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Highlights of my week
CoFE has come back to the centre of attention as Parliament held a feedback event for the citizen participants and called for a Convention to change the Treaties, but Council seems set to flatly reject the key suggestions. However, there was consensus in Eurogroup that the governance rules should be reformed. SSM’s Enria told ECON that banks were well-capitalised, but the worst has not yet come… De-risking of AML risks is a fraught area and the EBA is going to try to tackle it. Commissioner McGuiness had an exceptional speech-making week…starting with further CMU proposals especially about third country i.e. UK CCPs. To the surprise of no-one except starry-eyed Brexiteers, the Commission wants to make EU clearing services more attractive so reducing the obvious risks to the EU’s financial stability of depending on the UK. The Sustainable Finance Disclosure Regulation (SFDR) continued to trigger comment, while audit came back on to the radar as the Wirecard fraud trial started. The EU-UK Forum published a fascinating paper on the demographics of Brexit. As the elderly die-hard Brexiteers die out, the incoming younger voters are strongly pro-European.
Graham Bishop
Articles from 2 - 8 December 2022
Policy impacting Finance
Parliament: Conference follow-up: citizens ask about progress (video) : More than 500 of the citizens who took part attended a feedback event in the European Parliament in Brussels on 2 December. They questioned representatives from the Parliament, the European Commission and the Council about progress on their recommendations. View Article
Parliament: Conference on the Future of Europe: citizens demand more from the EU : ..Most of them also reiterated Parliament’s call to establish a Convention to revise the EU Treaties, and some noted that work across all of Parliament’s committees is underway to finalise the comprehensive legislative initiative report on its proposals to this end. View Article
EURACTIV: EU countries to reject Spitzenkandidaten and pan-EU election lists : EU governments are set to use next week’s pre-Christmas summit in Brussels to formally kill off plans for transnational lists and Spitzenkandidaten, or lead candidates, at the next European elections in 2024. View Article
Opening remarks by Executive Vice-President Dombrovskis at the ECOFIN Press conference : ...reform the EU's system of economic governance. Not surprisingly, there was a wide range of views – but with a general consensus on the need to ensure public debt sustainability and sustainable growth... View Article
Remarks by Paschal Donohoe following the Eurogroup meeting of 5 December 2022 : ...discussion on the proposals from the Commission for a two-tier pricing system for energy....Eurogroup issued a lengthy statement regarding the budgetary plans for next year, responding back to the assessment of the Commission and laying out our views on the work that needs to be done. View Article
Eurogroup statement on draft budgetary plans for 2023 : Based on the Commission forecast, the euro area deficit is projected to continue its decline in 2022 to 3.5% of GDP but is expected to widen in 2023 to 3.7% of GDP. Deficit levels vary significantly among Member States. Public debt in the euro area is expected to decline to 92% of GDP in 2023.. View Article
Opening remarks by Commissioner Gentiloni at the Eurogroup press conference : With the documents that we have approved, we have supported a consistent policy mix to support growth, reduce inflationary pressures and address fragmentation risks. View Article
BIS Quarterly Review, December 2022 : Triennial Survey results uncover shifts in trading activity in global foreign exchange and over-the-counter derivatives markets and identify risks; View Article
EURACTIV: German constitutional court: EU debt lawful as a crisis response : The Next Generation EU programme financed by EU debt does not overstep the EU’s competences as long as it is clearly linked to the economic crisis that was triggered by the COVID pandemic, the German constitutional court ruled. View Article
Banking Union
ECON Hearing: SSM's Andrea Enria : The banking sector maintains strong capital and liquidity positions. According to third-quarter results available for listed banks, the sector continues to record good levels of profitability. However, the euro area economic outlook has further deteriorated. View Article
EBA consults on new Guidelines to tackle de-risking : The EBA launched today a public consultation on new Guidelines on the effective management of money laundering and terrorist financing (ML/TF) risks when providing access to financial services. Through these Guidelines, the EBA aims to ensure that customers, especially the most vulnerable ones, are not denied access to financial services without valid reason. View Article
NVB: Undesirable consequences of de-risking for customers and banks : The NVB has been calling for attention to problems in the provision of services to customersin the performance of this role for some time. View Article
