Welcome to our Gold Friends weekly e-mail.
Highlights of my week: Eurobarometer reports overwhelming support for the EU’s Green deal – especially amongst the young. The French Presidency continues to lay out its goals even as the Russian menace hangs over the East – raising questions about Germany’s commitment. ECB wants to know about bank exposures to Russia and Bloomberg explains why SWIFT is such a good weapon – but only up to a point. ECB also discusses reforms to money market funds. With such strong public backing, the Net Zero Assets Owners Alliance is championing a halving of “portfolio emissions” by 2030. The Commission has teamed up with the OECD to promote citizens’ financial competence – with the need underlined by surging demands for retail crypto futures.
Brexit: yet more evidence that the Leavers’ promises of higher trade were false. City of London watchers can point to surging jobs but the warning signs multiply about loss of competitiveness in corporate lending, market trading, access to talent and `new job’ creation in Europe.
Graham Bishop
Articles from 20-27 January 2022
General Financial Policy
European Parliament: Future of Europe: Europeans see climate change as top challenge for the EU : Almost every second European (49%) sees climate change as the main global challenge for the future of the EU, with overwhelming support for the environmental objectives of the European Green Deal. View Article
French Presidency briefs the European Parliament’s committees on its priorities : Ministers outlined the priorities of the French Presidency of the Council of the EU to parliamentary committees, in a series of meetings. View Article
F. Robert Schuman: European sovereignty, strategic autonomy, Europe as a power: what reality for the European Union and for what future? : The aim of this article is to assess five years - in terms of where we are from an economic, foreign policy and security point of view and to analyse the steps taken by the European Union to become a full-fledged player on the international scene. View Article
Project Syndicate's Stub: Can Italy Maintain Its Pandemic-Era Transformation? : COVID-19 prompted a dramatic change in behavior that made Italy more stable and predictable. But with a new president and a general election approaching, there is concern that recent gains could be abandoned just as the country must decide how to use its windfall of EU recovery funds. View Article
EURACTIV: Coalition against EU debt rule reform shows cracks : Many of the fiscally conservative states hoped Germany would join their call to implement a rigid EU austerity policy when Christian Lindner of the liberal FDP party took over Germany’s finance ministry. However, the FDP-led ministry has shown it is willing to compromise on reform. View Article
Project Syndicate's Harold James: A Whiff of Munich : With the United States and its NATO allies seeking further negotiations to prevent Russia from invading Ukraine, many have been quick to invoke the 1938 appeasement of Hitler. But if the right lessons are taken from that episode, another violent conflict need not be inevitable. View Article
Der Spiegel: Germany Has Little Maneuvering Room in Ukraine Conflict : The U.S. wants to impose harsh sanctions on Russia invades Ukraine. But the German government is putting on the brakes out of fears over the economic consequences and what punitive measures could mean for energy supplies for a country that gets much of its gas from Moscow. View Article
FT: ECB warns European lenders on Russia sanctions risk : Central bank takes action as US threatens ‘massive consequences’ if Moscow invades Ukraine View Article
Banking Union
SRB:The public interest assessment and bank-insurance contagion : The SRB is continuously enhancing its approach to the public interest assessment (PIA). This is the main policy tool used to assess whether a failing bank should be resolved in the public interest, or whether it can be liquidated under normal insolvency proceedings. View Article
EBA consults on draft Guidelines on remuneration and gender pay gap benchmarking exercise for banks and investment firms : The principle of equal pay for equal work or work of equal value and measures to ensure equal opportunities have already been included in the EBA Guidelines on sound remuneration policies and internal governance. View Article
Capital Markets Union
ECB: Mind the liquidity gap: a discussion of money market fund reform proposals : Money market funds perform a key function for the financial system by linking the short-term funding and cash-management needs of various market participants. Proposals to reform the regulation of these funds and enhance the sector’s resilience are assessed. View Article
Environmental, Social, Governance (ESG)
EBA publishes binding standards on Pillar 3 disclosures on ESG risks : The technical standards aim to ensure that stakeholders are well-informed about institutions’ ESG exposures, risks, and strategies and can make informed decisions and exercise market discipline. View Article
UNEP FI: New protocol binds Net-Zero Asset Owner Alliance to halve portfolio emissions by 2030 : The recommended decarbonization range for absolute emissions reductions for the period 2020 to 2025 should range between 22% to 32% (as outlined in the criteria in the Annex). To date, 30 members have already set 2025 targets. View Article
