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Highlights of my week: The Commission announced its plans to start borrowing €80 billion this year for the RRF. AFME demonstrated that the great majority of EU equity trading is still on-“venue”. Commissioner McGuiness analysed what happens when all three pillars of corporate reporting failed at Wirecard – investors lost €20 billion! FSB set quantitative targets for better cross-border payments – bar for Bitcoin etc. raised further? Oliver Wyman helpfully tabulated the six policy errors that CBDC must avoid. Strongly split opinions on the European Parliament’s deal on corporate tax transparency. The Dutch Banking Federation poured a bit of cold water on investor’s real attitudes to “green”. Some academic analysis of Brexit: financial service exports already more than £110 billion lower than expected since the Referendum.

 Graham Bishop

Articles from 28 May - 3 June 2021

General Financial Policy

EURACTIV: EU Commission to borrow €80bn in 2021 to finance recovery : The European Commission is set to borrow about €80 billion ($97.76 billion) this year in long-term bonds to finance the European Union’s plan for economic revival after the pandemic, the EU executive said on Tuesday (1 June). View Article

Vox: Lower for longer – macroprudential policy issues arising from the low interest rate environment : At the end of 2019 the European Systemic Risk Board General Board mandated a Task Force on Low Interest Rates to revisit the ESRB’s 2016 report on “Macroprudential policy issues arising from low interest rates and structural changes in the EU financial system”, assess subsequent developments, compare these to the risks identified in the report, and assess whether new sources of systemic risk have emerged. View Article

Better Finance: European Commission Consultation: Improving the Situation of EU Citizens as Taxpayers for Direct and Indirect Tax : As it stands, too often the taxpayer faces plenty of difficulties to avoid double taxation. View Article

 Vox: Financial integration and structure in EMU during the corona crisis : The coronavirus health crisis also had a strong impact on financial systems. This column discusses its effects on euro area financial integration and financial structure. It illustrates how decisive monetary, fiscal and prudential policy responses first contained and then reversed the initial sharp fragmentation in asset prices across member countries.  View Article

 François Villeroy de Galhau: Never too much and never too many - how to transform global discussion into global action against climate change : Central banks' commitment to the climate cause may seem obvious today. But few issues have seen such a rapid and massive change. My generation changed its mind, I changed my mind. View Article

Banking Union

SSM's Enria: The effectiveness of European banks’ boards: progress and shortcomings : Florence School of Banking and Finance online seminar “Banks’ Board Members and Policy Makers: A Conversation” View Article

BETTER FINANCE Response to the European Commission consultation on the review of the crisis management and deposit insurance framework :  View Article

EBA consults on institutions’ Pillar 3 disclosure of interest rate risk exposures : The proposed IRRBB disclosure framework seeks to ensure stakeholders are informed about institutions’ interest rate risks in the non-trading book. The standards put forward comparable disclosures that should help institutions comply with the requirements. View Article

 EBA consults on institutions’ Pillar 3 disclosure of interest rate risk exposures : The European Banking Authority (EBA) launched today a public consultation on draft implementing technical standards (ITS) on Pillar 3 disclosures regarding exposures to interest rate risk on positions not held in the trading book (IRRBB).  View Article

 System-wide events in the PIA: addendum to the SRB approach & blog post by Sebastiano Laviola : The updated approach takes into account that a bank’s failure may take place not only under an idiosyncratic scenario, but also under broader financial instability or a system-wide event. View Article

Accountancy Europe: Building an effective Anti-Money Laundering ecosystem : Money laundering has devastating consequences for economy and society. It is critical to ensure that the fight against money laundering is effective. View Article

 FSB seeks feedback on its proposals for quantitative targets for enhancing cross-border payments : The proposed targets set goals for improving cost, speed, transparency and access for cross-border payments in the coming years through the actions taken under the Roadmap.  View Article

 Capital Markets Union

 IOSCO Board: Statement on Benchmarks Transition : The Board of the International Organization of Securities Commissions (IOSCO) reiterates the importance of ensuring a smooth and timely transition away from LIBOR. Sound functioning of systemically important benchmarks is vital to the global economy and financial markets. View Article

AFME: The landscape for European equity trading and liquidity : A new report published today by Oxera and commissioned by the Association for Financial Markets in Europe (AFME), provides evidence that the majority of equity trading in Europe (83%) takes place on venues[i].  View Article

FESE:Europe must foster transparent markets to remain competitive : Fragmentation & opacity are detrimental to issuers and investors. Shedding light on the reality of capital markets in Europe, today’s virtual Convention of the Federation of European Securities Exchanges (FESE) comes at a vital moment for decision makers. View Article

 ESMA publishes Final Report on the MiFIDII/MiFIR obligations on market data : The Final Report sets out guidelines on the requirements to publish market data on a reasonable commercial basis and to make market data available free of charge 15 minutes after publication. View Article

 ISDA: News Lessons Learned from Crisis : ISDA Chief Executive Officer Scott O'Malia offers informal comments on the lessons learned from the coronavirus pandemic. View Article

EMIR: Commission specifies commercial terms for clearing services for OTC derivatives : To facilitate access to clearing for clients, especially those that have a limited volume of activity in the OTC derivatives market, clearing members and clients which provide clearing services (‘clearing service providers’) must provide those services on FRANDT terms provided for in Article 4(3a) of the EMIR Regulation (EU) No 648/2012. View Article

