Welcome to our Gold Friends weekly e-mail.
Highlights of my week: The consequences of the Ukraine war remain the dominant topic. The Versailles Declaration by EUCO made strong statements on defence and security but had little to say on financial matters – beyond a ritual call to complete banking union and CMU. However, the think tank industry is swinging into action, underlining that the scale of sanctions on Russia has no parallel since 1914. The liquidation of Sberbank went smoothly for the SRB but they re-stated this was just one bank and not a systemic problem where EU deposit insurance – EDIS – could be vital. By coincidence, the Conference on the Future of Europe (CoFE) is moving towards its scheduled conclusion in May. Could it suddenly become the vehicle for more profound change??
AFME held a conference on the wholesale markets post-Brexit but the changes under discussion are a long way from wholesale – more like the tinkering that one expects from the EU’s regular reviews. The City of London Corporation produced another of its economic fact books on the City’s massive contribution to the UK economy - now at risk to empower tweaks like changes to pre- and post-trade transparency in the bond markets.
Graham Bishop
Articles from 11-17 March 2022
General Financial Policy
Informal meeting of the Heads of State or Government: Versailles Declaration : The European Council acknowledged the European aspirations and the European choiceof Ukraine, as stated in the Association Agreement... we addressed today three key dimensions:a) Bolstering our defence capabilities;b) Reducing our energy dependencies; andc) Building a more robust economic base View Article
EURACTIV: Macron cautious about joint EU debt plan : French President Emmanuel Macron said the war in Ukraine will require joint EU investments which may lead to a new bout of joint debt, but added he would prefer to talk about the goals first rather than what is needed to get there. View Article
Economic and Financial Affairs Council : Sanctions on Russia; Carbon border adjustment mechanism; Corporate taxation: Fair and effective taxation for multinational groups; Economic governance review & fiscal guidance; Council priorities for the EU budget 2023; VAT e-commerce package View Article
Bruegel: The economic policy consequences of the war : The Ukraine war will have significant economic policy consequences for the European Union and its members, arising from the adverse supply shock triggered by the rise in oil and gas prices, energy independence measures, the inflow of refugees and boosted defence spending. View Article
ESMA coordinates regulatory response to the war in Ukraine and its impact on EU financial markets : ESMA, in coordination with National Competent Authorities (NCAs), is closely monitoring the impact of the Ukraine crisis on financial markets and is prepared to use its relevant tools to ensure the orderly functioning of markets, financial stability and investor protection. View Article
LSE: Russia’s invasion of Ukraine signals new beginnings and new conflicts for the European Union : The EU’s response to Russia’s invasion of Ukraine was unprecedented both in its speed and its scope. Floris de Witte writes that by acting decisively, EU leaders have set a new course for the integration process. View Article
GRI: Peace is at the heart of sustainable development : War in Ukraine is a setback for sustainability throughout the region View Article
Vox: Sanctions, war, and systemic risk in 1914 and 2022 : The Western countries have sanctioned Russia in a way not applied to any globally integrated major power since 1914. There are lessons to be learned from the 1914 systemic crisis and that high inflation and government debt will make it difficult to contain a crisis today if one emerges. View Article
Vox: A proposal for a central fiscal capacity for the EMU targeting euro area, national, and regional shocks : The global crisis and Covid-19 pandemic highlighted the limitations of the European Economic and Monetary Union, particularly the lack of a fiscal union for cross-border risk sharing. View Article
ESMA warns consumers of risk of significant market corrections : ESMA today publishes the first Trends, Risks and Vulnerabilities (TRV) Report of 2022 and, in its outlook for 2022, continues to see high risks to institutional and retail investors of further, possibly significant, market corrections. View Article
Conference on the Future of Europe: another Conference Plenary dedicated to citizens' proposals : The Conference Plenary took stock of 88 citizens’ recommendations on migration, economy, jobs, education and youth among other matters. Putin's invasion of Ukraine and the EU's reaction to it featured prominently in the topical debates of this weekend. Ukrainian citizens and MPs joined the plenary. View Article
European Parliament: Conference on the Future of Europe: MEPs start preparing Parliament’s positions : MEPs to discuss a joint statement with national parliamentarians expected to be endorsed in the coming weeks, and assess the status of the Conference. View Article
Insurance Europe: Proposed EU anti-coercion instrument must not be used as protectionist tool : Insurance Europe strongly supports the aim of the proposal: ie to empower the EU to react when a third country adopts or threatens to adopt measures to pressure either the EU or a member state into making a particular policy choice. View Article
Banking Union
SRB Chair, Elke König at the ECON Committee March 2022 : The war in Ukraine and the unfolding tragedy there, is now not only the backdrop to our work at the SRB, but in some respects, it is centre-stage, not least because of the recent Sberbank case. View Article
SSM: Invasion of Ukraine: euro area banks so far resilient to a second exogenous shock : The invasion of Ukraine reversed a steady improvement in investors’ stance on EU banks View Article
