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On 7 February 1992, the Treaty of Maastricht was signed at the best of German Chancellor Kohl and French President Mitterrand (pictured below). The euro was created and – as fully expected – has driven closer political integration ever since, culminating in `banking union’ and `capital markets union’ with even closer political union to come as the current debates on economic and fiscal governance develop.
Two consumer bodies voiced their opinions on the MiFID II review and the conflict of interest inherent in `inducements’. The German banking industry drew attention to the need for a global green taxonomy – highlighting the leading role of the EU. The IMF is gearing up for central bank digital money while the EU’s supervisory agencies prepare for the impact of the digital world on the markets they oversee. The Commission followed up its extension of CCP equivalence with a call for evidence on precisely how it should make EU clearing more attractive to reduce the over-reliance on UK CCPs. The House of Lords initiated an inquiry into the impact of Brexit on financial services. The CCP issue should be at the heart of its questioning.
Graham Bishop
Articles from 4-10 February 2022
General Financial Policy
Carnegie Europe: Europe is Struggling, Thirty Years After the Maastricht Treaty : Three decades after Maastricht, the EU remains a work in progress. While the political constellation in 2022 seems favorable to reforms in several policy areas, the union could easily once again be thrown into crisis mode. View Article
CEPS:The Maastricht Treaty 30 years on : Time to mainstream QMV into EU foreign policymaking View Article
ECON: Inflation and continuing the economic recovery at forefront of MEP concerns in meeting with Lagarde : The ECB President briefed MEPs on the recent decisions of the ECB and fielded questions which mostly concerned how best to react to rising inflation despite a still faltering recovery. View Article
Introductory remarks by Commissioner Gentiloni at the meeting of the European Parliament's Committee on Economic and Monetary Affairs : Despite these negative developments, our Winter Forecast which I will present on Thursday will show that in 2022 the EU economy will continue recovering from the COVID crisis. This is mainly thanks to the successful vaccination campaign and the persistent support from monetary and fiscal policies. View Article
Vox: Debt: The eye of the storm – the 24th Geneva Report on the World Economy : Nations have accumulated public debt levels not seen since WWII in their efforts to tackle the health crisis and mitigate the ensuing economic dislocation. The private sector has also experienced a run-up in debt, but unlike the Great Mortgaging of the 2000s, this time led by the corporate sector. View Article
EPC: Rethinking EU economic governance: The foundation for an inclusive, green and digital transition : The European Union is undertaking a comprehensive review of its economic governance framework, to address longstanding criticisms, respond to the impact of COVID-19, and prepare for the challenges posed by the twin green and digital transitions. View Article
Bruegel: The puzzle of European Union recovery plan assessments : Identical European Commission assessments that EU countries’ recovery plan cost justifications are ‘medium-quality’ undermine trust in the assessments and raise questions about whether recovery money will be well spent. View Article
Eurobarometer: defending democracy is top priority for the European Parliament : EU citizens want Parliament to defend democracy: a third of respondents (32%) sees this as most important value to defend, followed by freedom of speech and thought (27%) and the protection of human rights (25%) View Article
Banking Union
Implementing Basel III Remarks by Pablo Hernández de Cos, Chair of the Basel Committee on Banking Supervision and Governor of the Bank of S : Financial stability is a global public good. The cross-border spillovers of financial distress can result in under-investment in financial stability by individual jurisdictions and regions... distress in one jurisdiction or region can easily spill over to other parts of the globe. View Article
Capital Markets Union
BEUC: Review of the markets in financial instruments regulation / MIFID II - A consumer perspective : Payment for order flow practices... is a clear conflict of interest that prevent brokers from acting in the best interest of their client and should be banned in the EU. The European Commission should also ban the payment of inducements to financial advisers . View Article
BETTER FINANCE EVIDENCE PAPER ON THE DETRIMENTAL EFFECTS OF “INDUCEMENTS” : This report by BETTER FINANCE aims to support EU authorities in their considerations of a ban on “inducements” in retail distribution channels across all financial market sectors. View Article
ESMA launches a Common Supervisory Action with NCAs on MiFID II costs and charges : This action will allow ESMA and the NCAs to assess the application by firms of the MiFID II requirements on costs and charges. View Article
EIOPA publishes its Supervisory Convergence Plan for 2022 : In line with EIOPA’s mandate to build a common supervisory culture and consistent supervisory practices in the European Union, the Supervisory Convergence Plan identifies EIOPA’s priorities to enhance supervisory convergence over the course of 2022. View Article
PensionsEurope comments on EBA consultation EMIR rules on Initial Margin Model Validation : It is PensionsEurope’s opinion that the suggested RTS regarding the adoption and governance of IM models will introduce new heavy and unjustified burdens on a vast number of counterparties and we believe that the proposed requirements overshoot what’s necessary in order to curb risks to the financial system arising from IM calculations. View Article