WSBI-ESBG shares its position on the draft FATF Guidance on the transparency and beneficial ownership of legal persons : In March 2022, the Financial Action Task Force (FATF) adopted amendments to Recommendation 24 (R.24) on the transparency and beneficial ownership of legal persons. A draft update on the Guidance to R.24 was published afterwards, aiming to facilitate the implementation of the new rules. View Article
Anti-money laundering: Council agrees its position on a strengthened rulebook : The EU continues its fight to protect EU citizens and the EU's financial system against money laundering and terrorist financing. View Article
Capital Markets Union
Remarks Commissioner McGuinness at the press conference on new proposals to boost the EU's Capital Markets Union : insolvency, listing, propsectus, CCPS, UK... View Article
Capital Markets Union: new proposals on clearing, corporate insolvency and company listing to make EU capital markets more attractive : to make EU clearing services more attractive and resilient; to harmonise certain corporate insomaking them more efficient and helping promote cross-border investment; to alleviate – through a new Listing Act – the administrative burden for companies View Article
Questions and Answers on the Commission's new proposals to make clearing services in the EU more attractive : Today's proposal amends EMIR and makes targeted amendments to the prudential frameworks for banks (the Capital Requirements Regulation, the Capital Requirements Directive) and for investment firms (the Investment Firms Directive) as well as to UCITS Directive and MMF Regulation. View Article
Questions and Answers on the Commission's proposals on corporate insolvency and listing : Today's proposal aims at harmonising targeted elements of Member States' insolvency rules and at creating common minimum standards across all Member States, thereby facilitating cross-border investment. View Article
AFME welcomes latest CMU proposals : Adam Farkas, Chief Executive of AFME, said: “Today’s package of proposals is a welcome step towards progressing the Capital Markets Union further, which is a vital project for supporting European capital markets, particularly in light of recent economic and geopolitical pressures. View Article
ADVICE TO ESMA SMSG reply to the Call for evidence on the implementation of SRD2 provisions on proxy advisors and the investment chain : 1.The SMSG welcomes the opportunity to respond to the call for evidence on certain provisions of SRDII and considers that the cross-border voting process should become simple, cost effective, and efficient. View Article
EuropeanIssuers answers to ESMA’s Call for Evidence on the implementation of SRD2 provisions on proxy advisors and the investment chain : Whilst EuropeanIssuers welcomes the improvements of the transmission of information along the chain of intermediaries since the implementation of SRD2, there are still cases in which the transmission is blocked in the holding chain. View Article
BdB Position ESMA Call for Evidence SRD II : BdB commented on the Call for Evidence on the implementation of Chapter Ia and Article 3j of the Shareholder Rights Directive II. View Article
PCS: Stakeholders' letter to European policy makers: "Securitisation cannot play its vital role for the European economy without reform" : Considering the breadth of representation encompassed by the signatories - in addition to PCS' own independent voice - we hope the letter will be taken to heart by policy makers. View Article
Insurance Europe: Artificial intelligence - Insurers criticise inclusion of sector in AI Act high-risk list without prior impact assessm : .. insurance is the only sector to be included by the Council in the high-risk list of Annex III without any proper analysis or impact assessment being conducted. View Article
EIOPA’s dashboard identifies the European natural catastrophe insurance protection gap : This tool is the first dashboard which presents the drivers of a climate-related insurance protection gap to identify measures that will help in decreasing society’s losses in the event of natural catastrophes in Europe. View Article
EIOPA outlines approaches to assess the prudential treatment of insurers’ sustainable assets and activities : EIOPA is therefore taking a step-by-step approach to assessing whether a dedicated prudential treatment of assets and activities associated with environmental or social objectives under Solvency II would be warranted. View Article
EFAMA: Strong net outflows from UCITS and AIFs, net inflows into SFDR Article 9 UCITS : EFAMA has today published its European Quarterly Statistical Release for Q3 of 2022... This Release presents for the first time data on the net sales and net assets of SFDR Article 8 and 9 UCITS. View Article
Environmental, Social, Governance (ESG)
Opening remarks by Commissioner McGuinness at the ECON-ENVI joint committee meeting: state of play on the remaining technical screening crit : The Sustainable Finance Disclosure Regulation ; ESG ratings; The Taxonomy,of course, being the core; And the new Platform on Sustainable Finance. View Article
ECB's Elderson: The European Climate Law and the European Central Bank : Is the ECB bound by the Climate Law? There are definitely indications that it is. The Climate Law is addressed to “relevant Union institutions and the Member States”. In the OLAF judgment, the ECJ made it clear that, in principle, the ECB is bound by all regulations which bind the Union. View Article
