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Highlights of the week: The EU’s “banking package” was surely the highlight - finalising Basel III. Commissioner McGuiness argued that it avoided “a significant increase in capital” but a string of banking associations begged to differ! UK bankers will be looking hard at the proposed treatment of “third country“ banks’ branches and they will also be examining the fine print of the CCP speech by the supervisory committee chair, as well as the CEPS report. Naturally, the imminence of COP26 triggered a further flurry of warnings about insufficient climate action. EURACTIV seemed to be alone in spotting that the OECD tax deal has been followed up by a quiet withdrawal of unilateral digital taxes and sanctions. After the UK budget, the independent Office of Budget Responsibility dropped the unsurprising comment that – in the longer term - Brexit would cause twice the loss of output than the pandemic.
Graham Bishop
Articles from 22-28 October 2021
General Financial Policy
Conference on the Future of Europe: second Plenary session concludes : Guy Verhofstadt (European Parliament), said: “The enthusiasm in the Citizens’ Panels is great, expectations are high, the formula is working. Now the Plenary has to find answers to the issues raised, in the form of a shared vision of Europe’s future and ... on how we reform the European Union. .” View Article
Banking Union
Opening remarks by Commissioner Mairead McGuinness at the press conference on the Banking Package 2021 : We are addressing the flaws that remain in prudential rules, while avoiding a significant increase in the overall capital requirements of our banks. View Article
Questions and Answers on the Banking Package 2021 : The main outstanding elements of the reform, included in today's package, aim to constrain the ability of banks to excessively reduce capital requirements when using internal models. View Article
Basel III package: EBF calls for further dialogue to secure Europe’s economic growth : The proposal puts forward several aspects identified by the EBF ... permanent solutions must be adopted to maintain banks’ current capital ratios without reducing their capacity to finance the economic recovery and to fund Europe’s digital transformation and sustainable transition. View Article
AFME: Do European banks need much more capital? : Despite assertions by the authorities to the contrary, these proposals will require European banks to raise significant additional amounts of equity capital to maintain their current ratios. View Article
Invest Europe comments on the revision of the EU banking framework : Invest Europe welcomes that, for the first time, “investments in private equity” are no longer deemed “high-risk exposures” in the new framework. View Article
FBF: Final transposition of Basel 3 still remains insufficient to ensure a sustainable European economic sovereignty : The proposal still fails to respect the commitment by the national and European authorities that this transposition would not lead to a significant increase in capital for all banking communities. View Article
BDB Christian Ossig on the implementation of Basel IV : The European Commission’s proposals for implementing the Basel rules are a step in the right direction. But they do not yet go far enough. View Article
SRB publishes guidance on separability of banks in time of crisis : The Single Resolution Board (SRB) has today published the operational guidance on separability for partial transfer tools. View Article
EBA publishes final draft technical standards on the alternative standardised approach for market risk as part of its FRTB roadmap : The European Banking Authority (EBA) publishes today its final draft Regulatory Technical Standards (RTS) on gross jump-to-default (JTD) amounts and on residual risk add-on (RRAO). View Article
SSM's Fernandez-Bollo interview : Wide-ranging interview: including "The danger would be to get stuck in the present situation, where the vast majority of the surveyed banks say climate risk is very important to them, but most of those also say, “We don't have the tools to measure it”. View Article
Capital Markets Union
CCP SUPERVISORY COMMITTEE CHAIR DELIVERS KEYNOTE SPEECH AT THE SECOND EACH CCP RISK MANAGEMENT SUMMIT : The Chair of ESMA’s CCP Supervisory Committee, Klaus Löber, today delivered a keynote speech on the role of CCPs in supporting the safety and efficiency of global financial markets. View Article
CEPS: Setting EU CCP policy – much more than meets the eye : A new study ‘Setting EU CCP policy – much more than meets the eye’, now calls for a long-term vision for the future of the European clearing market, by taking financial stability, efficiency, and market development objectives into account. View Article
Joint call for evidence on the European Commission mandate regarding the PRIIPs Regulation : The input provided will feed into the ESAs’ technical advice to the European Commission on a review of the key information document (KID) for PRIIPs. View Article
EFAMA Statement on the ECON Committee’s draft report amending the UCITS directive for PRIIPs : We are relieved to hear that the European Parliament’s ECON Committee proposed on Friday an extension of the UCITS exemption for funds with full support of the Council. View Article
Insurance Europe: EIOPA run-off supervisory statement should promote supervisory convergence of existing requirements, not establish additio : Overall, the industry welcomes EIOPA’s efforts to create a level-playing field with the same quality of standards for the run-off sector... View Article
