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My highlights of the week: On Europe Day – 9 May – it is always good to remind oneself of Schuman’s famous 1950 Declaration that launched the EU. Seventy one years later, the Conference on the Future of Europe (CoFE) launched – with apparent popular support for `more Europe’ so do make YOUR voice heard! The Commission’s Spring Economic Forecast looks for a robust recovery – aided by the €800 bn recovery fund swinging into action – finally. However, SSM Chair Enria warned that recovery alone will not get EU banks `out of the woods’. Private equity raised near-record sums last year and the Commission has launched a consultation on its retail investment strategy. Meanwhile, bond investors scrambled to buy Germany’s new 30-year Green bond – the longest maturity yet.
Brexit is starting to catch up with the UK: New York is the winner as swaps trading shift from London and the IMF expects the current account deficit – the UK’s Achilles Heel for a century – to widen ominously as exports to the EU dip (most unsurprisingly!).
Graham Bishop
Articles from 7-13 April 2021
Robert Schuman: The Declaration of 9 May 1950 : World peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it. View Article
General Financial Policy
Conference on the Future of Europe: inaugural event in Strasbourg : The inaugural event celebrated the launch of the participatory process set up jointly by Parliament, Council and Commission. On Europe Day 2021, the European Parliament in Strasbourg hosted the inaugural event of the Conference on the Future of Europe. View Article
Conference on the Future of Europe: make your voice heard : Their exchanges will be structured thematically around recommendations from the Citizens’ Panels and input gathered from the Multilingual Digital Platform. The Platform is the single place where input from all Conference-related events will be collected, analysed and published. View Article
EU survey highlights support for greater crisis management role at EU level : Two days ahead of the launch of the Conference on the Future of Europe, Parliament today published the results of its Eurobarometer survey on the future of Europe. The survey was commissioned jointly with the European Commission. View Article
Remarks by Commissioner Gentiloni at the press conference on the Spring 2021 Economic Forecast : The EU economy is set to grow robustly this year and next. View Article
EURACTIV: European recovery gains speed as COVID-19 fund kicks in : Europe’s economic recovery from the impact of COVID-19 is gaining momentum, the European Commission concluded in an economic forecast, with the rebound credited to the recovery fund, vaccines, global trade and the lifting of lockdowns. View Article
Eureopean Parliament: Scrutiny begins of EU multi-billion euro recovery funds : MEPs quizzed Commissioners Dombrovskis and Gentiloni on the progress made in executing the Reform and Recovery facility in what will become a regular bimonthly vetting exercise. View Article
EURACTIV: EU recovery fund struggles to find its true nature : Amid doubts around the implementation of the €800 billion recovery fund, European Commission and experts stress that the EU instrument is not a US-like emergency stimulus but an investment tool for the medium-term to transform the European economy. View Article
Vox's Hartmann: Central banks in a shifting world: Selected takeaways from the ECB’s online Sintra Forum : The 2020 ECB Forum on Central Banking addressed some key issues from the ongoing monetary policy strategy review and embedded them in discussions of major structural changes in advanced economies and the post-COVID recovery. View Article
BDB: For a meticulous implementation of the principle “same services, same risks, same rules” : The financial services market is currently undergoing an extensive process of digital transformation, with technology firms and banks playing an instrumental role. The digital upheaval we are all presently experiencing is so fundamental that it will determine the future of Europe in this key area. View Article
Banking Union
Interview with Andrea Enria, Chair of the Supervisory Board of the ECB: Restructuring debt : Supervisory relief measures have created capital space for banks to adopt tailor-made debt restructuring measures, says Supervisory Board Chair Andrea Enria. Acting early is good for banks and borrowers. If banks “wait and see” this could lead to bankruptcies at a later stage. View Article
The EBA observes achievements in a number of key areas of the supervisory review across the EU, but also highlights items requiring continue : Overall, the Report finds that supervisors converged in using the key topics of the EBA 2020 Convergence Plan in their supervisory work in 2020 and good progress in supervisors’ efforts could be achieved across the EU. View Article
Evaluation of the Consumer Credit Directive: EBF position : We look with concern to unregulated creditors and the consequences that they can bring to the stability and well-functioning of the market. View Article
EBA Chair Campa speaks at the 35th Annual General Meeting of ISDA : Campa talked about the measures taken by banks in relation to COVID-19 and their future support for the recovery after the pandemic. He also spoke about the full, timely and consistent implementation of Basel III and the importance of a high quality regulatory framework for a robust EU banking sector. View Article
BIS: How to improve funding of bank resolution in the banking union: the role of deposit insurance : This is a key issue within the ongoing reflection in the European Union on how to improve the current arrangements for bank failure management and, in particular, on how to best adjust the existing funding mechanisms. View Article
Capital Markets Union
European Commission consultation: EU strategy for retail investors : The Commission is preparing a retail investment strategy for the first half of 2022. This public consultation will serve to gather views and evidence which will help the Commission develop its policies. View Article
BDB: Comments of the Association of German Banks on the new capital markets union action plan : The Association of German Banks has warmly welcomed the capital markets union project from the outset. It is a project that needs to be pursued with ambition. The European Commission’snew action plan for capital markets union of 24 September 2020 is an important step forward. View Article
