Welcome to our Gold Friends weekly e-mail.
Highlights of my week: This week included the memorial of Armistice Day 1918 as well as Kristallnacht 1938 – events that continue to underline the need for a strong European Union. COP26 continues to dominate the news flow – with an array of new acronyms and private sector promises that observers such as the FT wonder loudly if they are just too vague. However, the establishment of the International Sustainability Standards Board (ISSB) by the IFRS Foundation may turn out to be the enduring legacy as it will create the standards that all private firms will have to observe and report to stakeholders. As the FT’s Tett observed “the green transition may depend on the auditors”! Last week, I wrote about the wheels of the tumbril for the City of London turning slowly. This week, Commissioner McGuiness announced that they surely would turn – but pragmatically proposing a market-based process over the next few years.
Graham Bishop
Articles from 5 - 11 November, 2021
General Financial Policy
ECOFIN: Economic governance and recovery : They discussed the future of the EU’s economic governance framework and gave their initial views on the way forward.... It is necessary to continue discussions and try and find common ground. View Article
Remarks by Paschal Donohoe following the Eurogroup meeting of 8 November 2021 : Topics included: digital euro, economic governance, good news on banking union View Article
FSB highlights implementation progress and gaps on effective compensation practices in financial institutions : It highlights uneven progress toward implementing the Principles and Standards, with banks relatively more advanced than insurance and asset management firms. This may reflect the more pressing need for banks to align compensation with risk-taking following the 2008 global financial crisis. View Article
Basel Committee: climate-related financial risks, specifying cryptoassets prudential treatment and reviewing G-SI : This follows discussions on risks and vulnerabilities to the global banking system, as well as policy and supervisory initiatives, at its meetings of 21 October, and 5 and 8 November. View Article
ESMA publishes technical standards on crowdfunding : This marks an important milestone towards harmonising the new European crowdfunding regime. View Article
Vox: The EU fiscal framework: A flanking reform is more preferable than quick fixes : The latest European Fiscal Board annual report proposes a reform to the EU fiscal framework based on (1) a medium-term debt anchor; (2) an expenditure rule as the main policy instrument; and (3) a single escape clause applied on the basis of independent analysis. View Article
Bruegel: Next Generation EU borrowing: a first assessment : The Next Generation EU programme is radically changing the way the EU finances itself ..interacts with financial markets...assesses the first design decisions made by the Commission .. the issuances that have taken place... outlines the potential risks/opportunities linked to upgrading EU borrowing. View Article
Banking Union
EBA publishes Guidelines on recovery plan indicators : The Guidelines establish a common EU approach for developing the framework of recovery plan indicators, providing additional guidance on indicators’ calibration, monitoring and breaches notifications. View Article
EBA issues requirements on institutions’ Pillar 3 disclosure of interest rate risk exposures : The harmonised disclosures provide stakeholders with information on institutions’ exposures to interest rate risks in their non-trading books. The final draft technical standards put forward comparable disclosures that help institutions comply with the requirements laid down in the revised Capital Requirements Regulation (CRR). View Article
SRB König: Speech to the 3rd EBI Policy Conference on Recovery and Growth in a Post-Pandemic EU : From the SRB’s standpoint, we must complete the reforms in terms of EU financial stability architecture. View Article
ESBG: Bank financing for SMEs must be protected in Basel III finalisation : The European Parliament (EP) should revise the measures that would eventually limit bank financing for ’unrated companies’ in the European Commission (EC)’s proposal for the finalisation of Basel III standards, said yesterday MEP Markus Ferber, Coordinator for the EPP Group at ECON. View Article
Capital Markets Union
AFME: Guiding Principles for Data Sharing - A Perspective for European Capital Markets : Data sharing is an essential function within European capital markets, in which firms see opportunities for further data sharing to support common objectives such as greater security and resilience, sustainability, innovation and compliance and monitoring. View Article
Environmental, Social, Governance (ESG)
FT: Big business and COP26: are the ‘net zero’ plans credible? : Companies have been in a congratulatory mood in Glasgow. But critics say their efforts to cut emissions are too vague View Article
