Welcome to our Gold Friends weekly e-mail.
Highlights of my week: Putin’s spectacular `own goals’ continue to multiply: Both Sweden and Finland are set to join NATO and the Commission has published its €300bn plan to ditch Russian energy entirely by 2027 - by going green and renewable. So there will be no way back for Russia’s main export. Green bonds may be gaining in substance as the Parliament approved further rules to prevent `greenwashing’ – just as `crypto’ cracked. Total asset value halved, and Luna went to zero! Can any type of private money ever be as secure as public money? CPMI published its final report on the G20’s attempts to close the gaps in national RTGS operating hours – to bolster the strength of the global payments systems. Boris Johnson is wriggling ever more vigorously over the Northern Ireland protocol but he made it so he will be unable to avoid owning it.
Graham Bishop
Articles from 13-19 May 2022
General Financial Policy
Carnegie Europe: EU Democracy After the Conference on the Future of Europe : The Conference on the Future of Europe represented a positive first step in the innovation of European democracy. Policymakers will need to use the experience as a catalyst for broader change, well beyond the kind of citizen engagement pioneered during the conference. View Article
CER podcast: Where will Macron now take France and Europe? : In this week’s CER podcast, we discussed Macron’s re-election as French President - to consider France’s domestic political landscape, Macron’s victory, his vision for French and EU policy this time around, and what the potential stumbling blocks might be. View Article
Interview with Klaas Knot, Chair of the Financial Stability Board:"We are not totally off the hook” : The global financial system weathered the pandemic fairly well, but now there is another unforeseen event: war in Europe, with financial and economic sanctions, restrictions on trade. How will this impact financial stability? View Article
The EFR published its position paper “Ensuring competitiveness of the European financial sector” : The achievement of open strategic autonomy in the area of financial markets requires ensuring that the attractiveness of EU financial markets and the competitiveness of EU financial market participants remains a cornerstone of the EU’s financial strategy. View Article
Vox: Seizures of foreign exchange reserves will not weaken the dollar’s role as dominant reserve currency : This column argues that sanctions will, in fact, reinforce the dollar’s dominance rather than weakening it. Countries which choose to exit the dollar bloc will have restricted ability to reassure foreign investors... impacting a growth strategy that involves participation of centre country capital. View Article
Bruegel's Veron: Now is not the time to confiscate Russia’s central bank reserves : The idea of confiscating the Bank of Russia’s frozen reserves is attractive to some, but at this stage in the Ukraine conflict confiscation would be counterproductive and likely illegal. View Article
Bruegel's Sapir: Does the war in Ukraine call for a new Next Generation EU? : The European Union should take significant economic measures in response to the war in Ukraine, but a new Next Generation EU is not needed yet. View Article
Banking Union
SSM's Enria: Of temples and trees: on the road to completing the European banking union : We have identified the urgent need for banks to recover profitability, improve cost efficiency, invest in digitalisation and enhance the sustainability of their business model. Healthy profitability is the first line of defence in the event of shocks... View Article
EBA publishes peer review on management of non-performing exposures : The EBA Guidelines on the management of non-performing and forborne exposures are being applied effectively by both prudential and consumer protection authorities across the EU. View Article
Capital Markets Union
ESMA publishes Final Reports on CCP resolution regime : The Final Reports also cover Guidelines on the circumstances under which a CCP is deemed to be failing or likely to fail as well as on the methodology to value each contract prior to termination. View Article
ESMA publishes ex-post analysis of derivatives risks in Archegos : In the study, ESMA finds that the build-up of exposures by Archegos, a US family office whose collapse in March 2021 resulted in more than USD 10bn in losses, can be seen in data reported under the European Market Infrastructure Regulation (EMIR). View Article
ESMA's Ross: ISDA keynote speech – ESMA’s priorities for transparency : Today I want to share with you some thoughts on the multifaceted conceptof transparency and how appropriately calibrated transparencyrequirements contribute to better market functioning. View Article
ESMA: Working Paper No 2, 2022 3 Financial stability risks from cloud outsourcing : Given the high concentration of CSPs, a single CSP outage could generatesimultaneous firm-level outages, posing systemic risk. Our model examinesthis possibility. View Article
ESMA consults on notifications for cross-border marketing and management of funds : The purpose of the draft ITS and RTS is to facilitate the process for notifying cross-border marketing and management activities in relation to UCITS and AIFs. View Article
EFAMA expresses strong support for the Draft report of MEP Isabel Benjumea on the Review of the AIFMD and UCITS Directive : EFAMA welcomes the Draft report published today by MEP Isabel Benjumea, Rapporteur for the AIFMD and UCITS reviews, as an important milestone towards ensuring accessibility of capital in Europe, providing incentives to ensure growth and promoting a safe and stable environment for markets and investors. View Article
EFAMA reply to EC targeted consultation on the functioning of the Money Market Fund Regulation : In essence, we see no need for a fundamental review of the MMFR regime. Its resilience has been proven throughout the March 2020 market correction, with European MMFs continuing to meet redemption requests, despite evident liquidity stresses in the underlying money markets. View Article