EIOPA: Risk Dashboard: European insurers’ risk levels remain : The results show that insurers’ exposures to macro risks remain at high level while all other risk categories remain at medium level. The European supervisors expect an increase in credit risks over the next 12 months, reflecting concerns over corporate indebtedness. View Article
EIOPA launches its 2021 insurance stress test : EIOPA has launched its 2021 insurance stress test for the European insurance market. Insurance stress tests assess the resilience of the European insurance market in case of adverse financial and economic conditions and identify the market’s vulnerabilities. View Article
ESMA: Guidelines on outsourcing to cloud service providers : These guidelines aim to help firms and competent authorities identify, address and monitor the risks/challenges arising from cloud outsourcing arrangements, from making the decision to outsource, selecting a cloud service provider, monitoring outsourced activities to providing for exit strategies. View Article
GFIA: IAIS should focus on sector-wide vulnerabilities not “systemic importance” of individual insurers : GFIA welcomes the reference made by the IAIS to, and the application of, the overarching concept of proportionality in macro-prudential supervision. View Article
GFIA: ALM rules should not be applied to general insurance : Any new rules to fight money laundering/terrorism financing (ML/TF) should only cover life insurance, which has some, albeit very low, exposure to ML/TF risks. View Article
Invest Europe: European private equity demonstrates resilience and viability with second highest Europe investment total ever : €88 billion of equity invested in over 8,000 European companies in 2020, €101 billion in new capital raised, taking five-year fundraising to €500 billion View Article
Environmental, Social, Governance (ESG)
ACCA: Working together for the planet: audit & assurance of sustainability information : EU and global experts discussed the opportunities and challenges of audit and assurance of Environmental, Social and Governance (ESG) information, at a joint ACCA, ECIIA, Deloitte and Accountancy Europe event, attended by over 780 participants. View Article
IOSCO sees strong support for its vision for an International Sustainability Standards Board under the IFRS Foundation : Roundtable participants identified some important matters for IOSCO to consider before recommending to its members that ISSB standards be used for cross-border offerings or when setting sustainability reporting requirements at the domestic level. View Article
IOSCO Vice Chair explains why and how IOSCO supports the sustainability initiative of the IFRS Foundation Trustees : Mr Servais began his speech by explaining how financial markets and their regulators are a part of the solution to ensure the financial system is resilient in the face of climate-related risks and to support the transition to a sustainable economy. View Article
Project Syndicate Panetta: A Global Accord for Sustainable Finance : With national climate commitments and a renewal of multilateralism both gaining momentum, there is a unique opportunity to forge a global consensus on issues such as carbon pricing, the green transition, and sustainable finance. In each case, the European Union offers a promising model for others. View Article
FSMA: Proposal for a corporate sustainability reporting directive. The way forward : There is a broad consensus that, after the global financial crisis and the COVID crisis, climate change is the third major risk in this century to economic prosperity and financial resilience. View Article
IFAC Encourages A Building Blocks Approach for Reporting Sustainability-Related Information : IFAC hopes to foster discussion on how this approach can deliver a global system for consistent, comparable, and assurable sustainability-related information that best meets the needs of investors and other stakeholders. View Article
Accountancy Europe: 3-step sustainability assessment for SMEs : Many small and medium-sized enterprises (SMEs) are busy with the day-to-day running of their business. It can be daunting for them to prioritise their business’ sustainable transition. View Article
FBF: The driving force of the Paris financial centre and progress made in the fight against climate change have been underscored by the results: The results speak volumes: the Paris financial centre plays a key role in the climate transition, and concrete progress has been made in combating climate change since the Paris Agreement was signed in 2015. View Article
EURACTIV: German 30-year green bond attracts record demand : Investors have been scrambling to purchase Germany’s new 30-year green bond despite the ongoing sell-off in the bond market that usually depresses demand. Previously, green bonds had only been issued with five or 10-year maturities. EURACTIV Germany reports. View Article
Broadening the International Role of the Euro
SUERF: Strengthening the international role of the euro : The euro is the second most important global currency, and the euro area’s economic weight can lay solid foundations for its greater role on financial markets. A stronger international role of the euro would benefit not only the euro area but also the global financial system. View Article
Brexit
IHS Markit: Brexit, Global OTC IRS markets - Q1 review : Following our initial flash analysis in mid-January (available here) and our January review (available here) we have received a great deal of interest for an update of the activity in the global OTC interest rate derivative markets post Brexit throughout Q1 2021. View Article
Reuters: New York wins Brexit swaps shake-up as clearing stays in London : Brexit forced Britain to relinquish 2.3 trillion pounds ($3.25 trillion) in monthly derivatives trading, leaving New York the global winner in a shake-up of that market, consultants Deloitte and data company IHS Markit said in a report on Tuesday. View Article
Bloomberg: Key Brexit Clash Would Cost Euro Swap Traders $2.4 Million a Day : Dutch professor estimates cost of fragmentation of clearing; Permission for cross-border clearing expires in June next year View Article
Bloomberg: The U.K. Deficit That Risks Cutting the Pound’s Rally Short : Current-account gap set to reach widest since World War II, Shortfall could test foreign investor appetite for U.K. assets View Article
FT: Brexit disruption forces German exporters to think again : Costs and red tape push EU companies to seek other markets or relocate production View Article
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