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Highlights of my week: Russia invades Ukraine in a well-planned operation – despite President Putin’s unending stream of denials of any such plans. By co-incidence the Conference on the Future of Europe (CoFE) is moving towards an uncertain conclusion, but will Putin re-energise it? Amidst the surge in sanctions on Russia, the EU is continuing to build its AML/CFT capacity – not before time. Following COP26, ESG and sustainable finance initiatives continue to fill in the details of the EU and global plans. The focus on central bank digital currencies (CBDC) continues but the second closure of a private payment system is reported. Brexit has spawned a rush in the UK to “slash” aspects of Solvency II but when will we get the details to calibrate against the EU’s own reforms? One result of Brexit is a sharp rise in customs duties on what used to be tariff-free trade.
Graham Bishop
Articles from 17-24 February 2022
General Financial Policy
European Parliament: Future of Europe: final recommendations from the European Citizens’ Panels : CoFE, On 25-27 February, the final of four European Citizens’ Panels of the Conference on the Future of Europe meets in Dublin to debate and deliver its recommendations. View Article
EPC: Conference on the Future of Europe: What worked, what now, what next? : There is still time for political interest to match the enthusiasm of the citizens actively engaged in the Conference and for this initiative to end with tangible results. View Article
EPC: Germany in the EU after Merkel: A view from France : Angela Merkel’s departure heralds the end of an important cycle in Franco–German relations. But this does not necessarily mean a major turning point in Germany’s role in the EU, particularly alongside France. View Article
FSB's Knot: Navigating change in the global financial system: the role of the FSB : This has made the global financial system more vulnerable to adisorderly tightening of financial conditions -- a concern that has been accentuated lately by thereturn of high inflation. View Article
Better Finance: How is technology changing financial institutions? : Covid-19 has accelerated the adoption of digital transformation due to the need to conduct more business remotely through digital channels. View Article
FSB seeks views on policy approaches and market practices to support a smooth transition out of debt overhang issues : The Financial Stability Board (FSB) today published a discussion paper on debt overhang issues of non-financial corporates in the context of the COVID-19 pandemic. View Article
BIS: Basel III Monitoring Report : For the sample of Group 1 banks, risk-based capital ratios remained roughly stable, but leverage ratios decreased from the prior period. View Article
Banking Union
SSM's Elderson: Towards a stronger AML/CTF framework in the EU : During a seminar presenting the ECB Opinions on the proposed regulation establishing the AML/CFT Authority, AML Regulation, the sixth AML Directive and the Funds and Crypto-assets Transfers Regulation View Article
SSM's Fernandez-Bollo: For a fully fledged European anti-money laundering authority : European legislators have taken various steps in recent years to strengthen the link between anti-money laundering/countering the financing of terrorism (AML/CFT) and prudential issues. View Article
EBA concludes its Luanda leaks investigation and points to significant differences in competent authorities’ responses to emerging money lau : The EBA found that competent authorities across the EU adopted significantly different approaches for identifying and tackling money laundering (ML) and terrorist financing risks highlighted by the leaks. These approaches varied beyond what the EBA would have expected under a risk-based approach. View Article
EBF/EACB/EAPB and ESBG Joint Conclusions from the cohosted “Access to better technology for (Supervisory) Reporting” workshop : The entire European banking industry, the European Banking Authority and the international RegTech community openly exchanged views and learnt from each other on how RegTech solutions could help banks reduce their reporting costs and what are the hurdles to clear along the way. View Article
EBA publishes annual assessment of banks’ internal approaches for the calculation of capital requirements : A particular focus has been put on analysing the impact of the pandemic and the compensating public measures on the IRB models. View Article
EBA updates methodology for assessing third country equivalence of regulatory and supervisory frameworks : The Capital Requirements Regulation (CRR) foresees that certain exposures to entities located in non-EU countries can be treated, in terms of risk-weights, as exposures in EU Member States, provided that the European Commission adopts an Implementing Decision... View Article
Capital Markets Union
ECA: Investment funds EU actions have not yet created a true single market benefiting investors : We found that EU actions have enabled a single market for investment funds, but have not yet achieved the desired outcomes, as true cross-border activities and benefits for investors remain limited. View Article
DG FISMA: Targeted consultation on options to enhance the suitability and appropriateness assessments : The Commission is preparing a retail investment strategy, which aims to take a holistic view of investor’s protection rules. One of the key objectives is to make the EU an even safer place for individuals to save and invest long-term and to increase participation of retail investors in capital markets. View Article
Environmental, Social, Governance (ESG)
SSM's Elderson at Eurofi: Prudential pathways to Paris : “Sustainable finance: what is expected from transition scenarios?” at the Eurofi High Level Seminar 2022 View Article
IRSG Report - ESG Ratings and ESG Data in Financial Services – A view from practitioners : ESG and sustainability are becoming increasingly central to investment decisions around the world. COP26 in particular provided a big boost to sustainable finance and the shift in capital toward sustainable activities. View Article