S&P: European Commission proposes new tools for insurance regulators : The European Commission (EC) proposed amending the EU's Solvency II directive and increasing harmonization of recovery and resolution regimes for insurers in the European Economic Area (EEA). View Article
IOSCO updates its outsourcing principles to ensure operational resilience : The updated Principles on Outsourcing are based on the earlier Outsourcing Principles forMarket Intermediaries and for Markets, but their application has been expanded and nowincludes trading venues, intermediaries market participants acting on a proprietary basis andcredit rating agencies. View Article
BIS: Review of margining practices : This BCBS-CPMI-IOSCO consultative report looks at margin calls in March and April 2020, margin practice transparency, predictability and volatility across various jurisdictions and markets, as well as market participants' liquidity management preparedness. View Article
Environmental, Social, Governance (ESG)
World Economic Forum: 57 organizations release open letter for EU to act on ESG : They encourage the European Commission to promote a global baseline set of standards through supporting the IFRS Foundation on the launch of the International Sustainability Standards Board (ISSB). View Article
GFIA: COP26: Insurers publish key principles for more resilient and sustainable construction : Given that natural hazards are on the rise both in terms of frequency and severity, climate adaptation considerations should lie at the very heart of building norms and processes. View Article
AFME: GFMA and BCG report says pace of adoption and growth of emissions trading schemes is not sufficient to limit global warming to 1.5C : A new report by the Global Financial Markets Association (GFMA) and Boston Consulting Group (BCG) titled, “Unlocking the Potential of Carbon Markets to Achieve Global Net Zero”, finds that close to 80% of greenhouse gas emissions are not covered by regulated carbon pricing today. View Article
Hedgeweek: Hedge funds split over ESG ahead of COP26 climate summit : As the 2021 UN Climate Change Conference (COP26) begins in Glasgow this weekend, hedge fund managers remain evenly split over the incorporation of ESG (environmental, social and governance) factors and sustainability metrics into their investment processes, according to a new poll. View Article
CFA: Certificate in ESG Investing Adds to the Skills Landscape in Investment Management : Global certificate awarded by CFA Institute is helping the profession navigate shifting client demands for sustainable investments View Article
ACCA: Good intentions are ‘disconnected from the pace of climate action that is urgently needed’, says new research : Organisations urgently need to set net zero targets and the pathways to achieve them View Article
ESAs propose new rules for taxonomy-related product disclosures : The disclosures relate to financial products that make sustainable investments contributing to environmental objectives. View Article
BETTER FINANCE Response to the Joint ESAs Consultation concerning Taxonomy-related sustainability disclosures : BETTER FINANCE welcomed the consultation and supports the proposed approach amending the existing Regulatory Technical Standards for the Sustainable disclosure regulation, in particular the Single Rulebook approach to avoid duplication and complexity. View Article
Fin Tech Regulation
Vox: Central bank digital currencies, cryptocurrencies, and privacy: What experiments tell us : With the development of new forms of money such as cryptocurrencies and central bank digital currencies, the attention paid to their role as a store of privacy is increasing. This column asks whether privacy is relevant in shaping the demand for these currencies. View Article
SUERF: The one trillion euro CBDC: Issuing a digital euro without disrupting the bank lending channel : Introducing a general-purpose Central Bank Digital Currency (CBDC) carries the risk of bank disintermediation, potentially jeopardizing financial stability and monetary policy transmission through the bank lending channel. View Article
ECB announces members of Digital Euro Market Advisory Group : ECB appoints 30 senior business professionals with proven experience; Members to advise Eurosystem on design and distribution of potential digital euro; Meetings of group to be held at least quarterly, starting in November 2021 View Article
Economic Policies Impacting EU Finance
EURACTIV: National digital taxes and US sanctions to be withdrawn after OECD tax deal : The national digital taxes should be phased out as soon as the OECD tax deal is put into practice, the US and European states agreed. In return, the US promised to drop the sanctions it had imposed in response. View Article
Insurance Europe: Insurers call on EC to develop an EU-wide withholding tax system that is simple, fast and digital friendly : Provisions around withholding tax procedures for cross-border portfolio investors or shareholders in the EU often pose a challenge to insurers regarding cross-border investment, due to their complexity and related costs View Article
Brexit
City AM: Forget the pandemic: Brexit’s impact on UK economy will be much worse, warns fiscal chief : The consequences of the UK leaving the European Union will be much more serious than the economic impact of the pandemic, the boss of the UK’s fiscal watchdog warns this morning. View Article
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