Vox's Weder di Mauro: Combatting climate change: A CEPR collection : This column brings together 45 Vox columns on the economics of climate change with the aim of (1) providing an overview of some of the key issues from the economist’s perspective, (2) stimulating further research, and (3) demonstrating how CEPR is fully engaged with this central debate of our times View Article
UNEP FI: Net-Zero Banking Alliance at COP 26 : Banks in the Alliance commit to using robust, ambitious, science-based targets to decarbonise their lending and investment portfolios on a 1.5 degree climate trajectory to achieve net zero emissions by 2050. View Article
Insurance Europe: Our statement for COP26 : Insurance Europe, the European insurance and reinsurance federation, unequivocally supports the collective global momentum to combat climate change that is the focus of COP26. View Article
GFIA statement for COP26 : GFIA is proud to join the worldwide collective momentum to combat climate change that is showcased during COP26. GFIA is composed of 41 member associations and 1 observer association which together include insurers and reinsurers from 64 countries. View Article
PCS: Green securitisation – ECB adds its voice in support of the “green proceeds” approach : Overall an excellent piece, it is notable when it comes to securitisation for its support for a definition of green that encompasses issuance where the proceeds are used by the originator to finance sustainable projects. This can be found in article 3.1.5 of their opinion. View Article
City of London: The Future of Voluntary Carbon Markets : Decarbonisation commitments are driving up demand. Leading global corporates aresetting ‘net zero’ targets and many expect to rely on some carbon credit use to deliver this. View Article
FT's Tett: The green transition may depend on auditors : Companies are under pressure to come clean on carbon emissions, but the framework for measuring this is still unclear View Article
IPE: Pension funds wanted for manager anti-greenwashing standards : A £6bn (€7bn) asset owner group comprising mostly charities, foundations and universities has formulated minimum expectations of asset managers with regard to climate change, with pension funds one of the constituencies targeted as potential additional adopters and beneficiaries View Article
IPSF report compares EU and China’s green taxonomies : The report is a first step in terms of analysing the comparability and interoperability of taxonomies across jurisdictions, in line with the Roadmap of the G20 Sustainable Finance Working Group (SFWG). View Article
Fin Tech Regulation
EURACTIV: EU ambassadors approve ‘general approach’ to Digital Markets Act : The Digital Markets Act (DMA) is a landmark proposal to regulate large online platforms such as Amazon, Google or Facebook, which are designated as “gatekeepers” because they play a systemic role in the digital ecosystem. View Article
Economic Policies Impacting EU Finance
UK Finance: The future of withholding tax relief : Global investors are becoming more educated and committed to minimising WHT leakage and the demand for change is very real. View Article
Brexit and the City
Commissioner McGuinness announces proposed way forward for central clearing : Strike a balance between safeguarding financial stability in the short term – which requires taking an equivalence decision to avoid a cliff-edge for EU market participants - and safeguarding financial stability in the medium term – requires us to reduce this risky over-reliance on a third country. View Article
The UK in a changing Europe: The UK's Greening Finance Roadmap : By its very nature, responding to climate change requires cross border action, and in green finance, the EU is an important player. View Article
Brexit
Bloomberg: U.K. Triggering Article 16 Would Be Reckless, Irish PM Warns : The U.K. would be “reckless and irresponsible” if it were to move to set aside parts of the Brexit agreement, Ireland’s prime minister said, amid growing speculation the British government is preparing to do just that. View Article
The UK in a changing Europe: The Chancellor and Treasury need to re-engage with Brexit : Under Theresa May, the Treasury was first excluded from discussions on the shape of Brexit, and then became an advocate of a soft Brexit and an impediment to no deal. View Article
VoteWatch: BusinessEurope's Santos: EU-UK Trade post-Brexit : "There is a challenge in the area of services, when it comes to mobility of workers and recognition of professional qualifications, there has been quite a significant change with the UK out of the Single Market...." View Article
FT: Close to half of UK’s FTSE 350 ‘damaged’ by Brexit : But nearly all companies optimistic about prospects and wider economy, according to the FT’s Boardroom Bellwether survey View Article
Jon Worth: Labour: a new relationship with the EU : So what is Labour in favour of? A new relationship with the EU. That the UK and the EU – as close neighbours and trade partners – need to collaborate when it makes mutual sense. View Article
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