Welcome to our Gold Friends weekly e-mail.
This two-week edition will be the last of the summer as we break until 1st September – enjoy some moderate sun! My highlights of the last fortnight: The Commission’s summer forecast highlighted the worsening economic picture under the malign influence of Russia’s Putin as he triggers a global inflation and famine. But the EPC regards this as the EU’s moment of truth. The Putin effect has now brought down Italian PM Draghi while UK PM “Boris” has finally been brought down by his own web of lies. The Single Resolution Board’s heat map showed good progress on the resolvability of large banks. But the ESRB showed the scale of non-bank financial intermediation in the EU - €42.6 trillion, so much larger than the banking system nowadays. ESMA’s CCP Committee reported successful handling of both Covid and Ukraine crises while the FSB reported progress on financial risks from climate change. CPMI and IOSCO published final guidance on “same risk, same rules” for stablecoins and the ECB seems increasingly clear about the need for a digital euro.
The candidates for UK Prime Minister emphasised their `trust’ credentials but failed to explain the consistency with breaching an international Treaty they both agreed to! Chancellor Zahawi spoke amidst the pomp of the Mansion House about the government’s vision for post-Brexit financial services – but failed to dispel the fog.
Graham Bishop
Articles from 07 - 21 July 2022
Policy impacting Finance
Commission: Summer 2022 Economic Forecast: Russia's war worsens the outlook : Russia's war of aggression against Ukraine continues to negatively affect the EU economy, setting it on a path of lower growth and higher inflation compared to the Spring Forecast. View Article
EPC: Europe’s moment of truth: United by adversity? : Inaction is not an option for the Union. It must demonstrate both unity and ambition along a concrete reform path, specifically across 10 strategic areas. The EU27 must decide whether the integration project can once again become a success story – this time in reaction to the watershed moment .. View Article
CEPS's Wright: Overall, the French EU Council Presidency was a success… but not everyone agrees : The assessment of France’s six-month Presidency of the Council has been mostly positive. It brokered a record 130 agreements and played a key role in the EU’s response to the war in Ukraine. View Article
Bloomberg: Italy Thrown Into Chaos as Draghi’s Coalition Abandons Him : Three parties in Draghi’s government turned against him; The prime minister will likely resign Thursday morning View Article
FSB Chair flags to G20 growing challenges to financial stability : The letter warns that the combination of lower growth, rising inflation and tighter global financial conditions may crystallise pre-existing vulnerabilities in the global financial system or give rise to new ones. View Article
BIS: Macro-financial stability frameworks and external financial conditions : Report submitted to the G20 Finance Ministers and Central Bank Governors View Article
LSE: Assessing the ECB’s new Transmission Protection Mechanism : The European Central Bank is set to unveil a new tool, the Transmission Protection Mechanism, which it hopes will protect states in the eurozone from escalating borrowing costs. Anthony Bartzokas, Renato Giacon and Corrado Macchiarelli argue there should be close coordination with the EU’s RRF. View Article
Banking Union
SRB Chair, Elke König speech at the ECON Committee : I will first take a look at some past resolution cases: including the recent court case on Banco Popular, and as well as mentioning the Sberbank case, which I touched on already in March; View Article
SRB publishes Resolvability Assessment and Heat-map : First time SRB publishes state-of-play for resolvability across the Banking Union; Good progress made to date on key priorities, especially for larger banks View Article
Speech by Elizabeth McCaul, Member of the Supervisory Board of the ECB, at the conference on “The use of artificial intelligence to fight fi : Europe needs a strong AML authority and framework View Article
EBF response to European Commission’s Targeted Consultation on the review of the revised Payment Services Directive (PSD2) : View Article
ESRB publishes EU Non-bank Financial Intermediation Risk Monitor 2022 : In 2021 the total assets of EU investment funds and OFIs grew by 9.2%, from €39.0 trillion to €42.6 trillion. View Article
Capital Markets Union
ESMA's Klaus Löber - Chair of the CCP Supervisory Committee : From a CCP perspective, the impact so far [Covid, Ukraine] seems to have been contained: there were no CCP defaults and only minor member defaults, which were swiftly and effectively managed. View Article
ESMA PUBLISHES ANNUAL PEER REVIEW OF EU CCP SUPERVISION : The Peer Review measured the effectiveness of NCA supervisory practices in assessing CCP compliance with EMIR’s requirements on business continuity, in particular in remote access mode. View Article
EIOPA publishes peer review on outsourcing : The findings show that European undertakings make an increasing use of outsourcing, mainly in the field of technology, and that the level of outsourcing varies greatly across the European Economic Area. View Article
ESMA proposes key risk indicators for retail investors : The proposed RRIs highlight risks around: inexperienced investors; use of digital tools by younger investors; and spikes in overall trading during periods of market stress. View Article
ICMA publishes Quarterly Report for the Third Quarter of 2022 : Corporate bond market liquidity; sovereign debt vulnerabilities.... View Article
Environmental, Social, Governance (ESG)
Bruegel's Darvas: Legal options for a green golden rule in the European Union’s fiscal framework : Achieving the European Union’s climate goals and decoupling from Russian energy will require a massive increase in green public spending, which will be difficult when EU fiscal rules requiring fiscal consolidation are reinstated. View Article