Capital Markets Union
Capital Markets Union: Commission proposes simpler rules to make settlement in EU financial markets safer and more efficient : Central Securities Depositories operate the infrastructure that enables the settlement of securities (such as shares or bonds) in financial markets. Settlement refers to the delivery of securities to a buyer in exchange for the delivery of cash to a seller. View Article
ESMA published its assessment and recommendations on the EC’s MiFIR review proposal : The letter focuses on the establishment of the consolidated tape provider (CTP) but also includes elements such as equity and non-equity transparency, reporting and payment for order flow. View Article
FSB, CPMI and IOSCO analysis highlights need to continue work on CCP financial resources : A first part of the analysis assessed the current use, composition and amount of financialresources and tools available to cover CCP losses in a sample of CCPs that are consideredsystemically important in more than one jurisdiction. View Article
AFME welcomes changes to CSDR, but cautions that Mandatory Buy-Ins could undermine European capital markets’ competitiveness : AFME welcomes today’s decision from the Commission to avoid immediately introducing mandatory buy-ins. View Article
EBF supports AFME proposal for temporary changes to the CSDR penalties month-end process : EBF members feel that this solution would facilitate the proper receipt of full and correct details of all individual penalty items by participants, while giving them sufficient time to reconcile Monthly Net Amounts with the individual penalty items captured on the daily reports. View Article
Environmental, Social, Governance (ESG)
Banks must get better at disclosing climate risks, ECB assessment shows : Banks do not fully meet ECB expectations on disclosure of climate and environmental risks; Significant gaps remain despite progress since first assessment in 2020; Supervisors informed banks of shortcomings and publish examples of good practice View Article
EBF Response: ESMA Call for Evidence on Market Characteristics for ESG Rating Providers in the EU : While ESG providers remain largely unregulated, their influence is expected to grow considerably. View Article
CEPS: Carbon removals on the road to net zero : Exploring EU policy options for negative emissions View Article
GRI welcomes appointment of strong EFRAG sustainability board : Continued progress towards EU sustainability reporting standards View Article
EURACTIV: EU countries agree world’s first carbon tariff, but leave out controversial issue : The EU’s 27 economy ministers reached an agreement to introduce a carbon levy on imports of highly-polluting goods like steel, cement and fertilisers, but kicked the can down the road on controversial aspects like the use of revenues coming from the scheme. View Article
IOSCO’s 2022 Sustainable Finance work plan strengthens the organization’s commitment to increasing transparency and mitigating greenwashing : "Our work plan for 2022 is very ambitious but it is of utmost importance that the regulatory community steps up its efforts in ensuring markets contribute positively to sustainability challenges, in a way that secures the integrity of financial markets and the protection of investors.” View Article
Protecting Customers
InsuranceEurope: DPB guidelines on right of access must ensure proportionality and benefit data subjects : Insurance Europe welcomes the draft guidelines as they provide clarity on how to handle practical cases of data access requests and the obligations to which insurers must adhere.data protection, guidei View Article
Fin Tech Regulation
Finextra: European Parliament votes down bitcoin mining ban : European Parliament members have voted against a proposed rule that would have effectively banned bitcoin in the EU because of the energy consumption involved in mining the cryptocurrency. View Article
European Parliament: Cryptocurrencies in the EU: new rules to boost benefits and curb threats : Uniform legal framework for crypto-assets in the EU; Consumer protection and safeguards against market manipulation and financial crime; Include crypto-assets mining in EU taxonomy for sustainable activities by 2025 to reduce carbon footprint View Article
Economic Policies Impacting EU Finance
Eurogroup statement on the fiscal guidance for 2023 : After two years of being in the grip of the Covid-19 pandemic, the EU is faced with a watershed moment caused by the unprovoked and unjustified Russian military aggression against Ukraine. View Article
Brexit and the City
City statistics briefing : The City Statistics briefing looks at the City of London's role as a global business hub for financial and related professional services. It provides facts and figures about employment and firms located within the City, as well as highlighting some recent changes to the City as a workplac View Article
AFME: Future of wholesale financial markets conference - Summary : Discussions centred around a speech from John Glen, Economic Secretary to the UK Treasury and City Minister, announcing reforms to capital markets regulation and listing rules changes in the UK. View Article
Brexit
EIAG: The UK and the EU: Two years after Brexit and one year into the Trade & Co-operation Agreement : European & International Analysts Group (EIAG) looks at the consequences of Brexit and at the implementation of the TCA in its first year, including its economic impact, and current problems arising from the agreement and its implementation. View Article
UK and EU: From sponsor licence to status: is it too early to see the true impact of Brexit? : It’s been over one year since the end of the Brexit transition period, yet many are still getting to grips with the new regime. View Article
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