AFME welcomes progress on CSRD and highlights need for consistency with international frameworks : Finalising EU sustainability reporting standards has become especially urgent to enhance the availability and comparability of sustainability information, provide banks with the sustainability information needed to scale sustainable finance and to address the problematic sequencing of ESG disclosure rules. View Article
Invest Europe: European Data Cooperative to Measure Private Equity, Venture Capital ESG Contributions through Annual Data Tracking : EDC to track European private equity emissions and progress towards net zero, Will also measure women’s role in the board and staff of portfolio companies View Article
Protecting Customers
Commissioner McGuiness: Keynote speech at launch event for joint EU OECD-INFE financial competence framework : We’re a little hesitant sometimes to talk about money and make sure that money works for us, as citizens. View Article
ESBG welcomes the financial competence framework by the European Commission and OECD : The framework builds on the OECD’s existing one, updating it to the EU context and enriching it with more detailed digital and sustainable finance competences. It is made available for voluntary uptake in the EU by public authorities, private bodies and the civil society. View Article
EIOPA:Consumer Trends Report: The pandemic has fast-forwarded digitalisation, raising opportunities but also risks for consumers : This brings opportunities but also some concerns for consumers, such as frauds and possible new forms of exclusion from access to the financial products. View Article
Fin Tech Regulation
European Parliament: Digital Services Act: regulating platforms for a safer online space for users : MEPs agreed a draft set of measures to tackle illegal content, to ensure platforms are held accountable for their algorithms, and improve content moderation. View Article
CER: How the Digital Markets Act will challenge consumers : The European Parliament’s proposals to tame big tech will challenge consumers. Some of these proposals will promote innovation – but law-makers should drop proposals which will stifle it. View Article
City AM: CME crypto futures : Surging demand for crypto exposure amongst investors has created a bustling futures market according to the Chicago Mercantile Exchange (CME). View Article
Bloomberg: Why Swift’s Global Payments Are a Sanctions Pain Point : As the U.S., the U.K. and the EU weighsanctions against Russia should it invade Ukraine, one idea under discussion involves cutting off access to a messaging system called Swift. So central is Swift to the international financial system that any such talk rattles bankers and diplomats alike. View Article
BIS Innovation Hub to focus on CBDC, payments, DeFi and green finance in 2022 work programme : New initiatives also focus on regulatory and supervisory technology and cyber security; First projects to be launched in the new London and Stockholm centres; Several projects will support broader Group of 20 (G20) efforts to improve cross-border payments. View Article
BIS: Gatekeeping the gatekeepers: when big techs and fintechs own banks – benefits, risks and policy options : Tech firms have obtained banking licences in several jurisdictions to access low-cost deposits and to gain the credibility a banking licence affords. View Article
Economic Policies Impacting EU Finance
SUERF: Choosing the European fiscal rule : We evaluate the properties of two fiscal rules – the structural balance rule and the expenditure growth rule. Having just the expenditure growth rule tends to yield more stable macroeconomic outcomes, but more volatile public finances, as compared to having only the structural balance rule. View Article
Broadening the International Role of the Euro
EURACTIV: Central and Eastern Europe needs a different type of eurozone : EU countries such as Czechia, Croatia and Bulgaria should leverage their future membership of the eurozone for significant structural change View Article
Brexit and the City
FT: UK faces unintended consequences of post-Brexit financial regulation : New rules over corporate lending and market trading mean EU rivals may soon have a competitive advantage View Article
Reuters: London is top global finance centre but lags in key areas, says study : London remains the top global financial centre, according to a study from its own financial district, but is outgunned by New York and Singapore in access to talent, while Paris is adding competition from the European Union.View Article
Reuters: London financial vacancies jump 40% from pre-pandemic level : 40% increase in City jobs in Q4 2021 vs Q4 2019; 34% more people looking for City jobs in 2021 vs 2019 View Article
Bloomberg: London Bankers, Your Jobs and Bonuses Look Safe — For Now : New finance jobs created elsewhere in Europe, rather than transfers from London, threaten to erode the City’s status. View Article
Brexit
Federal Trust: Post-Brexit Trade Flows with the EU: What Leavers overlooked :Above all else, Leavers were looking for a marked short run improvement in Britain’s economic fortunes, such as higher trade and output volumes, and a reduction in trade with the EU. This has not happened. View Article
UKandEU: Expecting Brexit : Research shows that the Leave vote had a sizable negative effect on the economy even before the UK left the EU. Based on the available evidence, our judgment is that the UK’s economy was two to three per cent smaller at the end of 2019 than it would have been if the UK had voted to stay in the EU. View Article
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