The European Commission and several European countries have acknowledged the importance of open standards and have taken various initiatives for addressing specific challenges. Formal standards (e.g. from ISO) are often referred to in software development and procurement. However, there is a lack of knowledge concerning use of formal and open standards in national policy and implications for implementation in software. This paper characterises how requirements for open standards have been adopted in national policy, elaborates on conditions for use of formal standards in scenarios when national policy imposes requirements for use of open standards, and elaborates conditions for implementation of specific open and formal standards in open source software. It is shown that not all formal standards are open standards. Specifically, while some formal standards (e.g. the ISO standard for PNG) are also considered open standards according to the definition adopted in national policies for open standards, it is also clear that other formal standards (e.g. the ISO standard for JPEG 2000) are not considered open standards by the same policies. Use of such formal standards creates barriers for implementation in open source software and inhibits an open and inclusive business friendly ecosystem, something which is of particular importance for small companies that are essential players in an innovative and international society.