Welcome to our Gold Friends weekly e-mail.
My highlights of the week: Pandora’ papers electrified the week – or should have done! While taxes go up for citizens to pay for the pandemic, the ineffectual action by governments (for a decade and more!) against tax havens rightly shocked the European Parliament. “Crypto” regulation seems to be getting closer: the IMF, IOSCO and CPMI issued reports on various aspects. If these assets are to become a serious means of payment, then they should follow the rules for safe payments systems – or risk financial stability. Their “un-greenness” is also being more fully recognised. The Distance Marketing Directive is about to turn 20 years old and pre-dates the iPhone by five years! Time for this serious review. The market’s attention is now focussing on the precise details of how to make the Green Bond Standard work in practice. The ESAs are bringing out their post-Covid Work Programmes for 2022 and consumer/retail investor protection feature prominenlty – as does the greening of the financial system.
Graham Bishop
Articles from 1-7 October 2021
General Financial Policy
Eurogroup: Main results - macro-economic developments, international meetings, work programme, banking union : Banking union update and reporting on operational aspects - impact of the COVID-19 pandemic on credit risk, structural transformation of the European banking sector and adjustments of business models driven by digitalisation and climate risk... View Article
Remarks by Commissioner Gentiloni at the ECOFIN press conference : On the Semester, the rollout of the Recovery and Resilience Facility and the pandemic have of course affected this year's European Semester. Today we discussed the lessons learnt and began to discuss what the European Semester will look like in 2022 and beyond View Article
2022 Work Programme of the Joint Committee of the European Supervisory Authorities : The three ESAs regularly coordinate through the Joint Committee their activities within the scope of their respective responsibilities to ensure consistency in their practices. They further exchange information and best practices among themselves and with the ESRB. View Article
Joint Statement on the EU - U.S. Joint Financial Regulatory Forum : EU and U.S. participants in the EU - U.S. Joint Financial Regulatory Forum (“theForum”) met virtually on September 29 and 30, 2021, to exchange views on topics of mutualinterest as part of their ongoing financial regulatory dialogue. View Article
FSB launches new financial stability surveillance framework : The framework supports the comprehensive, methodical and disciplined review of vulnerabilities by the FSB, and thereby helps to identify and address new and emerging risks to financial stability. View Article
SUERF: The Path to Euro Area and Banking Union Membership: Assessing the Incentives for “Close Cooperation” and Adherence to the Exchange Ra : ECB announcement that both Bulgaria and Croatia were required entry to ‘close cooperation’ with their respective central banks ... after fulfilling the necessary supervisory and legislative steps prior to the inclusion of their respective currencies in the Exchange Rate Mechanism II (ERM II). View Article
EURACTIV: Draghi on quest to challenge EU rules and grow out of public debt : Italian Prime Minister Mario Draghi unveiled an ambitious Italian budget for 2022-2024 last week, with deficits above the limits set by the Stability and Growth Pact, in what appears to be a bet on a change in the EU’s fiscal rulebook. View Article
Banking Union
Commissioner McGuiness: Banking on the future: keynote address at the European Banking Summit 2021 : To move our banking sector forward, we need to think about new ways to increase profitability, resilience, digitalisation and sustainability. View Article
EBA consultation on review on Guidelines for the Supervisory Review and Evaluation Process: EBF response : The EBF has commented on various parts of the consultation paper, which are further elaborated in the response. View Article
EBA consultation on credit risk adjustments in the context of risk weights: EBF response : The EBF supports the EBA amendment, which is an important step in the implementation of the European Commission NPL (non-performing loan) Action Plan. View Article
EBA publishes its work programme for 2022 : For 2022, the EBA has set five vertical priorities - and two horizontal prorities View Article
EBA Risk Dashboard points to stabilising return on equity in EU Banks but challenges remain for those banks with exposures to the sectors mo : The data indicate that banks are benefitting from the economic recovery with RoE remaining broadly similar to the previous quarter. Capital ratios remained stable and there was a further decline in NPL ratios. View Article
MEP Giegold: PandoraPapers: Tougher measures against tax evasion and money laundering needed : “Tax evasion and money laundering continue to flourish through letterbox companies despite all past scandals. The policy measures taken after scandals like the Panama Papers are insufficient..." View Article
MEP Giegold: Upside-down world at the EU finance ministers' meeting: After PandoraPapers, EU tax havens list gets slashed : At today's meeting of EU Economic and Finance Ministers (ECOFIN), a decision was made on the EU list of tax havens. Despite the biggest tax leak ever, the PandoraPapers, the list was shortened. View Article
Capital Markets Union
EIOPA sets out its strategic priorities for the coming year : The European Insurance and Occupational Pensions Authority (EIOPA) has outlined its strategic priorities for the coming year, under the overarching goal of building a safe and sustainable EU for citizens in times of transformation. View Article
EIOPA’s comment on Solvency II proposals from the European Commission : The proposals largely share EIOPA’s approach and follow the objectives set in EIOPA’s Opinion from December 2020. View Article
Invest Europe: The devil lies in… the implementation. Cross-border distribution of funds is still not straightforward. : The Cross-Border Distribution of Investment Funds (CBDF) legislation became applicable across the EU in August 2021...Member States have not always (or have rarely) been consistent in how they interpret and implement the rules. View Article
FESE: New analysis of consolidated tape models recommends balanced approach : Provided data quality is improved and changes in market structure are implemented, a new cost-benefit study suggests a 15-minute delay post-trade tape would be the optimal starting position View Article