FSB outlines progress made on addressing financial risks from climate change : The report takes stock of progress by standard-setting bodies (SSBs) and other international organisations on the actions coordinated through the Roadmap, outlines areas for further attention, and provides updates where needed to the detailed Roadmap actions. View Article
ESMA: ISSB’s Exposure Drafts ‘IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information’ and ‘IFRS S2 Clim : ... we have observed in the past years the growing interest by financial market participants ... in morerelevant, reliable and comparable disclosures relating to ESG factors (... ‘non-financial information’ or ‘sustainability reporting’)... View Article
Commission: Call for feedback on the draft report by the Platform on Sustainable finance on minimum safeguards : The Platform invites stakeholders to provide feedback on the draft report until 6 September 2022 View Article
Protecting Customers
MEPs want better protection for consumers applying for loans online : Proper assessment of consumer’s creditworthiness ; Clear, concise and standardised credit information must be easily readable on digital devices ; Rules for advertising to reduce miss-selling to over-indebted consumers View Article
Fin Tech Regulation
CPMI and IOSCO publish final guidance on stablecoin arrangements confirming application of Principles for Financial Market Infrastructures : • Guidance is a major step forward in applying “same risk, same regulation”to stablecoins, and extending the international standards for payment,clearing and settlement systems to cover systemically important stablecoin arrangements. View Article
DMA: Council gives final approval to new rules for fair competition online : The DMA ensures a digital level playing field that establishes clear rights and rules for large online platforms (‘gatekeepers’) and makes sure that none of them abuses their position. Regulating the digital market at EU level will create a fair and competitive digital environment, allowing companies and consumers to benefit from digital opportunities. View Article
Commission welcomes political agreement on the Digital Decade policy programme driving a successful digital transformation in Europe : The programme sets up a monitoring and cooperation mechanism to achieve the common objectives and targets for Europe's digital transformation set out in the 2030 Digital Compass. View Article
ECB's Lagarde, Panetta: Key objectives of the digital euro : The way we pay is becoming increasingly digital. To ensure financial stability in this digital age, it is crucial that we all still have easy access to central bank money, which is the foundation of our currency. The digital euro can achieve that. View Article
ISDA's O'Malia: Getting Crypto Capital Requirements Right : ...we welcome the Basel Committee’s work to develop a robust capital framework for bank exposures to crypto assets. View Article
InsuranceEurope: Insurers are acting on non-affirmative cyber exposures : EU insurers and insurance associations are increasingly taking actions to reduce the industry’s exposure to non-affirmative cyber risks — risks that are neither expressly covered nor excluded from property and liability insurance policies. View Article
Broadening the International Role of the Euro
EURACTIV: Euro sinks, reaching parity with dollar : The dollar’s role as the safe-haven go-to currency for investors worried about the economic outlook has been burnished in recent weeks, with the US currency roaring to two-decade highs against multiple currencies. View Article
Brexit and the City
HM Treasury - Chancellor Zahawi: Mansion House 2022 : On the 19 July 2022, the Chancellor set out in a speech at Mansion House how the government is delivering on its vision for the future of financial services in the UK. View Article
AFME welcomes UK Financial Services Bill : AFME welcomes today’s Financial Services and Markets Bill setting out the UK Government’s vision for the future of the financial services sector in the UK View Article
Reuters' Jones: Britain kicks off post-Brexit 'transformation' of finance : UK seeks to preserve London's financial standing after Brexit; Regulators to focus on competitiveness, not just stability; Capital rules for insurers to be relaxed to boost investment; Zahawi pauses plan for more government oversight of regulators View Article
FT's Thomas: A post-Brexit bonanza eludes both the City and the EU : There are no easy ways for either side to extract quick wins from the current landscape View Article
City of London: The State of the Sector - new report : The financial services sector is a major driver of the UK’s economy. Securing its competitiveness is critical for future prosperity across the UK. The report shows where the UK is world leading, what steps have been taken to improve the overall environment for finance so far... View Article
FT: Insurers issue Solvency II warning as post-Brexit reforms of City unveiled : Zahawi says new financial services bill will ensure sector ‘works in interests of British people and businesses’ View Article
Brexit
UK and EU's Rutter: breaking the deadlock on the Norther Ireland protocol : So far no PM candidate has offered an alternative to proceeding with the Northern Ireland Protocol Bill and playing hardball with the EU over the future trading arrangements between GB and NI. View Article
Federal Trust's Donnelly: VIDEO: Brexit Doesn’t Have To Be Forever : In a new video commentary, our Director Brendan Donnelly discusses the role of Brexit-related issues in the current Conservative leadership race. He compares the Conservative debate with the European discussion now taking place within the Labour Party. View Article
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