Welcome to our Friends weekly e-mail.
Highlights of my week: Reform of the EU’s fiscal rules seems be getting closer with much of the text agreed and the Spanish Presidency hopes to finalise an initial agreement next month. However, commentators are still sceptical about what should be in the rules as penalties have never been implemented in their three-decade existence! One bright spot is that ECON has done a survey of the involvement of national parliaments in EU economic governance and found 70-80% were actually involved in “national ownership”. SUERF’s Boonstra posed the hypothetical question of whether it was practically possible to leave the euro and concluded it would be exceptionally difficult! Bank supervision came under the microscope and ECB speakers concluded that a bank’s “culture” is the key, rather than laws. The FSB proposed a “toolbox” of resources to resolve CCPs – especially cross-border ones – in the (of course unlikely) event that one needed to be resolved. (An interesting moment to open the debate while the EU and UK argue about the location of CCPs for euro activity.) The role of finance in environmental issues took another turn as the UN launched its framework for nature-related risks and the City of London published a report on positioning the City to be the global centre for nature finance. Capital market bodies reacted positively to the UK’s FCA consultation about a consolidated tape for bonds (though the EU reached political agreement on its own formal legislative proposal in June.) Labour leader Starmer seems to be putting on the cloak of Prime Minister-in-waiting as he sounds out what can be done to improve the Brexit deal but may have found the EU pre-occupied with other more-pressing matters.
Graham Bishop
In this latest Federal Trust video, Graham Bishop describes the growing risks to the City of London from Brexit. He contrasts the methodical approach of the European Union to building its Capital and Banking Union with the confused rhetoric of the British government. He concludes by warning that a smaller City of London will be able to contribute less to the already stretched public finances of the UK.
SPEAKERS:
Brendan Donnelly is the Director of the Federal Trust and a former Conservative MEP.
Graham Bishop is a member of the Federal Trust and an analyst and commentator on economic affairs.
Articles from 14-21 September 2023
Policy impacting Finance
ESAs warn of risks resulting from a fragile economic outlook : The ESAs warn national supervisors of the financial stability risks stemming from the heightened uncertainty, and call for vigilance from all financial market participants. View Article
EURACTIV: EU ministers agree on fiscal reform ‘camino’, aim for year-end deal : Spanish Finance Minister Nadia Calviño said that Spain, which holds the rotating EU presidency until the end of the year, is aiming for an initial agreement at the next finance ministers' meeting in October, but that more talks could be necessary View Article
Bruegel: A quantitative evaluation of the European Commission’s fiscal governance proposal : This paper focuses on the fiscal adjustment that the first regulation would require of countries with debt above the treaty benchmarks. View Article
CEPR: In for a penny, in for a pound: The enforcement dilemma of EU fiscal rules : The EU’s Stability and Growth Pact has been struggling with enforcement since inception. Although some Member States honour the EU’s fiscal rules more by their breach than their observance, financial sanctions under the Pact have never been applied. View Article
ECON: The outcome of a survey on review of EU economic governance and national parliaments : This document provides a snapshot of the state-of-play on EU national parliaments involvement at the early stage (spring 2023) of the current EU economic governance reform debate. The summary is based on replies from 20 parliament chambers from 16 EU member states View Article
ECB's Panettta: Investing in tomorrow: Future-proofing fiscal policies and governance in Europe : To ensure this reform is successful and that it strengthens our economic governance, the new framework will have to protect us from the mistakes of the past. And it will need to make it possible to use again policies that have proven to be effective. View Article
SUERF's Boonstra: Leaving the eurozone but staying in the EU. Can it be done? And is it wise? : Such proposals share with each other that they usually are poorly substantiated by sound economic arguments and that hardly any attention is paid to the transitional and structural costs of such a step. A cost-benefit approach to such a step is almost always absent. View Article
IMF blog: Financial Stability Needs Supervisors With the Ability and Will to Act : Supervisors in many countries face conditions that limit their effectiveness. Raising the bar requires independence with clear mandates, enhanced powers, greater resources, and more effective approaches. View Article
