Economic Archives | Page 2 of 695 | Digital Watch Observatory

European Commission fines Temu €200 million under DSA

The European Commission has imposed a €200 million fine on Temu after finding that the online marketplace breached obligations under the Digital Services Act by failing to properly assess and mitigate systemic risks linked to illegal products sold to consumers in the EU.

According to the Commission, Temu’s 2024 risk assessment did not meet DSA requirements because it relied on general information about the wider e-commerce sector rather than evidence specific to its own platform. Regulators also found that the company significantly underestimated the likelihood that the EU consumers would encounter illegal or unsafe products.

The investigation drew on mystery shopping exercises and information from customs and market surveillance authorities. Findings included chargers that failed basic safety requirements and baby toys that contained chemicals above legal limits or presented choking hazards.

Regulators also criticised Temu for failing to sufficiently assess how recommender systems and influencer promotion programmes could contribute to the spread of illegal products on the platform.

Temu must now submit a detailed action plan explaining how it will address the shortcomings identified by the Commission. The plan will be reviewed with the European Board for Digital Services before implementation requirements are set. Failure to comply could lead to additional penalties under the DSA.

The decision is part of a wider Commission investigation into Temu, including issues related to potentially addictive design, recommender systems, and data access for researchers.

Why does it matter?

The fine marks one of the most significant enforcement actions under the Digital Services Act against a major online marketplace. It shows that the DSA is being used not only to address illegal content, but also to require platforms to assess and reduce consumer safety risks linked to illegal and unsafe goods. The case reinforces the EU’s focus on proactive risk management by very large online platforms, including how marketplace design, recommendations, and influencer promotion can amplify the reach of harmful products.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

ChatGPT down as users report login and conversation issues

OpenAI reported two resolved incidents affecting ChatGPT on 29 May, following user reports of issues with conversations, logins, and account creation.

The first incident affected users trying to log in or create an account. OpenAI classified the issue as degraded performance affecting ChatGPT and APIs. The company began investigating at 03:12 a.m., applied a mitigation at 03:28 a.m., and marked the incident resolved at 04:57 a.m.

A second incident affected ChatGPT conversations. OpenAI began investigating the issue at 03:18 a.m., applied a mitigation at 03:29 a.m., and marked the incident resolved at 04:58 a.m. The company said all impacted services had fully recovered.

OpenAI’s official status page listed both incidents as degraded performance rather than a full outage. The company did not provide further details on the cause of either disruption in the incident updates.

The brief disruption highlights the growing reliance on AI services for daily work, communication, and software development, as even short periods of degraded performance can affect users and organisations that depend on cloud-based AI tools.

Why does it matter?

The incidents show how widely used AI services are becoming part of everyday digital infrastructure. Even brief login or conversation failures can disrupt work for individuals, developers, businesses, and teams that rely on ChatGPT and related API services.

Would you like to learn more about AI, tech, and digital diplomacy? If so, ask our Diplo chatbot!

European Commission prepares Chips Act 2.0 to boost semiconductor resilience

The European Commission is preparing a Chips Act 2.0 aimed at strengthening Europe’s semiconductor resilience, reducing strategic dependencies, and supporting technological sovereignty.

The initiative builds on earlier legislation introduced after pandemic-related supply chain disruptions, but seeks to address persistent gaps in advanced chip manufacturing and fragmented governance across Member States.

A key focus of the revised framework is expanding Europe’s capacity in advanced semiconductors, particularly chips below 10 nanometres that are used in AI, high-performance computing, defence and advanced automotive systems.

The proposal also aims to improve monitoring of supply chains and market actors, while simplifying regulatory processes and enhancing investment conditions for strategic semiconductor projects.

Alongside production capacity, the initiative is expected to strengthen oversight of supply chain risks and improve crisis preparedness within the EU semiconductor ecosystem. Policymakers have identified limited visibility into supply-chain risks, including technology leakage and dependence on suppliers outside the EU, as a structural weakness.

The initiative is also expected to form part of the EU’s broader digital sovereignty agenda, including support for semiconductor research, chip design capabilities and cross-border industrial coordination.

Why does it matter?

