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Highlights of my week: Brexit has exploded back into the headlines – though superficially with little financial services impact. However, the string of extraordinary claims that Prime Minister Johnson negotiated the Irish Protocol in bad faith may become the turning point in whether the EU can trust the solemn word of a British Government. If it cannot, then the EU would be naïve and foolish to trust any “binding agreement” negotiated by a government led by Boris Johnson about financial regulation such as that relating to crisis support for UK-based CCPs or banks. Why put the levers of destruction of your financial stability into the hands of a man you now believe you cannot trust?

 In an otherwise light week, a weakened agreement on global corporate tax rates was signed at the OECD. Several more regulators took aim at the potential impact on global financial stability of stablecoins, etc.

Graham Bishop

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Articles from 8-14 October

General Financial Policy

FSB Chair updates the G20 on enhancing resilience in non-bank financial intermediation and addressing challenges in cross-border payments : The letter focuses on two key areas of the FSB’s work on which the FSB has submitted reports to the upcoming G20 meeting.

Banking Union

FSB publishes targets for enhancing cross-border payments and progress under its Roadmap : The Financial Stability Board (FSB) today published a progress report on the first year of the G20 Roadmap for Enhancing Cross-Border Payments, bringing together in one place the work under the wide-ranging, but interconnected, set of initiatives.

Capital Markets Union

EBF paper on the review of the EU securitisation framework : EBF has elaborated four priority topics that should be given particular attention: 1. capital non-neutrality, 2. the significant risk transfer process (SRT), 3. The liquidity treatment of securitisations, and 4. the disclosure requirements for securitisation. 

FSB publishes final report with policy proposals to enhance money market fund resilience : MMFs are subject to two broad types of vulnerabilities that can be mutually reinforcing: they are susceptible to sudden and disruptive redemptions, and they may face challenges in selling assets, particularly under stressed conditions.

AFME says Consolidated Tape must strike right balance : From AFME’s members’ perspective the use case is clear: in equities markets, we need a real-time consolidated tape in Europe that provides access for all investors to help build deeper and more open capital markets in Europe.

Reuters: Better data needed for reform of EU trading rules-official : Poor trading data is hampering the European Union's capital market, ruling out any radical reform to securities rules before statistics have been improved, a senior official from the bloc said on Friday.

Environmental, Social, Governance (ESG)

FT EU launches largest-ever green bond : Brussels’ €12bn sale narrowly exceeds UK’s £10bn debut in September

Irish Funds: Ireland to establish international centre for sustainable finance : A new international Sustainable Finance Centre of Excellence is to be established in Ireland next year and financial workforce skills and training in sustainable finance are to be prioritised, as two key actions identified in a new Sustainable Finance Roadmap.  

BIS: A taxonomy of sustainable finance taxonomies : Sustainable finance taxonomies can play an important role in scaling up sustainable finance and, in turn, in supporting the achievement of high-level goals such as the Paris Accord and the UN sustainable development goals. This paper develops a framework to classify and compare existing taxonomies.

Fin Tech Regulation

ECB's Panetta:Stay safe at the intersection: the confluence of big techs and global stablecoins : Speech at the panel on “Cross-border dimensions of non-bank financial intermediation: what are the priorities for building resilience globally?”, as part of the UK G7 Presidency Conference on “Safe Openness in Global Trade and Finance” hosted by the Bank of England 

BIS Couere: Finance disrupted : New technologies can foster greater efficiency, financial stability and inclusion. But they can also do the opposite, spawning financial instability, loss of privacy, and financial exclusion.

Bank of England's Cunliffe: Is ‘crypto’ a financial stability risk? : He looks at the impact of ‘crypto’ on the stability of the UK’s financial system. ...unbacked crypto-assets (eg Bitcoin) and backed crypto-assets for payments (stablecoins) have begun to connect to the financial system. ...and talks about how regulators are responding to their rapid growth.

 

Economic Policies Impacting EU Finance

OECD: International community strikes a ground-breaking tax deal for the digital age : Major reform of the international tax system finalised today at the OECD will ensure that Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023.

Brexit and the City

FT: Brussels eyes new rules to tighten grip on branches of non-EU banks : Move by commission could push up costs for the industry

Brexit

Lord Frost speech: Observations on the present state of the nation, 12 October 2021 : ...I want to make five points....

UK in a Changing Europe: A reflection (or four) on Lord Frost's speech : Process matters, but ultimately outcomes will matter more, so it is important, once the Commission has produced its proposals, that the two sides sit down and try to thrash out a compromise acceptable to both.

CITY AM: Brexit: Boris Johnson never understood what leaving Customs Union meant, says Cummings : Dominic Cummings said in a provocative series of tweets that he had always intended to get “the trolley” – his derogatory nickname for the Prime Minister – to “ditch the bits we didn’t like” after beating Labour in the 2019 general election.

BBC Newsnight: Boris Johnson and the Northern Irish Protocol: tearing it up : Boris Johnson did tell me personally... after agreeing to the protocol, he would sign up to changing that protocol and indeed tearing it up” DUP MP Ian Paisley Jr tells #Newsnight that before the 2019 election the PM wanted to change the NI protocol 

Irish Times: Pat Leahy: Pessimism grows in Dublin over protocol : Acute concern over British intentions and impact on political stability in North.