Welcome to our Gold Friends weekly e-mail.
Highlights of the week: ECB President Lagarde talked about the recovery seeming to lose momentum as a second Covid wave builds up. The consequences may be profound as a McKinsey survey showed “over half of Europe’s small and medium-sized businesses say they face bankruptcy in the next year if revenues don’t pick up”. However, Parliament seems to be backing away from confronting Council on the EU budget so the Next Generation plan could still operate in 2021. In the meantime, “EU bonds” got off to a cracking start when the Commission issued two bonds totalling €24 billion for the SURE programme – oversubscribed 13 times and contributing a significant foundation for CMU! However, that will require citizen investors to trust financial markets and aspects of the MiFID II review were heavily criticised by ESMA – elaborated in a new CEPS report on opening Pandora’s Box. (Karel Lanoo discussed this with me in the 167th Brussels4Breakfast Zoom – below).
The ludicrous Brexit saga staggered into yet another chapter of negotiations as “Boris” found a discrete way to blink….
Graham Bishop
CSFI’s 167th Brussels4Breakfast yesterday is at www.GrahamBishop.com
Articles from 16 - 22 October
General Financial Policy
ECB's Lagarde: Interview with Le Monde : The second wave of the pandemic in Europe, notably in France, and the resulting new restrictions are adding to the uncertainty and weighing on the recovery. Since the rebound we saw over the summer, the recovery has been uneven, uncertain and incomplete and now risks losing momentum. View Article
European Commission issues first emission of EU SURE social bonds : The European Commission issued a €17 billion inaugural social bond under the EU SURE instrument to help protect jobs and keep people in work. The issuing consisted of two bonds, with €10 billion due for repayment in October 2030 and €7 billion due for repayment in 2040. View Article
Press points by Commissioner Hahn at the press conference on the first issuance of EU social bonds under SURE : As key elements of its joint response, the Union has put in place the so-called SURE programme to support MS's temporary employment schemes – to help people and to help MS, in order to help their citizens to keep their jobs...placing a €17 billion inaugural social bond under the EU SURE instrument. View Article
CEPS: Sovereign debt management in the euro area as a common action problem : This Policy Insight discusses sovereign debt management in the euro area, where the Covid-19 crisis has caused a huge increase in such debts View Article
Vox - Micossi: Managing post-Covid sovereign debts in the euro area : As the world comes to terms with a post-Covid reality, the euro area must confront its growing fiscal and sovereign debts. This column argues that common euro area policies are justified in order to address sovereign debt externalities and risks to financial stability. View Article
Bloomberg: Half of Europe’s Smaller Businesses Risk Bankruptcy Within Year : Over half of Europe’s small and medium-sized businesses say they face bankruptcy in the next year if revenues don’t pick up, underscoring the breadth of damage wrought by the Covid-19 crisis. View Article
POLITICO: Parliament set to climb down in EU budget fight : MEPs under pressure from governments, with southern countries keen to get cash flowing quickly. View Article
Banking Union
EBA issues Opinion to address possible infection risk stemming from legacy instruments : The European Banking Authority (EBA) issued today an Opinion to clarify the prudential treatment of the so-called ‘legacy instruments” in view of the end of the grandfathering period on 31 December 2021. View Article
ECB's Macroprudential Bulletin : Macroprudential capital buffers – objectives and usability; Buffer use and lending impact; Financial market pressure as an impediment to the usability of regulatory capital buffers; Enhancing macroprudential space when interest rates are “low for long” View Article
IMF Seminar events: Cross-Border Payments—A Vision for the Future : The panel discussed the advent of digital currencies and its implications for the future of cross-border payments. Discussants focused on the benefits and challenges associated with CBDC, the importance of global policy coordination, and the role of the private sector. View Article
FSB publishes global transition roadmap for LIBOR : The Financial Stability Board (FSB) today published a global transition roadmap for LIBOR. The roadmap sets out a timetable of actions for financial and non-financial sector firms to take in order to ensure a smooth LIBOR transition by end-2021. View Article
Capital Markets Union
CEPS: Opening the MiFID II Pandora’s box : Earlier this year, the Commission started consulting on a series of priority areas as part of its ongoing MIFID II/MiFIR review. This ECMI webinar focused on two issues that are rather technical (and perhaps controversial) but are nonetheless key to the functioning of capital markets View Article
POLITICO: Maijoor warns MiFID rollback threatens investor protection : Europe’s top securities regulator hit out at plans to roll back EU financial markets rules in the name of economic recovery. View Article
STEVEN MAIJOOR DELIVERS KEYNOTE AT IRISH FUNDS ANNUAL GLOBAL FUNDS ONLINE CONFERENCE : In his speech, Mr Maijoor focused on how retail investors and asset management are the pillars of a successful Capital Markets Union (CMU). View Article
FT: EU sets sights on money market fund reform : French and Irish watchdogs worried about how close products came to experiencing a liquidity crisis in March View Article