Semiconductors are essential components in technologies ranging from AI systems and telecommunications networks to defence equipment, energy infrastructure and vehicles. The concentration of advanced chip production in a small number of global locations has heightened concerns about supply-chain resilience and strategic dependencies.

By expanding manufacturing capacity and improving oversight of supply chain risks, the EU aims to strengthen its ability to withstand disruptions while supporting long-term competitiveness in a critical technology sector.

Would you like to learn more about AI, tech, and digital diplomacy? If so, ask our chatbot!

ECB warns digital money must evolve to preserve financial stability

The European Central Bank has said central bank money must evolve to remain relevant in an increasingly digital financial system.

Speaking in Frankfurt, Piero Cipollone, Member of the ECB’s Executive Board, said digitalisation is reshaping retail payments, wholesale financial markets, and cross-border payment infrastructure across the euro area. He warned that if central bank money does not adapt to technological change, it risks losing relevance in key parts of the economy, weakening public money’s role as an anchor of stability and increasing fragmentation in the financial system.

Retail payments are becoming more digital and platform-based, while wholesale financial markets are being shaped by tokenisation and distributed ledger technology. Cipollone said digitalisation could help reduce costs and speed up cross-border payments if it is used in a way that avoids further fragmentation.

The ECB’s policy response is built around three areas: preparing for a possible digital euro for retail payments, enabling DLT-based transactions to settle in central bank money, and interlinking fast payment systems to improve global cross-border transactions.

Cipollone said the digital euro would be designed as a digital form of cash for day-to-day retail payments, not as an investment product. He said it would complement physical cash and private payment solutions while ensuring that people retain access to a public digital payment option across the euro area.

For wholesale markets, the ECB said tokenisation could make capital markets more efficient, but only if tokenised settlement assets are available. The Eurosystem plans to allow DLT-based transactions to settle in central bank money from September 2026 through its Pontes project, while its Appia work will develop a longer-term vision for Europe’s tokenised financial ecosystem.

Cross-border payments remain a concern because they are still too slow, costly, and opaque. The ECB said interlinking fast payment systems could help reduce these frictions while protecting the monetary sovereignty of participating jurisdictions.

Why does it matter?

The speech frames digital money as a financial stability and sovereignty issue, not only a payments innovation story. As payments, markets, and cross-border settlement become more digital and tokenised, the ECB wants central bank money to remain the risk-free settlement asset, anchoring trust in the financial system. The message is also a response to the risk that private platforms, stablecoins, and fragmented infrastructures could weaken the uniformity of public money if central banks fail to adapt.

Would you like to learn more about AI, tech, and digital diplomacy? If so, ask our chatbot!

ECB explores AI tools for monitoring financial stability risks

The European Central Bank (ECB) has examined how AI could support financial stability monitoring and communication, comparing traditional dictionary-based sentiment analysis with transformer models and GPT-based systems. The study was published as part of the ECB’s May 2026 Financial Stability Review.

Researchers analysed all ECB Financial Stability Review publications between 2004 and 2025 to evaluate how AI systems interpret financial stability risks and vulnerabilities. The study found that GPT-based models were better able to isolate explicit risk assessments and identify stronger signals during periods of financial stress, including the global financial crisis and the COVID-19 pandemic.

The ECB also introduced its SPOT indicator, an AI-powered system that uses large language models and financial news coverage to assess the severity and probability of potential financial stability triggers. According to the study, the system detected elevated risk levels ahead of several major geopolitical and economic disruptions.

Despite the growing capabilities of AI-based analysis, the ECB stressed that such tools should remain complementary to human expertise, vulnerability analysis and stress testing. The ECB stressed that financial stability assessments cannot rely solely on automated systems because forecasting shocks and systemic crises remains inherently uncertain.

Why does it matter?

Central banks are increasingly exploring AI tools to analyse large volumes of financial reports, market data, and news coverage. The ECB’s findings suggest that advanced AI models could help identify emerging vulnerabilities and support risk monitoring, while also highlighting the continued need for human judgement in assessing complex financial and geopolitical developments.

As financial systems become more interconnected, AI may become an increasingly important component of central bank analytical toolkits.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Financial institutions adopt stricter monitoring than crypto exchanges

A Chainalysis analysis of crypto compliance monitoring shows that transaction surveillance standards across financial institutions and crypto firms have tightened significantly since 2020.

