General Financial Policy
FT: Neel Kashkari: Big US banks should raise $200bn in capital now : Biggest lenders must prepare for the worst to survive deep economic downturn, writes Fed official.
VOX: Daniel Gros - A corona financial solidarity levy : Multiple proposals for a ‘solidarity fund’ have been made. This column argues that a one-time EU-wide levy on financial assets could raise €300-400 billion, and thus finance a European Solidarity Fund. ..and would avoid the need for controversial Coronabonds.
Soros: The EU Should Issue Perpetual Bonds : The disruption in the European Union caused by the COVID-19 pandemic should be temporary, but only if EU leaders take the extraordinary measures needed to avoid long-term damage. Fortunately, there is an easy, fast and low-cost way to finance the proposed €1 trillion European Recovery Fund.
Banking Union
SSM Chair Enria: wide-ranging interview on use of capital flexibility and loan loss provisions : In general, euro area banks entered this crisis with much stronger balance sheets, stronger capital positions, better asset quality and stronger liquidity buffers. Profitability was the weak spot.
Expected loss provisioning under a global pandemic : In response to the 2007-09 Great Financial Crisis (GFC), accounting standard setters introduced a new methodology to value loans based on expected credit losses (ECL). The previous approach, based on incurred losses, was viewed as procyclical and inconsistent with prudential objectives.
Reuters: ECB to give banks ample time to resume pre-crisis capital rules
Capital Markets Union
ESMA's Newsletter: including Covid Recommendations to financial market participants : ESMA has launched its new page on COVID-19 as it continues to closely monitor the situation in view of the impact the virus is having on EU financial markets.
Protecting Customers
SUERF: Regulation, Corporate Culture and Individual Responsibility in Banking : David Llewellyn considers the role of institutional culture and individual responsibility in banking and the role and focus of regulation. Should the focus be on individuals or financial institutions for regulation, supervision, accountability, and sanctions?
Environmental, Social, Governance (ESG)
EU COVID-19 recovery plan must be green and ambitious, say MEPs : Parliament called on the Commission to propose a recovery and reconstruction package that “should have at its core the Green Deal and the digital transformation in order to kick start the economy."
EURACTIV: Timmermans promises green recovery to EU lawmakers : The European Commission’s Green Deal chief, Frans Timmermans, assured EU lawmakers on 21 April that “every euro” spent on economic recovery measures after the COVID-19 crisis would be linked to the green and digital transitions.
Economic Policies Impacting EU Finance
EURACTIV: ‘Coronabonds’ vs ‘Recovery bonds’: Where does Germany stand? : While German Chancellor Angela Merkel has opposed the idea of ‘coronabonds,’ German MEPs from her own political faction have spoken out in favour of ‘recovery bonds,’ a position that could weigh heavily on the EU summit on Thursday.
IMF blog -- The Great Lockdown: Worst Economic Downturn Since the Great Depression : As countries implement necessary quarantines and social distancing practices to contain the pandemic, the world has been put in a Great Lockdown. The magnitude and speed of collapse in activity that has followed is unlike anything experienced in our lifetimes.
More ambition needed for EU recovery instruments, says majority of MEPs : numerous MEPs called for stronger measures to be put forward, arguing that the ones currently on the table consisted mostly of loans which would leave those countries most hit by the Coronavirus heavily indebted and increase economic divergence in the Eurozone.
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