and France’s Blablacar, but it is still the US and Asia that have been leaders in creating the ecosystem for innovation.

Another important reason behind this sudden acceleration is Brexit. For many years the UK has been the center of European start-ups, venture capital, and innovation, especially in the financial sector. With London leaving the EU in March 2019, the EU has had to define its own strategy towards innovation, without the UK on board.

“We’re living in a time of an enormous change and tech progress: there are some global trends that we have to react to,” said Mr Kern. “But also we’re facing the preparation for the next financial perspective, so now is the time to develop things.”

This article is sourced from fDi Magazine
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