Welcome to our Gold Friends weekly e-mail.
My highlights of the week: As the effects of Covid recede, the EU has launched a review of its economic governance as any idea of trying to get debt levels back to the 30-year-old “Maastricht” criteria looks increasingly forlorn. COP26 is looming ever larger and EIOPA is looking at climate effects on insurance, whilst the SSM is going to launch its “climate” stress tests next year and the EBF joined the banking campaign for Net Zero. TCFD reported that already 50% of firms disclose their climate risks. Brexit issues remain: the FT reported that the ECB is getting tougher on banks to staff (and capitalise) their EU operations properly as Covid problems dwindle, though Commissioner McGuiness did promise there would be no `cliff edge’ on clearing.
Graham Bishop
Articles from 15-21 October
General Financial Policy
Commission relaunches the review of EU economic governance : The relaunched debate will draw on both the Commission's view of the effectiveness of the economic surveillance framework presented in February 2020 and the lessons learnt from the COVID-19 crisis described in today's Communication. View Article
EURACTIV: Architect of EU fiscal rules calls for reform : Ahead of a new push by the European Commission to reform the EU’s fiscal rules, the chief of the bloc’s bailout fund, Klaus Regling pointed out the danger of sticking to rules that have become “economically nonsensical”. View Article
Statement by Christine Lagarde, President of the European Central Bank : I respect Jens Weidmann’s decision to step down from his position as President of Deutsche Bundesbank at the end of this year after more than 10 years of service, but I also immensely regret it. Jens is a good personal friend on whose loyalty I could always count. View Article
Project Syndicate Hedegaard: The EU Must Step Up in Glasgow : As world leaders prepare to gather for COP26 next month, expectations for progress are low, even as the need to address climate change becomes more urgent. The European Union was critical in building the coalition needed to conclude the Paris climate agreement in 2015, and success in Glasgow may again depend on EU leadership View Article
EIOPA at ECON: Introductory statement by Petra Hielkema, Chairperson of the European Insurance and Occupational Pensions Authority : Topics: consumer protection; clear communication as key for consumer confidence; Solvency II - the European Commission largely shares our approach and our objectives, including to a large extent those related to proportionality. View Article
ESAs at ECON:ANNUAL ECON COMMITTEE HEARING : Financial technology is rapidly impacting markets. Most young people have never heard of an investmentadvisor and are buying products on their smartphone. View Article
European Supervisory Authorities publish sectoral reports on the supervisory independence of competent authorities : Based on the CAs’ self-assessment, the three reports highlight that the independence of CAs is multi-faceted and dependent on a number of legal, institutional, operational and cultural factors. View Article
Banking Union
EBA Consultation on draft Guidelines on the limited network exclusion under PSD2: EBF Response : Our response highlights that a transparent and clear application of the exemptions is relevant from a consumer protection perspective. View Article
CEPS: Impediments to resolvability – what is the status quo? : To efficiently resolve a bank that is failing or likely to fail, and for which resolution is deemed in the public interest, it is important that impediments that hamper its resolvability are removed. View Article
Capital Markets Union
FT: Brussels vows ‘no cliff edge’ over EU banks’ access to UK clearing : Financial services commissioner says there will be no ‘sudden twists and turns’ over licence View Article
AFME report tracks European capital markets performance in 2021 : Record levels of capital markets funding supported EU businesses in the first half of 2021, reflecting significant recapitalisation needs in response to the pandemic and favourable conditions for raising capital; View Article
EBA publishes final draft regulatory technical standards on disclosure of investment policy by investment firms : The draft technical standards specify the information that investment firms will have to disclose to show their influence over the companies in which they hold voting rights. View Article
CFA Institute: Global Pension Index calls for pension systems reform to close gender gap in retirement income : Causes of gender pension gap mixed, with all systems carrying weaknesses; Mercer CFA Institute Global Pension Index sees new entrant Iceland top the list; Index compares 43 retirement income systems, covering two-thirds of world’s population View Article
EIOPA welcomes Solvency II proposals from the European Commission on sustainability : EIOPA is convinced that these proposals would contribute positively to a transition into a more sustainable economy and that insurers, in their role as investors and risk managers, can facilitate it. View Article
Insurance Europe: EIOPA’s proposed changes to supervisory reporting could significantly — and needlessly — increase costs for both insurers : This would all place a significant extra administrative burden on insurers, without a clear benefit for supervisors. View Article
