Welcome to our Gold Friends weekly e-mail.
My highlights of the week: The war in Ukraine remained the dominant factor this week as the world was ever-more horrified by new levels of Russian barbarities – forcing Western commercial players (including banks) to withdraw from Russia. Whatever the ultimate consequences, NATO is back at centre stage and the EU is being forced into action on defence, energy and its economy. The demonstration of the awesome power of the dollar payments system should reinforce the EU’s drive to extend the autonomy of the euro payments system. Turning a blind eye to money laundering by oligarchs/autocrats – wherever they come from – should no longer acceptable to the EU. But the IPCC report reminded us that the climate crisis has not gone away, so green finance may need to adapt in the short term – without losing sight of the longer term imperatives.
Graham Bishop
Articles from 4-10 March 2022
General Financial Policy
Carnegie Europe: What Russia’s War in Ukraine Means for Europe : Russia’s invasion of Ukraine marks a turning point for the EU. When boosting its capabilities and resilience, Europe must not neglect engagement with the wider world. View Article
Der Spiegel: How Vladimir Putin Brought the West Together : The Ukraine war is uniting the West – politically, militarily, morally. But what will the world's democracies do with this newfound unity? Can they succeed in preventing further escalation? View Article
Bruegel: War in Europe: the financial front : Russia is reeling from massive financial sanctions, while Ukraine’s financial system is battered but remains functional, and the EU and global financial systems have rather easily absorbed the initial shock. View Article
POLITICO: Ukraine war gives Macron’s drive for EU autonomy new impetus : Where France sees vindication, others fear Europe turning in on itself. Russia's war on Ukraine has given new momentum to Emmanuel Macron's push to make the EU more autonomous. But the Continent's leaders still need to thrash out what that means in practice. View Article
Invitation letter by President Charles Michel to the members of the European Council ahead of their informal meeting of 10 and 11 March 2022 : At our informal meeting, I would like us to focus on three particular issues, namely: bolstering our defence capabilities; reducing our energy dependency, in particular on Russian gas, oil and coal, and building a more robust economic base. View Article
EURACTIV: EU leaders unlikely to agree on Ukraine’s candidate status : EU leaders are to pledge support but are likely to stop short of offering fast-track EU membership to Ukraine when they meet for an informal summit in Paris on Thursday (10 March), according to a draft statement, seen by EURACTIV. View Article
POLITICO: Big countries play down calls to waive defense from EU deficit rules : The push comes ahead of this week’s informal gathering of EU leaders in Versailles, France. A push from Central and Eastern Europe to exempt defense spending from EU rules on budget deficits ran into resistance from other capitals on Monday, but has not yet been ruled out. View Article
DG FISMA: March issue of newsletter : In this issue: Interview with ECON committee Chair Irene Tinagli, the EU taxonomy, and CCPs. View Article
Banking Union
Reuters Analysis: Ukraine crisis leaves European banks' renaissance in tatters : European banks down 15% since invasion, among worst-hit sectors; Russia losses, delayed rate hikes threaten dividend outlook; Investors, poised to flock back to banks, reconsider View Article
City A.M: Branch banking to be dead and gone in Europe by 2025, survey says : Banking through physical branches could phase out by 2025, a new survey has revealed, as the pandemic-era push to online holds its momentum. View Article
SRB approach to CRR discretion on leverage and MREL calibration : Final MREL targets will be re-calibrated in the 2022 resolution planning cycle based on the leverage amount, including the central bank exposures temporarily excluded on the basis of the relief measure, to ensure adjustment of the MREL before the compliance date of 1 January 2024. View Article
Project Syndicate : For years, Western governments and financial institutions have been gladly profiting from the schemes that allow Russian oligarchs and others to stash their ill-gotten gains abroad. Their complicity has removed the incentives these elites might have had to rein in their countries' authoritarian leaders. View Article
Capital Markets Union
PensionsEurope input to the EC consultation on the review of the central clearing framework in the EU : Therefore, PensionsEurope proposes to the Commission that the solution would be that the European central clearing houses could provide central bank liquidity to PSAs in times of stress to convert high quality government bonds into cash. 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 ... View Article