Remarks by Paschal Donohoe following the Eurogroup meeting of 15 September 2023 : Most of the meeting was taken by an extensive exchange of views with regard to economic developments. It is a varied picture across the euro area View Article
Banking Union
SSM's Elderson: Treading softly yet boldly: how culture drives risk in banks and what supervisors can do about it : Culture encompasses the collective mindset and the shared set of values that shape the everyday behaviour of a bank’s employees. It is not just a trendy buzzword. It is in the DNA of how a bank functions and how it manages risks. View Article
SSM's af Jochnik:Banks after the end of “low for long” : ...good banking is produced not by good laws, but by good bankers. While this characterisation of the banking industry was probably accurate back then, I hope you agree that, nowadays, good laws and efficient supervision are also essential for resilient and prosperous banks... View Article
SUERF's Bindseil, Senner: Technological change and the destabilisation of bank deposits: Assessment and policy implications : This policy note discusses the causes, financial stability implications and policy implications of the exceptional speed and scale of bank runs in March 2023. View Article
ECON: CMDI reform: What are the implications for depositors? : Some savers and investors can lose money when a bank fails. The recent proposal for a reform of the EU bank crisis management and deposit insurance (CMDI) framework changes how bank resolution authorities have to treat deposits and how deposits rank in insolvency relative to other claims. View Article
SRB Chair Dominique Laboureix - Liquidity in resolution: a missing piece in the framework : Liquidity is central to successful crisis management. Banks depend on trust. If customers lack confidence that their funds will be available on demand, a spiraling liquidity crisis may develop. Such a crisis can potentially drive fire sales of assets to meet increasing liquidity demands.. View Article
POLITICO: EU suspends trade talks with Monaco after financial watchdogs’ warning : Talks with Andorra and San Marino over an association agreement will continue, however. View Article
Capital Markets Union
FSB proposes a toolbox of financial resources and tools for the resolution of central counterparties (CCPs) : Toolbox approach aims to ensure that adequate liquidity, loss-absorbing, and recapitalisation resources and tools are available to maintain the continuity of critical functions should resolution of a CCP become necessary. View Article
IOSCO Seeks Feedback on Proposed Good Practices on Leveraged Loans and CLOs and Publishes its Thematic Analysis on Emerging Risks in Private : IOSCO today publishes two reports analysing important market risks. It has called for an improvement in practices in the leveraged loan market and highlighted weak transparency in private finance. View Article
Retail Investment Strategy: Insurance Europe's key messages : The European insurance industry firmly supports the European Commission (EC)’s objectives of the RIS: to increase retail investors’ participation in financial markets, while protecting them from mis-selling practices. View Article
Environmental, Social, Governance (ESG)
UNEP FI: The Taskforce on Nature-related Financial Disclosures (TNFD) launches its final recommendations : The groundbreaking framework enables companies to assess, disclose and manage nature-related risks and impacts which will lead to consistent and comparable reporting on nature-related risks and impacts by businesses and financial institutions worldwide. View Article
ISSB congratulates Task Force on Nature-related Financial Disclosures on finalised recommendations : The International Sustainability Standards Board congratulates the Task Force on Nature-related Financial Disclosures (TNFD) on the publication of its recommendations during New York Climate Week 2023. View Article
City of London: New roadmap unveiled to position the UK as a global centre for nature finance and unlock sustainable growth opportunities : The City of London Corporation in collaboration with PwC unveils a new report outlining a vision for an innovative and world leading global centre for nature finance that supports the ambition of the Global Biodiversity Framework. View Article
OECD: Leaders endorse revised G20/OECD Principles of Corporate Governance to promote corporate sustainability, market confidence and financi : They include new and updated guidance on shareholder rights, the role of institutional investors, corporate disclosure and transparency, the responsibilities of boards...on sustainability and resilience to help companies manage climate-related and other sustainability risks and opportunities. View Article
