Welcome to our Gold Friends weekly e-mail.
My highlights of the week: SRB Chair Koenig discussed the idea of a European Bank Charter for the EU’s largest banks and (eventually) a harmonised EU liquidation regime for banks – following the example of the United States. The Covid impact on market structures continues – even bond trading is going digital. The Wirecard impact also continues: CFA called for improved corporate governance. In a sign of the times, the Central Banks of China and the UAE joined the “Multiple CBDC Bridge”.
Brexit also generated much news: BoE Governor Bailey attacked the EU’s stance on equivalence (but I think this is a hopeless case – see www.GrahamBishop.com with likes: dislikes running at 500:10!!); the FT reported that British insurers are urging a “watering down” of Solvency II; Bovill Consultancy used a Freedom of Information request to find that nearly 1500 EU financial firms are planning a new UK office. Brexit has fractured British politics: in 4Q 2020 49% said we were wrong to Leave v 39% right, and electors now identify themselves as Leave or Remain rather than Tory/Labour.
Graham Bishop
Articles from 19-25 February 2021
General Financial Policy
EURACTIV: From financial solidarity to a social and federal union : The creation of a federal bond will pave the way for a treasury and common EU taxation... Such an ad-hoc financial union is mostly an intergovernmental affair and a stronger role of the European Parliament is necessary to reach a stronger and more social political community View Article
Banking Union
SRB: Speech to European Parliament's Kangaroo Working Group on Financial Services by SRB Chair Elke König : First challenge will be the exit strategy; not just the exit from lockdowns and the exit from governmental support for the economy... we need to avoid potential cliff effects. Second challenge will be the rise in NPLs. Banks must put in place the measures to identify and deal with NPLs... View Article
EURACTIV: Spanish Central Bank proposes robust EU deposit guarantee fund : Spain’s central bank considers that the volatile economic environment in Europe requires a massive EU response through a “fully mutualised European deposit guarantee fund”. EURACTIV’s partner EuroEfe reports. View Article
SSM: What does the ECB expect from banks’ leaders? : Speech by Edouard Fernandez-Bollo, Member of the Supervisory Board of the ECB, Florence School of Banking and Finance online seminar “Fit and Proper Assessment: Better Boards for Better Banks?” View Article
Vox: How much capital should banks hold? : Well-capitalised banks make the financial system more resilient to episodes such as the COVID-19 crisis. This column assesses how much capital would be optimal for banks to hold, taking into consideration the risk of banking crises driven by borrower defaults. View Article
Data reporting: EBF supports single EU data dictionary : Banking industry invites EBA, ESCB and SRB to move swiftly towards a common data dictionary - the key cornerstone underpinning a much-needed integrated and standardized framework for data reporting that can contribute to better supervision and support financial stability. View Article
IFAC and ICAEW Release Fifth Installment of Six-Part Anti-Money Laundering Educational Series : Together with ICAEW, The International Federation of Accountants (IFAC) today released the fifth installment in its Anti-Money Laundering: The Basics educational series: Installment 5: Tax Advice. View Article
FBF: Study: The French highlight their trust in their banks : The French are generally satisfied with the actions of banks during the health crisis, notably welcoming their availability and their role in supporting and boosting the economy. View Article
Capital Markets Union
FT: Bond trading finally dragged into the digital age : Shift of fixed-income markets from analogue to electronic speeds up View Article
ESMA: MiFID II research unbundling: assessing the impact on SMEs : MiFID II Research Unbundling – impact on EU equity markets. This article analyses the impact of the MiFID II research unbundling provisions on EU sell-side research, following their application on 3 January 2018. View Article
ALFI provides feedback regarding the draft EC’s implementing decision on the equivalence with the US to exchange collateral : On 20 January 2021, the European Commission published a draft Implementing Decision setting up an equivalence in the field of collateral exchange for OTC Derivatives transactions non centrally cleared by a CCP. View Article
IAIS 2021-2022 Public Roadmap : The Covid-19 pandemic is serving as a catalyst that is adding impetus and accelerating many of the key strategic themes identified in the Strategic Plan, including climate risk, technological innovation, cyber risk, issues of conduct and culture, and sustainable development. View Article
CRE: EIOPA’s capital loading plans could risk insurability of nat cat risk, warns Fitch : A final report from Eiopa on its proposal is expected in the next few months. Fitch says EU regulators are aware and concerned about climate change risk facing the insurance industry and therefore capital charges for nat cat exposures are almost certain to rise. View Article
Insurance Europe: Supervisory action before SCR is breached goes beyond Solvency II and creates an unlevel playing field in Europe : Insurance Europe has today published its response to a consultation by the European Insurance and Occupational Pensions Authority (EIOPA) on its statement on supervisory practices and expectations in the case of an insurer breaching its solvency capital requirement (SCR). View Article