ICMA response to the European Commission’s Targeted Consultation on the functioning of the Money Market Fund Regulation : ICMA responded to the European Commission’s Targeted Consultation on the functioning of the Money Market Fund Regulation. View Article
ESMA makes recommendations for disclosures of expected impacts of IFRS 17 application : The Statement highlights the importance of issuers accompanying users of their financial statements, so that they understand the expected accounting implications of the new Standard’s application. View Article
Environmental, Social, Governance (ESG)
Parliament: European Green Bond Standard: new measures to reduce green washing : Not only is a new label created but also rules for the green bonds market; Added requirements for companies wishing to issue European green bonds to weed out ‘brown companies’ View Article
AFME welcomes EU Parliament’s compromise on EU Green Bonds Standard : “Today’s agreement is a welcome step forward towards establishing an important element of the EU sustainable finance framework. On behalf of our members, AFME contributed with practical industry input for the GBS to support and strengthen the EU green bonds market... View Article
EURACTIV: EU tables €300bn plan to ditch Russian fossil fuels, speed up green transition : The European Commission submitted a €300 billion plan to eliminate Russian energy imports by 2027, although it admitted this would require short-term investments in new fossil fuel infrastructure to replace imports of Russian oil and gas. View Article
CRE: Lloyd’s accused of being climate ‘villain’ as it publishes second ESG report : Campaign group Insure Our Future has accused Lloyd’s of London of being a “climate villain” and greenwashing, after being less than impressed with market’s new ESG report. View Article
Fin Tech Regulation
The Economist: The crypto infrastructure cracks : A vicious sell-off in risky assets jolts stablecoins View Article
BIS: Banking in the shadow of Bitcoin? The institutional adoption of cryptocurrencies : While the role of retail investors has received much attention, we know less about the role of financial intermediaries in this sector. View Article
Digital Markets Act: EP committee endorses agreement with Council : The Digital Markets Act sets obligations for large online platforms acting as “gatekeepers” and enables the Commission to sanction non-compliant behaviour. View Article
Council approves Data Governance Act : The Data Governance Act (DGA) will set up robust mechanisms to facilitate the reuse of certain categories of protected public-sector data, increase trust in data intermediation services and foster data altruism across the EU. View Article
Insurance Europe: Data Act welcomed but more work needed to unlock value in EU data economy : Insurance Europe has published its response to a consultation by the EC on its proposal for the Data Act. View Article
Comments of the German Banking Industry Committee on the European Data Act proposal : The German Banking Industry Committee (GBIC) welcomes the objective pursued by the proposal for a European Data Act, namely to establish a horizontal legal framework to facilitate the access to data for, and the exchange of data between, consumers and businesses. View Article
Commission welcomes political agreement on new rules on cybersecurity of network and information systems : The NIS 2 Directive also strengthens cybersecurity requirements imposed on the companies, addresses security of supply chains and supplier relationships and introduces accountability of top management for non-compliance with the cybersecurity obligations. View Article
ECB's Panetta: Public money for the digital era: towards a digital euro : In the financial realm, old certainties are also beginning to falter. Digital technologies, changing payment habits and the race for payments supremacy are testing the complementarity of public and private money, which has long formed a cornerstone of our monetary system. View Article
SUERF: How to regulate crypto currencies : The rapid growth in crypto currencies has gotten ahead of financial regulations. Regulators have limited choices: a complete ban, or historic methods of regulation that are a poor fit with crypto currencies. View Article
UK Finance: Will the ‘big four’ finally become real financial services challengers? : Over the past few years we have seen the rise of ‘challenger’ banks which have styled themselves as fintechs, and for good reasons. View Article
CPMI: Extending and aligning payment system operating hours for cross-border payments : This final report – issued as part of the G20 cross-border payments programme – focuses on the operating hours of real-time gross settlement (RTGS) systems, as systems that are key to enhancing cross-border payments. View Article
Economic Policies Impacting EU Finance
Remarks by Commissioner Gentiloni at the Spring 2022 Economic Forecast press conference :We now forecast the EU economy to grow by 2.7% this year before slowing further to 2.3% in 2023. For 2022, this is 1.3 percentage points lower than projected in February, one of the steepest downgrades between forecasts of recent years. View Article
Brexit
LSE: Why London should worry about the ECJ’s external judicial politics when pushing for a revision of the Northern Ireland Protocol : Boris Johnson will hold crisis talks in Belfast today in an attempt to resolve differences over the Northern Ireland Protocol. Robert Basedow writes the UK would be wise to carefully evaluate the EU’s red lines before demanding a revision of the Protocol. View Article
FT's Wolf: Boris Johnson must embrace the Brexit he made : The row over Northern Ireland risks a deeper decline in UK trade in response to threats of violence from a tiny minority View Article
UK in changing EU: Brexit Opportunities - meet Government efficiency : Jacob Rees-Mogg wears two hats - One hat is labelled Brexit Opportunities; The other is labelled Government Efficiency View Article
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