FT: UK government signals post-Brexit changes to insurance rules : Review launched into how Solvency II regulations and use of risk margin will be applied nationally View Article
CRE: Ferma president urges insurers to improve pandemic response : Insurers need to be more proactive in their response to the coronavirus pandemic and work with governments on solutions for systemic risks like pandemics and cyber, according to the president of Ferma. View Article
Insurance Europe: EC should make European Long-Term Investment Funds more attractive to long-term institutional investors : Insurance Europe has today published its response to an inception impact assessment conducted by the European Commission on the revision of the European Long-Term Investment Funds (ELTIF) Regulation. View Article
Insurance Europe: It is premature to call for mandatory AI insurance due to insufficient underwriting data and lack of similarity between ri : We believe it is premature for the Parliament to consider mandatory insurance for high-risk AI systems for two reasons. View Article
EIOPA publishes third annual European Insurance Overview : The European Insurance Overview report is published by EIOPA as an extension of its statistical services in order to provide an easy-to-use and accessible overview of the European insurance sector. View Article
Environmental, Social, Governance (ESG)
Insurance Europe: ESAs' proposals for ES disclosure templates would not improve transparency for consumers : Insurance Europe has today published its response to a survey by the European Supervisory Authorities (ESAs) on their proposals for disclosure templates for environmental and/or social financial products. View Article
IPE: International sustainable finance forum starts taxonomy work, gains IMF : The International Platform on Sustainable Finance (IPSF) has initiated work to compare detailed approaches to sustainable finance, in particular to classifying economic activities, among its members. View Article
IPE: ESG is huge opportunity for European managers – report : The upsurge of interest in environmental, social and governance (ESG) investing could prove a major business opportunity for European asset and wealth managers, according to a report from PwC Luxembourg. View Article
EFAMA’s REPLY TO ESAs SURVEY ON TEMPLATES FOR ENVIRONMENTAL AND/OR SOCIAL FINANCIAL PRODUCTS UNDER SFDR : EFAMA, the voice of the European investment management industry, believes that, for retail clients, standardised disclosure of information can improve the comparability of financial products that promote environmental and/or social characteristics or have a sustainable objective. View Article
WBCSD: Pushing the needle forward amidst disruption: new report showcases more robust sustainability reporting : The World Business Council for Sustainable Development (WBCSD) highlights the importance of maintaining sustainability ambitions amidst unprecedented disruption in the eighth edition of Reporting matters – WBCSD’s annual review of its member companies’ sustainability and integrated reports. View Article
Seventeen Data and Analytics Providers Now Have a Licensing Relationship With SASB, Improving Access to Financially Material ESG Information : View Article
AFME CEO urges ESG harmonisation : The EU has set a target to become climate-neutral by 2050. To achieve this and drive sustainability on a global scale, it is even more important to accelerate the low-carbon transition and embed environmental, social and governance (ESG) standards across all industries. View Article
Fin Tech Regulation
Bloomberg: The New Tools the EU Wants to Crack Down on Big Tech: QuickTake : The European Union has long been the world’s most aggressive regulator of the world’s biggest technology firms -- and perhaps the most frustrated. View Article
Friends' Standard Services
Brussels 4 Breakfast no167: with Karel Lanoo of CEPS : CSFI Zoom video of my discussion with Karel View Article
Brexit
POLITICO: Three phone calls that unlocked Brexit : UK stalled talks last week, saying a signal was needed from Brussels that the EU was ready to make concessions. View Article
FT: Ireland fires warning shot to asset managers on delegation : Regulator’s damning assessment of Dublin offices comes despite new rules introduced ahead of Brexit View Article
FT: Stock exchanges prepare to activate their Brexit contingency plans : Investors fear a split in share trading activity from January View Article
Reuters: Moody's downgrades UK as COVID-19 and Brexit hit debt outlook : Ratings agency Moody’s cut the United Kingdom’s debt rating on Friday over the huge economic hit from the coronavirus crisis, Brexit and the lack of clear budget plans from Prime Minister Boris Johnson’s government. View Article
UK in a Changing Europe: Australia style - a model for relations with Europe? : During the referendum campaign in 2016, Australia was a reference point for many British Conservative politicians...However, such references are misleading as there is currently no Free Trade Agreement (FTA) in force between Australia and the EU. View Article
Bloomberg: U.K. Finance Remains Downbeat on EU Access Without a Brexit Deal : Bank lobby, PwC strike concerned notes on equivalence; Tech group also warns U.K.-EU data sharing is at risk View Article
Federal Trust: Brexit: removing the connective tissue of the United Kingdom? : The United Kingdom (UK) and what is now the European Union (EU) were intertwined for nearly half a century. Consequently, Brexit means more than the UK removing itself from the EU. It involves extracting the EU from the UK. View Article
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