ESBG response to the European Commission consultation on the upcoming review of the Mortgage Credit Directive : ESBG asks for a limited review on the necessary topics only View Article
IPE: Irish regulator: ‘Considerable consolidation’ likely needed for IORP II : The Irish pensions regulator has published its strategy statement for 2022-2024, suggesting “considerable consolidation” of pension schemes would be needed to deal with the requirements stemming from the EU pension fund directive and that it would pay close attention to this. View Article
ACC and AIMA response to the EC proposal amending ELTIF Regulation : The ACC and AIMA support the ambition shown in the proposed reforms of the European Long-Term Investment Fund (ELTIF) Regulation. These changes have the potential to unlock ELTIFs’ value proposition and deliver for EU investors and businesses alike. View Article
EFAMA’s position on the EC's review of the AIFM and UCITS directives : We welcome the targeted approach of the Commission in its review, recognising the overall success of the frameworks over the past decade. View Article
EFAMA: US mutual funds are not necessarily cheaper than UCITS | EFAMA Market Insights Issue #8 : This report compares the costs of UCITS and US mutual funds, taking into account various cost calculating methods, as well as the differences in fund distribution between Europe and the US. View Article
Environmental, Social, Governance (ESG)
UN EP - FI: What conclusions should financial institutions take from the latest IPCC report? : The report provides an alarming summary of the increasingly devastating impacts of climate change on societies and economies, their vulnerabilities and how we may adapt to inevitable climate change. UNEP FI’s Paul Smith provides a summary of the key implications for financial institutions. View Article
S&P: ESG investors warm to nuclear power after EU green label award : Europe's ethical investors may soften their attitude toward nuclear power after the carbon-free technology won EU recognition as a sustainable activity. View Article
BIS: Deconstructing ESG scores: how to invest with your own criteria : ESG scores amalgamate a broad range of fundamentally different factors, which creates ambiguity. Weak scores in one pillar can offset strong scores in another pillar. View Article
Vox: How to reconcile increased green public investment needs with fiscal consolidation : The EU’s ambitious emissions reduction targets will require a major increase in green investments. This column considers options for increasing public green investment when major consolidations are needed after the fiscal support provided during the pandemic. View Article
CER: How to make the new emissions trading system work for consumers : Extending the Emissions Trading System to buildings and road transport can cut emissions and help poor households if all revenues are devoted to income support and green investment. View Article
Protecting Customers
GFIA: Policyholders highly protected, so extra market conduct tools not always necessary : GFIA pointed out that, among all financial sectors, the market conduct of insurers is already heavily regulated and supervised, and that insurance consumers are already highly protected. Additional tools may not, therefore, always be necessary. View Article
Fin Tech Regulation
Carnegie: How Sanctions on Russia Will Alter Global Payments Flows : Beijing sees the Ukraine crisis as its opportunity to gain influence over financial markets...In the longer term, the events of the past few weeks play into the deep concerns in Beijing that China could one day be disconnected from U.S.- and EU-led payments channels. View Article
Finextra: Swift ban extended to Belarus : Three Belarusian banks have been excluded from the Swift financial messaging network as the EU imposes further financial sanctions against warring forces in Uktaine. View Article
Economic Policies Impacting EU Finance
ECON: Recovery and Resilience tools to support EU countries through the Ukraine crisis : Energy independence, the negative effects of sanctions on Russia, and funds for Ukrainian refugees were among key issues discussed by MEPs and Commissioners on Monday evening. View Article
Broadening the International Role of the Euro
Joint Statement on the U.S.-EU Joint Financial Regulatory Forum : U.S. and EU participants in the U.S. - EU Joint Financial Regulatory Forum (“the Forum”) met virtually on March 1-2, 2022, to exchange views on topics of mutual interest as part of their ongoing financial regulatory dialogue. View Article
Brexit
UKandEU's Curtice: Do voters’ perceptions of the consequences of Brexit matter? : Today’s poll asked a new set of questions designed to tap people’s perceptions of whether the UK is better or worse off as a result of being outside the EU. Hitherto, most polls that have addressed the issue have asked people what they think has been the impact of leaving the EU. View Article
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