Invest Europe considers implications for the EU financing ecosystem of changes to EU State Aid rules : It is especially relevant from a private equity perspective as it specifies when risk finance aid can be granted to national venture and growth funds or the companies they support. View Article
Environmental, Social, Governance (ESG)
FSB welcomes TCFD status report : It finds that over 50% of firms disclosed their climate-related risks and opportunities. View Article
European Banking Federation announces support for Net-Zero Banking Alliance : With this move, the EBF commits to further step up its efforts to accelerate the banking sector transition to net zero and facilitate its member banks’ ambitions to achieve this goal. View Article
LSE: Highlights from the ECB’s work on climate-related financial risks and opportunities : The long-term nature of climate risks, the uncertainty about how these risks will manifest over time as well as their mutual interdependence pose a significant challenge. View Article
SSM Elderson: Overcoming the tragedy of the horizon: requiring banks to translate 2050 targets into milestones : Banks need to start thinking about the next important step in risk management which will require them to look at the thirty years ahead and devise intermediate targets for their risk exposures that can render them fit for a carbon-neutral economy by 2050. View Article
SSM: Information on participation in the 2022 ECB Climate Risk Stress Test : It aims to identify vulnerabilities, industry best practices and the challenges faced by banks. The exercise will also help enhance data availability and quality, and allow supervisors to better understand the stress-testing frameworks banks use to gauge climate risk. View Article
Bruegel: Better sustainability data is still needed to accelerate the low-carbon transition in capital markets : Investors need more trustworthy sustainability data. Regulators should leave space for better products to emerge, while remaining alert to well-known patterns of misconduct in capital markets. View Article
Lord Mayor calls on City of London to lead global charge to net zero : The Lord Mayor said that the City of London can ensure the net zero transition is 'financed, implemented and sustained'. View Article
Paying the (carbon) price for net zero: ACCA calls for global minimum price of carbon : ACCA believes that the policies that will achieve net zero emissions by 2050 need to be much more ambitious than they have been so far. View Article
ACCA: Narrowing the audit expectation gap is essential for a resilient global financial reporting ecosystem : New report provides recommendations for regulators, standard setters and auditors in tackling fraud and addressing going concern issues. View Article
Fin Tech Regulation
Vox: The international dimension of central bank digital currencies: Open research questions : Central banks around the world are weighing the pros and cons of issuing their own digital currency. This column identifies open research questions around the international macro-financial dimension of central bank digital currencies,... View Article
Vox: Central bank digital currency in an historical perspective : Monetary transformations through history have been driven by changing technology, changing tastes, economic growth, and the demands to effectively satisfy the functions of money. View Article
FT: France tests crypto assets in series of government bond deals : Digital currency issued by central bank was used in 10-month trial involving big banks and public debt office View Article
Fabio Panetta, Member of the Executive Board of the ECB, at the ECB-CEBRA conference on international aspects of digital currencies and fint : “Hic sunt leones” – open research questions on the international dimension of central bank digital currencies View Article
Stablecoins and Next-Gen Payments: Marching Toward Institutional Adoption of DeFi in Europe : Cryptocurrencies and stablecoins will likely play a more noticeable role in the future global payments ecosystem, as consumers and businesses increasingly embrace cryptocurrencies and investments in digital currencies continue to gain ground. View Article
Friends' Standard Services
CSFI: 176th Brussels 4 Breakfast : The current row over the NI Protocol threatens to undermine fragile trust between London and Brussels - and that could have ramifications for the EU's attitude to bank branches from third country institutions and to CCP View Article
Brexit and the City
FT: ECB pushes banks to boost their post-Brexit operations : Central bank increasingly forceful in demanding lenders move more resources to continent View Article
Brexit
City AM: Temporary Brexit? Half of young British business owners expect UK will apply to rejoin EU : Younger business owners are significantly more likely to believe that the UK will re-apply in the future. View Article
The UK in a Changing Europe: UK-EU regulatory divergence tracker : It identifies and analyses the most significant cases of divergence in regulatory standards between the UK and EU which have taken place since Brexit. View Article
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