ESMA's Ross: The Green Deal vs. Geopolitics : Tackling the environmental crisis and dealing with geopolitical challenges require two things - commitment to the long term and perseverance in our efforts to find international solutions. View Article
CEPR: Climate risks are real and need to become part of bank capital regulation : van Tilburg, Grünewald, Schoenmaker, Boot: Climate risks are building up on banks’ balance sheets. Supervisory reviews show that banks are not well prepared. Yet, supervisors have been slow to include climate risks in minimum capital requirements. View Article
UNEP FI: 2022: a year of milestones on the road to implementing sustainable finance : At UNEP FI, 2022 was a year in which we marked important milestones, while we continued to drive the finance industry’s ambition on delivering sustainable global economies and showcased our members’ progress. View Article
GRI reporting best prepares companies for new EU standards : Key questions on the roll-out of the new European Sustainability Reporting Standards (ESRS) have been addressed, offering reassurance to the thousands of organizations already using the GRI Standards that their current reporting practices can best prepare them for the new requirements. View Article
Keynote speech by Commissioner McGuinness at the 2022 EFRAG Conference, 'Where is Corporate Reporting heading?' : On the importance of corporate reporting that includes both sustainability and financial information, on an equal footing; Where we stand on sustainability reporting; And the prospects for financial reporting. View Article
BETTER FINANCE Concerned About the European Commission Abandoning the Necessary and Urgent Audit Reform Announced in November 2021 : BETTER FINANCE is very concerned that this major reform that would go a long way towards improving investor trust, is being watered down or, worse, abandoned. View Article
ISDA: Towards Transparency – IQ December 2022 : Regulators in Australia, Canada, the EU, Hong Kong, Japan, Singapore and the UK are set to follow suit in the coming years, making global rule sets more consistent. View Article
IOSCO: Monitoring Group Reports on Progress to Implement Recommendations to Strengthen the International Audit and Ethics Standard-Setting S : In June of 2021, the MG reported on the development of its transition plan1 to implement the MG Recommendations. Since then, the MG, with strong multi-stakeholder support, has faithfully worked to implement the Recommendations, using the objectives agreed upon in 2020 as its guiding principle. View Article
Protecting Customers
Parliament: Deal on new rules to protect consumers from taking on too much debt : Proper assessment of consumer’s creditworthiness; Stricter rules on advertising to reduce miss-selling to over-indebted consumers; Effective measures against overcharging consumers; Right to withdraw from a credit agreement with no reason within 14 days View Article
Fin Tech Regulation
Commissioner McGuinness at EU Delegation in London on the EU Crypto-Asset Strategy : ... criminals and sanction evaders are using the anonymity of parts of the crypto system for illicit transactions. Now all that said, behind crypto is a technology with huge potential. This distributed ledger technology could make trading and settlement of securities more efficient. View Article
ECB's Panetta: Crypto dominos: the bursting crypto bubbles and the destiny of digital finance : When I last spoke about crypto finance last April, I likened it to the Wild West and warned about the risks stemming from irrational exuberance among investors, negative externalities and the lack of regulation.[2]Crypto markets have since witnessed a number of painful bankruptcies. View Article
Economic Policies Impacting EU Finance
Council approves conclusions on the progress achieved by the Code of Conduct Group (business taxation) in the second half of 2022 : Today, the Council approved conclusions welcoming the progress achieved by the Code of Conduct Group during the Czech Presidency, in particular its recent reform which highlights the strengthened political commitment of the member states to continue fighting harmful tax practices. View Article
Brexit
Federal Trusts' Stevens and Donnelly: Can the Conservative Party survive Brexit? : If the Reform Party does indeed stand in all Westminster seats at the next General Election, it may well produce a catastrophic defeat for the Conservatives. The future existence of the Party would then be in question. View Article
EU-UK Forum's Frese, Härkönen and Hix: Will Brexit support become extinct? : Has the British public changed its mind about Brexit? Recent opinion polls suggest that there has been a considerable shift in attitudes against Brexit, compared to the 52% to 48% split in the June 2016 referendum. View Article
FT's Duff: Keir Starmer must plot a bold route back to Europe for Britain : By showing ingenuity, the EU can turn a truculent neighbour into a useful security partner. The rest of Europe looks with amazement at the goings-on in Britain. Faced with a Brexit that has demonstrably failed, Rishi Sunak’s government seems hapless. View Article
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