The report says nearly half of organisations onboarded in 2026 now operate at alerting standards that would have placed them among the top 10% for alerting strictness in 2020. Chainalysis said newer entrants are launching with more aggressive Know Your Transaction monitoring configurations, reflecting the maturation of digital asset compliance frameworks.

According to the analysis, traditional financial institutions generally apply stricter detection thresholds than crypto exchanges. Financial institutions set lower dollar-detection floors for both illicit and non-illicit categories, meaning they are alerted for smaller sums and apply a more conservative monitoring approach.

The gap is particularly visible in indirect exposure to non-illicit flows. Chainalysis said crypto exchanges set average alerting minimums of USD 950, compared with USD 150 for traditional financial institutions. For illicit funds, both groups apply tighter thresholds, with exchanges setting alerts from USD 100 and financial institutions from USD 55.

The report also highlights a persistent gap between direct and indirect exposure monitoring. Direct exposure refers to funds arriving immediately from a known illicit source, while indirect exposure covers funds that pass through intermediary addresses before arriving at the final destination. Chainalysis said direct monitoring has become more standardised, but indirect exposure thresholds often remain 10 to 20 times higher than direct thresholds in categories such as ransomware, fraud shops, scams, darknet markets, and sanctioned jurisdictions.

Regional differences also remain. Chainalysis said direct exposure monitoring is broadly uniform across regions, while indirect exposure thresholds vary more significantly. EMEA organisations generally apply the strictest and most concentrated thresholds, while APAC organisations show more lenient and varied configurations.

Chainalysis said the findings show a compliance sector in transition, with stronger direct exposure monitoring but continuing inconsistency in how organisations treat indirect risk.

Why does it matter?

The findings point to a maturing crypto compliance environment, especially as traditional financial institutions expand into digital assets. However, the persistent gap in indirect exposure shows that illicit actors may still find room to exploit inconsistent monitoring practices. As funds move through intermediary wallets and cross-regional networks, calibration of indirect risk controls is becoming a key issue for regulatory defensibility, counterparty due diligence, and institutional trust in digital asset markets.

Would you like to learn more about AI, tech, and digital diplomacy? If so, ask our chatbot!

Argentina bill tightens crypto gambling rules

Argentina’s national government has sent Congress a bill aimed at regulating online gambling, preventing gambling addiction, and blocking financial and technical support for unauthorised betting platforms.

The bill, titled the Law on the Prevention of Gambling Addiction and Regulation of Online Gambling, would coordinate action between several state bodies, including the Central Bank of Argentina, the National Securities Commission, the National Communications Agency, and NIC Argentina.

The proposal would prohibit financial institutions, payment service providers, and virtual asset service providers from offering services to unauthorised gambling operators. It would also allow NIC Argentina to suspend, disable, or remove domains reported by competent authorities in relation to illegal gambling.

The bill also restricts the promotion, sponsorship, and dissemination of illegal gambling platforms across television, radio, public spaces, social networks, and digital environments. Media companies, agencies, and content creators would be required to verify that promoted operators have official authorisation. Measures to protect minors are also included.

Authorised platforms without effective technological systems to identify age and exclude minors would be prohibited from operating financially. The Central Bank would also be required to block money transfers from accounts linked to minors to gambling operators.

The proposal would amend the Criminal Code to introduce prison terms of three to six years for those operating unauthorised betting systems. It would also create a new offence, punishable by two to four years in prison, for those who provide essential financial, technological, advertising, or digital services to unauthorised operators.

The bill follows growing scrutiny of online betting and prediction markets in Argentina and abroad, including earlier action against Polymarket for alleged unlicensed gambling.

Why does it matter?

The proposal shows how governments are targeting the infrastructure that enables illegal online gambling, including payment systems, domain names, advertising channels, and crypto-related services. By including virtual asset service providers, Argentina is treating crypto payment rails as part of the regulated gambling ecosystem when they are used to support unauthorised betting platforms. That could raise compliance expectations for crypto firms, payment providers, media companies, and online platforms.

Would you like to learn more about AI, tech, and digital diplomacy? If so, ask our chatbot!