ISDA: Landmark Change in Interest Rate Derivatives Market as New Definitions Take Effect : ISDA has today announced the implementation of its new standard definitional booklet for interest rate derivatives, designed to ensure ISDA’s documentation keeps pace with changes in market practice, regulation and technology. View Article
AFME says MiFID rules prevent conflicts of interest, but better supervisory convergence required on PFOF : AFME agrees that payment for order flow (PFOF) models are unlikely to be compatible with existing MiFID II rules on avoiding conflicts of interests and ensuring best execution outcomes for clients. View Article
European Commission consultation on the functioning of the EU securitisation framework: EBF response : The EBF welcomes the initiative of the European Commission to comprehensively review the EU securitisation framework. View Article
Environmental, Social, Governance (ESG)
Insurance Europe: Insurers welcome EC proposal for EU Green Bond Standard and suggest refinements to ensure its uptake : There are, however, some improvements that can be made to ensure the uptake of the EUGBS... View Article
ESBG: Proposal for a Regulation on European green bonds : The European Commission adopted its proposal for a EUGBS in July 2021 and later launched a public consultation. In this context, ESBG has recently finalised a position paper that indicated some of the mainconcerns with the adopted proposal. View Article
ISDA: Role of Derivatives in Carbon Markets : Companies subject to carbon compliance programs use carbon derivatives to meet their obligations and manage risk in the most cost-effective way. View Article
IAIS Global Insurance Market Report provides first quantitative study on the impact of climate change on insurers’ investments : Drawing on unique quantitative and qualitative data gathered from the wide IAIS membership, analysis was carried out to better understand insurers’ asset-side exposures to, as well as supervisors’ views on, climate-related risks. View Article
UNEP FI: Swiss and French insurance associations become Net-Zero Asset Owner Alliance supporters : The UN-convened Net-Zero Asset Owner Alliance today welcomed the French and Swiss insurance associations as supporting partners. View Article
UNEP FI: Net-Zero Banking Alliance and Center for Climate-Aligned Finance announce collaboration : The industry-led, UN-convened Net-Zero Banking Alliance brings together banks worldwide, representing over 25% of global banking assets, which are taking a leadership role on climate change. View Article
EFRAG: Insights on reporting the business model, sustainability risks and opportunities : The Main Report presents the state of play and the drivers of current reporting practices, the application of technological solutions, and suggests a path to improvement in the reporting of sustainability risks, opportunities and their linkage to the business model. View Article
IFAC and ACCA: Climate Literacy and Collaboration Agreed Key to Plugging Net-Zero Information Gap : “Climate literacy and collaboration, both within an organization and with stakeholders, are both essential to enact plans that will result in businesses setting and achieving net-zero goals.” View Article
ACCA: Global accountancy bodies come together for net zero : Thirteen professional accountancy bodies from around the world - including AAT, ACCA, ICAEW, ICAS, and the Association of International Certified Professional Accountants - have joined forces to fight climate change by committing to reach net zero greenhouse gas emissions. View Article
Protecting Customers
Insurance Europe: Relevance of DMD Directive must be reviewed and inconsistences with product specific rules — like the IDD — must be avoided :Insurance Europe highlighted concerns about the continued relevance of the DMD in the light of more recent product specific legislation, such as the Insurance Distribution Directive (IDD). View Article
BETTER FINANCE response to the European Commission Consultation on Distance Marketing of Consumer Financial Services : While the Directive’s objectives are still relevant, it is unclear to what extent it contributes to addressing the current challenges consumers face when purchasing a financial service at distance i.e. online or off-premises. View Article
BEUC: PUBLIC CONSULTATION ON THE DIRECTIVE ON DISTANCE MARKETING OF CONSUMER FINANCIAL SERVICES : it is crucial for EU legislation to adequately protect consumers when they purchase financial services at a
ESMA: call for evidence on retail investor protection aspects : ESMA invites comments on all matters in this paper View Articledistance, regardless of the means of communication used. View Article
Fin Tech Regulation
FSB publishes progress report on the regulation, supervision and oversight of “global stablecoin” arrangements : The report notes that standard-setting bodies (SSBs), including BCBS, CPMI and IOSCO, are assessing whether and how existing international standards and principles may apply to stablecoin arrangements View Article
IMF: Crypto Boom Poses New Challenges to Financial Stability : Crypto assets offer a new world of opportunities: Quick and easy payments. Innovative financial services. Inclusive access to previously “unbanked” parts of the world. All are made possible by the crypto ecosystem. View Article
CPMI and IOSCO publish guidance, call for comments on stablecoin arrangements : The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) today published for public consultation preliminary guidance that confirms and clarifies that stablecoin arrangements should observe international standards for payment, clearing and settlement systems. View Article
Economic Policies Impacting EU Finance
Parliament slams EU governments during debate on Pandora Papers : MEPs unanimously expressed indignation and disgust at the Pandora Papers revelations and criticised governments’ woefully inadequate response for over a decade. View Article
Council:Taxation: Anguilla, Dominica and Seychelles removed from the EU list of non-cooperative jurisdictions : Twice a year the Council revises its list of non-cooperative jurisdictions and an accompanying state of play document. This practice was established in 2017 to promote global good governance in taxation and inform member states on which non-EU jurisdictions engage in abusive tax practices. View Article
MEP Giegold: Ambitious global minimum tax threatened by weakened wording to cap tax rate at 15 per cent : According to media reports, Ireland has been able to push through a far-reaching concession in the negotiations on the global corporate tax reform: The wording of the planned global minimum tax for companies is to be weakened at a crucial point. View Article
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