ESMA Newsletter May 2021 : On 28 May, we said goodbye to Verena Ross, our Executive Director for the past 10 years. On 1 June, Natasha Cazenave takes office as the new Executive Director of ESMA. View Article

Environmental, Social, Governance (ESG)

 Commissioner McGuiness: Speech at the European Policy Centre: Corporate reporting in the Capital Markets Union after Wirecard : Wirecard has illustrated what can happen if the three pillars of corporate reporting – corporate governance, audit and supervision – fail.And if you look at the amount of money – around €20 billion of investors’ money was lost – this is a major, major issue. View Article

IASB consults on a new framework for management commentary reflecting changes in corporate reporting landscape : Management commentary—in some countries referred to as management discussion and analysis—is a report that complements a company’s financial statements. View Article

Finance Watch: Climate risks and financial stability: the snowballing cost of procrastination : After years of warnings on the tremendous macro-economic consequences of the unfolding climate crisis[1], financial supervisors are finally acknowledging that regulatory action on climate risks is a necessity in order to fulfil their financial stability mandate[2]. View Article

 EBA consultation on draft technical standards on Pillar 3 disclosures of ESG risks: EBF response : A few key points of the EBF response on the EBA consultation on draft technical standards on Pillar 3 disclosures of ESG risks: View Article

IA: Investment industry calls on G7 to take further action on climate change : The proposed changes would see the world’s largest economies implement mandatory climate-related risk reporting for companies against a standardised set of principles. View Article

 GRI: Why double-materiality is crucial for reporting organizational impacts : A white paper commissioned by GRI investigates the application of materiality in sustainability reporting – highlighting why disclosing impacts that go beyond those that are financially material benefits organizations while supporting sustainable development. View Article

 SSE Initiative: Exchange in Focus: NYSE Publishes ESG Disclosure Guidance 28 May 2021 : The New York Stock Exchange (NYSE) joins a group of now 60 stock exchanges around the world that have written guidance on ESG reporting. View Article

 Deloitte: Second IVSC perspectives paper on ESG and business valuation : The International Valuation Standards Council (IVSC) has published a second perspectives paper 'A Framework to Assess ESG Value Creation' to analyse the impact of environmental, social, and governance (ESG) factors on value creation and explore how such a framework may be incorporated into the capital allocation process and bring much needed financial discipline to ESG investments. View Article

 NVB: Do investors care about impact? “They pay for ‘the warm glow’, not for more impact” : It’s known that investors are willing to make sustainable choices. But are they willing to pay more for sustainable investments with more impact in the form of CO2 emission savings? Unfortunately not, behavioral finance scientist Stefan Zeisberger says:  View Article

 BdB: GBIC comments on EBA's Draft Implementing Standards on prudential disclosures on ESG risks in accordance with Article 449a CRR : In its current version, the level of detail of the information required for the green asset ratio is very high.  View Article

Fin Tech Regulation

Oliver Wyman: Central Bank Digital Currencies - Six policy mistakes to avoid : Central Bank Digital Currencies (CBDCs) are coming and it is important to do them right. There is strong momentum in key nations for central banks to create digital versions of their currencies for widespread use.  View Article

 CER: Can the EU set a global rulebook for Big Tech? The EU is angling to set a rulebook for digital markets which could be adopted around the world. To achieve this, its draft regulations need improvement. View Article

Economic Policies Impacting EU Finance

 Remarks by Executive Vice-President Dombrovskis at the press conference on the European Semester Spring Package : For the EU taken as a whole, economic activity is due to return to its pre-crisis level this year. And while there are still divergences across countries, we expect all member state economies to return to pre-crisis levels by the end ofnext year. View Article

 ECON: EU lawmakers strike milestone deal for corporate tax transparency : Multinationals will have to disclose the amount of tax they pay in each EU country; The public and tax authorities will be able to see what taxes are being paid where; Some flexibility but detailed rules to prevent multinationals from abusing it  View Article

POLITICO: NGOs blast EU tax transparency bill as ‘almost meaningless’ : Tax activists are lining up to berate Brussels’ legislators, arguing they aren't going far enough after MEPs agreed on a tax transparency bill that will require giant companies to disclose where they pay taxes and make profits. View Article

 Sven Giegold: EU agreement on public country-by-country reporting: a milestone for greater tax justice! : Negotiators from the Council and the European Parliament have just agreed on a compromise text for public country-by-country reporting by multinational companies.  View Article

 Broadening the International Role of the Euro

 ECB: International use of the euro stable in 2020 : This 20th annual review of the international role of the euro published by the European Central Bank presents an overview of developments in the use of the euro by non-euro area residents. View Article

 Brexit

 Bloomberg: ECB Probes Whether Goldman, Peers Still Too Tied to London : ECB concerned about reliance on back-to-back booking model; Review to help benchmark lenders on asset, risk location View Article

 FT Brexit shrank UK services exports by £110bn, academics find : Brexit shrank UK services exports by more than £110bn over a four-year period, new research shows, highlighting the far-reaching trade implications of Britain’s decision to break away from the EU. View Article

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