European digital identity wallets and digital sovereignty discussed at EuroDIG 2026

Participants at EuroDIG 2026 discussed whether the European Digital Identity Wallet (EUDI Wallet) and the proposed EU business wallet could become foundational infrastructure for a more integrated European digital single market.

The session focused on reducing fragmentation in digital identity, trust, and cross-border administrative procedures across Europe. Speakers broadly supported the wallets as tools for simplification and interoperability, while also raising concerns about adoption, implementation, and Europe’s dependence on non-European digital infrastructure.

Nathan Meurens, CTO of EURid, framed the discussion around a central challenge for European integration: despite advances in the single market, digital trust and identity systems remain fragmented across member states.

Norbert Sagstetter, Head of Unit for Digital Identity and Trust at the European Commission, outlined the timeline and objectives of the updated European Digital Identity Framework. He said all EU member states will be required to offer a voluntary European Digital Identity Wallet by the end of 2026 under common technical and legal standards.

According to Sagstetter, the wallet is designed to allow citizens to identify themselves digitally, sign documents, and share verified attributes and official records under user control across both public and private services.

He described the wallet as a response to the growing role of private technology platforms in digital identity management. The framework, he said, aims to provide a citizen-controlled alternative governed by European law and supervised by public authorities.

Sagstetter also highlighted the concept of ‘electronic attestation of attributes,’ which could include digital versions of documents such as driving licences, educational credentials, certificates, and potentially health-related records.

The discussion also focused heavily on the proposed EU business wallet, which remains under negotiation.

Sagstetter argued that companies across Europe still face fragmented identification systems and inconsistent administrative procedures, particularly in cross-border interactions. The business wallet, he said, is intended to enable legally effective exchange of documents and interoperable communication between companies and public administrations.

Benjamin Knirsch of SMEunited said small and medium-sized enterprises continue to face duplicated reporting obligations, fragmented platforms, and repeated verification procedures across Europe. He argued that reusable verified company information and implementation of the once-only principle could significantly reduce administrative burdens for SMEs.

However, Knirsch warned that simplification would fail if interoperability remained partial or uneven. He criticised proposals that would exempt smaller municipalities from participation, arguing that SMEs often interact most frequently with local authorities.

Pedro Oliveira of BusinessEurope also supported the business wallet proposal, describing it as one of the few EU digital initiatives likely to create tangible, practical value for businesses.

Oliveira pointed to fragmented company registration and beneficial ownership systems as examples of existing inefficiencies the wallet could help address. He also suggested future links between the wallet and due diligence obligations, Know Your Customer procedures, product passport systems, and possible EU company identifiers.

Several participants stressed that successful implementation will depend on integrating the wallets with existing infrastructure rather than creating parallel systems.

Jaromir Talir of the Czech registry CZ.NIC described how domain registries have struggled for years with reliable registrant identification, particularly in the context of cybersecurity and regulatory requirements. Talir said large-scale EUDI wallet pilots involving domain registries have already demonstrated use cases including registrant verification, authentication, and proof-of-domain-ownership credentials.

He also noted that some countries, including France and Denmark, already operate wallet-like systems while full certification processes continue.

A major part of the discussion focused on digital sovereignty and Europe’s dependence on foreign technology infrastructure.

Sebastiano Toffoletti of the European DIGITAL SME Alliance warned that wallet deployment still depends heavily on US-controlled mobile operating systems and hyperscale cloud providers. He argued that Europe should not build critical identity infrastructure on systems it does not control.

Toffoletti also suggested that large-scale wallet adoption could help support broader adoption of European digital alternatives by creating new distribution channels for European services.

Other speakers responded that the framework itself remains technologically neutral and does not mandate any specific infrastructure provider.

Meurens argued that the wallet framework could operate on different infrastructures if Europe chose to develop them, while Talir noted that alternative implementations, such as web-based wallets, remain possible.

The discussion also addressed concerns that the wallet ecosystem could ultimately strengthen the role of major technology companies if implementation becomes concentrated among dominant providers.

Vittorio Bertola of Open-Xchange warned that Europe could face two separate risks. Either the wallet fails to achieve adoption, or it succeeds but becomes dependent on large non-European firms capable of operating identity services at scale.