ALFI responds to the EBA consultation on IMMV under EMIR : ALFI is of the view that in its initiative, EBA (leading the RTS drafting on behalf of ESAs) is taking a banking stance. View Article
Environmental, Social, Governance (ESG)
BDB: Next Stop: Common Taxonomy for Sustainable Investment? : The European Union, in particular, which sees itself as a pioneer on climate protection, needs to work together with partners in international forums to achieve an even greater impact for more sustainability worldwide. View Article
ACCA responds to EC consultation on strengthening corporate reporting and its enforcement : ACCA strongly supports the EC approach to consider the three pillars of high quality and reliable corporate reporting as part of the wider financial reporting ecosystem and commend the EC’s multi-stakeholder approach. View Article
Accountancy Europe: Stronger corporate reporting in Europe – solutions by the accountancy profession : Accountancy Europe commends the European Commission (EC) for its initiative and for adopting a holistic approach to the 3 pillars of corporate reporting: corporate governance & reporting, statutory audit, and their supervision. View Article
ECGI: Climate Change and Mutual Fund Voting on Environmental Proposals : This paper explores whether investors’ personal experience of climate change affects their voting behavior on environmental issues. We find that fund managers exposed to abnormally hot temperatures are significantly more likely to support environmental proposals. View Article
GRI: The stakeholder capitalism revolution is well underway : Multi-stakeholder demands for transparency on sustainability impacts can’t be ignored View Article
Fin Tech Regulation
Joint European Supervisory Authority response : to the European Commission’s February 2021 Call for Advice on digital finance and related issues: regulation and supervision of more fragmented or non-integrated value chains, platforms and bundling of various financial services, and risks of groups combining different activities View Article
ESMA's Ross: Keeping on track in an evolving digital world : These innovations bring benefits, but also risks. I will then explore how financial regulation can adapt, to ensure that investors and markets can thrive in this new environment. In short, how do we keep on track in an evolving digital world? View Article
The ESAs recommend actions to ensure the EU’s regulatory and supervisory framework remains fit-for-purpose in the digital age : View Article
ESMA: Report on Call for evidence on Digital Finance : There was a broad consensus among respondents that the growth of digital finance hascontributed to greater fragmentation of the financial value chain. View Article
IMF's Georgieva: The Future of Money: Gearing up for Central Bank Digital Currency : Central banks are rolling up their sleeves and familiarizing themselves with the bits and bytes of digital money. View Article
Economic Policies Impacting EU Finance
MEPs quiz Commissioners about national recovery plans and inequalities in the EU : MEPs called for combining the European Semester with National Recovery Plans, to improve efficiency and express concern about persisting wealth disparities in the EU. View Article
ECON: Economic Dialogue with the European Commission on EU Fiscal Surveillance : Executive Vice-President Dombrovskis and Commissioner Gentiloni have been invited to an EconomicDialogue on the fiscal part of the 2022 European Semester autumn package adopted by the Commission inNovember 2021. View Article
Brexit and the City
Commission extends time-limited equivalence for UK central counterparties and launches consultation to expand central clearing activities in : The Commission launched a targeted public consultation and a call for evidence on ways to expand central clearing activities in the EU and improve the attractiveness of EU CCPs in order to reduce the EU's overreliance on systemic third-country CCPs. View Article
AFME welcomes 3-year extension to Euro clearing : AFME welcomes the decision from the European Commission to extend the equivalence period for UK CCPs until 30 June 2025. This is an important step towards avoiding a significant financial stability risk and provides medium-term certainty for EU market participants. View Article
Bank of England/Fed: Joint Readout of Principals’ Meeting of UK and U.S. Authorities regarding Central Counterparty Resolution : Senior officials from the Bank of England, Federal Deposit Insurance Corporation, Commodity Futures Trading Commission, Securities and Exchange Commission, and Federal Reserve Board convened a virtual meeting today to discuss certain issues relating to the resolution of a central counterparty (CCP). View Article
City of London: New campaign launched to boost UK’s position as a world-leading investment management centre : The City of London Corporation, working in partnership with Department for International Trade and the Investment Association, launched Global Investment Futures, a new campaign to preserve and promote the UK as a leading investment management centre globally. View Article
FCA: Enhancing the UK’s capital markets – The FCA’s role and priorities : Speech by Sarah Pritchard, Executive Director, Markets, to City & Financial Global – The Future of UK Financial Regulation Summit. View Article
House of Lords: New UK-EU financial services inquiry launched : What has been the impact of Brexit so far on the UK financial services sector? What is the future of financial services trade with the EU in the absence of equivalence? And what impact will regulatory divergence have on UK-EU financial services trade? View Article
Brexit
UKandEU: Scotland, independence, Brexit and the border : There is no doubt that Brexit has reenergised the campaign for independence in Scotland. View Article
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