ESMA launches Call for Evidence on climate risk stress testing for CCPs : ESMA, to support the EU's efforts in improving the financial sector’s resilience and contribution to sustainability, has started developing a climate risk stress testing framework tailored to the specificities of CCPs. View Article
ACCA statement on the release of the European Commission’s initiative on Corporate Sustainability Due Diligence: While we view this as a step in the right direction, ACCA believes greater transparency and disclosure are needed on the entire spectrum of ways businesses can impact people and the planet if we are to ensure that sustainability is effectively embedded into corporate governance best practices.View Article
EuropeanIssuers opposes the need for further legislative action in Corporate Reporting and encourages finalising the current framework : The priority is to finalise and implement current on-going EU initiatives with a particular focus on not overloading issuers with additional reporting needs, adequacy of the material aspects of the reporting and coherence with existing EU law. View Article
UNEP FI responds to Basel Committee on Banking Supervision consultation on its principles for management and supervision of climate-related : We believe that strong regulatory action can help catalyse the financial sector to address the risks posed by climate change and the net-zero transition. View Article
IFAC Welcomes European Commission Efforts to Enhance Corporate Reporting : IFAC believes that global standards promote global methodologies, which lead to enhanced and more consistent quality in both reporting and assurance. View Article
InsuranceEurope: Insurers raise concerns about aspects of EIOPA’s climate change ORSA guidance : Insurance Europe has responded to a consultation conducted by the European Insurance and Occupational Pensions Authority (EIOPA) on its application guidance on running climate change materiality assessments and using climate change scenarios in an insurer’s Own Risk and Solvency Assessment (ORSA). View Article
EFRAG's Feedback Statement on Post-Implementation Review of IFRS 9 - Classification and Measurement : ??The Feedback Statement summarises constituents' feedback on EFRAG's Draft Comment Letter relating to the IASB's Request for Information IFRS 9 Financial Instruments and explains how EFRAG considered this feedback in developing its Final Comment Letter. View Article
GRI: Understanding materiality can unlock accountability : Why smart companies benefit from a ‘double materiality’ reporting system View Article
InsuranceEurope: no need to modify or extend EU rules for auditing, supervision and corporate governance : Insurance Europe has published its response to a consultation by the European Commission on its proposals regarding corporate reporting and its enforcement. View Article
Fin Tech Regulation
ECB's Panetta: Central bank digital currencies: defining the problems, designing the solutions : I will argue that in a digital world CBDCs are necessary to preserve the role of central bank money as a stabilising force at the heart of the payments system and to safeguard monetary sovereignty. View Article
New GFMA Paper by BCG and Clifford Chance Outlines Benefits and Challenges of Wholesale Central Bank Digital Currencies : Paper Encourages Collaboration between Public and Private Institutions and Outlines Opportunities, Challenges, and Questions Concerning the Design, Issuance, Legal Status, and Use Cases of wCBDCs View Article
Data Act: Commission proposes measures for a fair and innovative data economy : The Data Act will ensure fairness in the digital environment, stimulate a competitive data market, open opportunities for data-driven innovation and make data more accessible for all. It will lead to new, innovative services and more competitive prices for aftermarket services and repairs of connected objects. This last horizontal building block of the Commission's data strategy will play a key role in the digital transformation, in line with the 2030 digital objectives. View Article
Finextra: MUFG shutters blockchain-based payments network : Mitsubishi UFJ has pulled the plug on its blockchain-based online payment network, Global Open Network Japan (GO-NET Japan), citing the "recent hard business environment" for payments. View Article
Brexit and the City
FT: Why post-Brexit race in financial regulation is a bad strategy : UK has hurriedly announced changes to insurance rules but watchdog is right to be cautious View Article
UK slashes red tape through bold reforms to insurance sector regulation : Economic Secretary to the Treasury sets out plans to seize Brexit opportunities and slash red tape through bold reforms to Solvency II. View Article
City AM: City banks launch record recruitment drive : The UK’s top banks are looking to hire nearly 3,000 new candidates, according to research by recruiter Morgan McKinley and Vacancysoft View Article
Brexit
EURACTIV: UK firms stung by €5bn in customs fees as confusion reigns over EU trade pact : Customs duties paid by UK businesses increased by 64% to a record £4.5bn (€5.2bn) in the year to 31 January 2022, up from £2.9bn (€3.6bn) in the previous 12 months, according to research released on Wednesday, as firms struggle to adapt to the new rules imposed under the post–Brexit trade deal View Article
Federal Trust: Can Brexit be reversed? (video) : In this video our Chairman John Stevens and Director Brendan Donnelly discuss the possibility and desirability of a campaign to rejoin the European Union. They accept that the current political system of the United Kingdom poses formidable barriers to any such campaign. View Article
SUERF: Brexit: Trade diversion due to trade policy uncertainty : During the long process of negotiation after the 2016 Brexit referendum, there was a high uncertainty about the final shape of bilateral trade relations between the European Union (EU) and the United Kingdom (UK). View Article
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