Sagstetter defended the wallet’s public-private model, arguing that successful adoption will require both trusted public oversight and useful private-sector services. He also stressed that Europe is contributing actively to the development of international digital identity standards rather than simply adopting frameworks developed elsewhere.

Several participants emphasised that European digital sovereignty should remain open and collaborative rather than protectionist or isolationist.

Oliveira described the concept as ‘open sovereignty,’ while Meurens argued that reducing vendor lock-in through interoperability, open standards, and diversification should remain the primary objective.

The session concluded with broad agreement that the EUDI wallet and the business wallet could become important infrastructure for the European single market if they achieve interoperability, security, trust, and practical usability.

Participants also agreed that adoption will depend heavily on whether the wallets provide convenient and widely used everyday services while preserving privacy, user control, and legal certainty.

EuroDIG 2026 took place on 26 and 27 May at the Charlemagne Building of the European Commission in Brussels under the theme ‘European Voices for the Future of the Internet – Celebrating 20 Years of .eu and the Beginning of a New Internet Governance Era’.

Digital Watch Observatory followed EuroDIG 2026 through a dedicated event page, featuring session information and reporting from Brussels.

Would you like to learn more about AI, tech and digital diplomacy? If so, ask our Diplo chatbot!

Belarus expands crypto role in financial system with new asset recognition

Belarus has expanded the role of digital assets in its financial system by recognising cryptocurrencies, including Bitcoin, as underlying assets in non-deliverable over-the-counter financial instruments.

The decision, issued by the Council of Ministers and the National Bank of the Republic of Belarus, marks another step in the country’s effort to integrate digital tokens into regulated financial market activity.

The updated framework allows cryptocurrencies, alongside futures, interest rates, stock indices, and other reference assets, to be used in cash-settled contracts rather than through delivery of the underlying asset. Such instruments allow investors to gain exposure to price movements without directly holding the asset itself.

Authorities are positioning the change as a way to expand investment opportunities and deepen the use of digital assets within the wider economy. Belarus has already developed a broader regulatory framework for digital tokens, including rules covering crypto-related banking services, mining, trading, and token operations.

The move reflects a wider trend of bringing crypto exposure into conventional financial structures, rather than treating digital assets as entirely separate from regulated markets. However, the change is narrower than full integration of cryptocurrencies into the financial system, as it applies specifically to their use as reference assets in cash-settled OTC instruments.

Why does it matter?

Belarus’ decision shows how crypto assets are being incorporated into more traditional financial products through regulated exposure rather than direct ownership. The change could broaden access to crypto-linked instruments while keeping settlement within conventional financial channels. It also illustrates a broader regulatory trend in which digital assets are increasingly treated as reference assets for financial contracts, rather than solely as standalone tokens traded on crypto platforms.

Would you like to learn more about AI, tech, and digital diplomacy? If so, ask our chatbot!

US Census Bureau reports higher AI adoption among larger firms

The US Census Bureau has published new findings from its Business Trends and Outlook Survey, showing that AI use among US businesses remained between 17% and 20% from December 2025 to May 2026.

The survey also found that between 20% and 23% of businesses expected to use AI within the next six months. The data were collected between 14 December 2025 and 3 May 2026 and provide a biweekly, nationally representative view of AI implementation across US businesses.

AI adoption was higher among larger firms. Around 37% of businesses with at least 250 employees reported using AI in their operations, while 32% of firms with 100 to 249 employees reported AI use during the data collection period ending 3 May 2026.

The Census Bureau said AI use increased among firms with at least 20 employees between December 2025 and May 2026, but did not change significantly among firms with fewer than 20 employees. Less than 20% of firms with four or fewer employees reported using AI.

Sector-level findings showed that AI use remained above the national average in the Information and Finance and Insurance sectors. As of 3 May 2026, AI use reached 39.7% in Information and 33.9% in Finance and Insurance, compared with a national rate of 19.8%.

Retail Trade businesses reported lower adoption rates, with around 14% currently using AI and about 17% expecting to use it within six months.

The Census Bureau also noted that its updated AI supplement now measures AI use across 15 business functions, including finance, human resources, customer service, marketing, information technology, and research and development. The supplement also examines AI-related operational changes, including training, workflow adjustments, and technology investments.

Would you like to learn more about AI, tech, and digital diplomacy? If so, ask our Diplo chatbot!