IFAC: Trust, Corruption and Sustainable Development Are Interconnected Issues in Public’s Attitude Towards Tax : Accountants remain the most trusted players in tax according to the ACCA, IFAC and CA ANZ biennial global survey. View Article
Bankenverband: Comments on Amendments to the Classification and Measurement of Financial Instruments : Particularly with regard to the ESG issue, we consider it very important that IFRS 9 remains principles based and that no case-by-case rules have been included. View Article
Fin Tech Regulation
FESE: Response to the first ESMA consultation on the Technical Standards specifying certain requirements under MiCA : FESE welcomes the opportunity to contribute its views to the ESMA consultation on the Technical Standards specifying certain requirements under MiCA. View Article
Finextra: PSD3: 4 Real Problems Addressed, Yet 1 Big Opportunity Missed : PSD3 appears to be heavily focused on data sharing, which is a great sign. Increasing the inter-communication between banks, processors, PSPs, merchants, and the rest of the payments ecosystem will improve conversion rates. View Article
Friends' Services
Federal Trust video: Donnelly, Bishop: Has the City of London benefitted from Brexit as the golden days continue to fade? : In this latest Federal Trust video, Graham Bishop describes the growing risks to the City of London from Brexit. He contrasts the methodical approach of the European Union to building its Capital and Banking Union with the confused rhetoric of the British government. View Article
Economic Policies Impacting EU Finance
PensionsEurope position paper on the EC's proposal for a withholding tax directive - 2023 : View Article
CEPS' Thomadakis: EU Corporate taxation in the digital era : The road to a new international order. The current international system that coordinates corporate income tax is increasingly unable to deal with a highly integrated and digitalised economy. View Article
Broadening the International Role of the Euro
Project Syndicate's Norloff:The Dollar’s Full-Spectrum Dominance : Predictions about the greenback’s demise fail to appreciate the forces behind its continued supremacy. Positive feedback across official and private functions, the network effects associated with incumbency, and financial opportunism discourage collective action against the status quo View Article
Brexit and the City
UK bonds consolidated tape is a major milestone for the UK: AFME responds to FCA consultation : AFME’s response outlines members’ views on the framework that the FCA has proposed for the UK bonds consolidated tape and includes commentary on the UK equities consolidated tape, for which a dedicated consultation paper is expected in 2024. View Article
ICMA response to the FCA Consultation Paper on The Framework for a Consolidated Tape : ICMA endorses the FCA’s proposal for a UK consolidated tape to improve bond market transparency and reduce the cost of accessing bond data, aiming to improve liquidity and market efficiency View Article
FT: LSE Group chief hits back at ‘clickbait’ criticism of the City : David Schwimmer calls London ‘a fantastic international financial centre’. The head of the London Stock Exchange Group has hit back at criticism that the City’s position as one of the world’s leading financial centres is slipping, calling fears of a loss of business “a kind of clickbait”. View Article
Brexit
FT: Can Keir Starmer reset Britain’s Brexit deal? : Experts say Labour leader has limited how far UK’s trading relationship with EU can be improved. Sir Keir Starmer has promised to try to get a “much better” Brexit deal for the UK if he wins the general election expected next year. View Article
UKandEU's Wachowiak, Reland: Reviewing the Trade and Cooperation Agreement: potential paths : Among its numerous provisions, the treaty contains Article 776 stating that, ‘The Parties shall jointly review the implementation of this Agreement and supplementing agreements and any matters related thereto five years after the entry into force of this Agreement and every five years thereafter.’ View Article
CER's Springford: Welcome to Doppelgänger Britain – a world without Brexit : The economist John Springford on how he modelled what the UK would look like had it voted Remain....Picture the scene. Economic growth is 5 per cent higher in the UK than it is now, foreign investment is up 11 per cent, and 7 per cent more goods are being traded across its borders View Article
Follow us on  
About this email
If you do not wish to receive these e-mails, please click this linkIf you wish to add a colleague, please inform: office@grahambishop.com
Euro Comment LimitedPO Box 2002, Battle, East Sussex, TN33 0WL, UK Tel:+44 (0)1424 777123 Email: office@grahambishop.com (Registered in England and Wales No. 7984039)
|