Environmental, Social, Governance (ESG)
ICMA note following the publication of the ESAs' final recommendations for the RTS of the Sustainable Finance Disclosure Regulation (SFDR) : ICMA has issued a note following the publication of the ESAs' final recommendations for the RTS of the Sustainable Finance Disclosure Regulation (SFDR). The note explains the decision making process and points out implementation challenges which members and policy makers may want to consider. View Article
IPE:German investors expect positive impact of new EU disclosure rules : German investors believe the EU Sustainable Finance Disclosures Regulation (SFDR), paired with further disclosure obligations, will improve transparency of companies’ climate impact activities. View Article
CFA Institute calls on European policymakers, companies and investors to improve corporate governance in the European Union : The report finds that governance mechanisms in Europe still do not offer sufficient corporate accountability and protection of shareholder rights, and it makes recommendations for improvements. It also analyses the effects of incorporating ESG practices in European companies’ business models. View Article
GRI and B Lab team up on impact management : Two of the leading global enablers for environmental, social and governance impact management and disclosure have joined forces to help organizations get more out of their reporting and assessment tools. This collaboration allows companies to optimize their contribution to a more sustainable future. View Article
Acountancy Europe: Sustainable Finance Update - February : A useful compendium of major ESG developments View Article
Fin Tech Regulation
MEPs scrutinise Digital Services Act and Digital Markets Act : Internal Market and Economic Affairs Committees discussed the legislative proposals to better protect consumers and create fairer platform economy with Executive Vice-President Vestager. View Article
Insurance Europe: EC proposal for financial sector cyber security rules too prescriptive, and should instead be principle- and risk-based : Insurance Europe has today published its position on the European Commission’s proposal for a Digital Operational Resilience Act (DORA). View Article
IMF Blog: Public and Private Money Can Coexist in the Digital Age : Today’s world is characterized by a dual monetary system, involving privately-issued money—by banks of all types, telecom companies, or specialized payment providers—built upon a foundation of publicly-issued money—by central banks. View Article
BIS: Central banks of China and United Arab Emirates join digital currency project for cross-border payments : The Digital Currency Institute of the People's Bank of China and the Central Bank of the United Arab Emirates join the Multiple CBDC (m-CBDC) Bridge, a cross-border payments project. View Article
Economic Policies Impacting EU Finance
PIIE: Redesigning EU fiscal rules: From rules to standards : The European Union’s fiscal rules have been suspended until at least the end of 2021. When they are reinstated, they will need to be modified, if only because of the high levels of debt. View Article
Brexit
Bloomberg: BOE’s Bailey Slams EU Stance on Swaps Clearing After Brexit : Andrew Bailey speaks during a hearing with U.K. lawmakers; Bank of England governor says EU moving to ‘location policy’ View Article
UK Finance: Promoting global trade in financial services is central to UK economic recovery : In a report published today, UK Finance has provided a detailed analysis of international trade in financial services, the tools that can be used to promote it and the benefits it brings for businesses and consumers. View Article
CER:Keeping up appearances: What now for UK services trade? : The UK is a services superpower. But foreign-owned businesses are responsible for 56 per cent of its annual services exports (excluding financial, insurance and transport services). View Article
Bovill: London to remain financial services centre of Europe : Almost 1,500 EU-based financial services firms have applied for permission to operate in the UK, with around 1,000 of these planning to establish their first UK office, according to a Freedom of Information request (FOI) by financial regulatory consultancy Bovill. View Article
Bloomberg: 5 things to know about post-Brexit talks on financial services : The two sides are set for a cooperation agreement rather than a mini-trade deal as some financiers hoped. View Article
FT: Insurers urge UK to reduce capital buffer in break from EU rules : Watering down Solvency II would help to cover the costs of preparing for Brexit, trade body says View Article
UKandEU: Public opinion - the legacy of Brexit : So, that’s it. Brexit’s been done. The ‘will of the people’ as expressed in the 2016 referendum has been fulfilled. Britain can now put four years of intense and passionate debate behind it and focus on the opportunities thus created...But is that what we should necessarily expect? View Article
The Economist: Counting the cost of Brexit’s impact on trade : The government talks of teething troubles, but the red tape is here to stay View Article
CRE: EC confirms UK data adequacy but will review in 2025 : It will now move to adopt the draft data adequacy decisions on the GDPR and then on the Law Enforcement Directive, which will allow the personal data of EU citizens to continue to transfer to the UK after the interim agreement expires on 30 June 2021. View Article
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