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President Biden was inaugurated – amidst high hopes for a new Trans-Atlantic relationship – but he did not even mention Europe in his address. The Commission announced its plan to strengthen the role of the euro and the EMU – re-affirming the course of the EU regulatory ship for the years ahead. AFME reported that up to €600 billion in new equity is needed to repair corporate balance sheets – nearly the same as the much-vaunted RRF for governments. The Commission has to postpone its detailed taxonomy rules after widespread veto threats from Member States. The IMF asked if digital money is really “money” around the world but the ECB and Commission are pushing ahead with investigations into how to make it happen in the EU.
The realities of Brexit continue to intrude: BoE Governor Bailey warned against being a “rule-taker” and Chancellor Sunak talked excitedly of “Big Bang 2.0” so the British regulatory boat is surely going to row away from the clear course of the EU regulatory ship. How can there be equivalence? (This was the main topic of the 169th Brussels4Breakfast Zoom call yesterday. Please E-mail me graham@grahambishop.com if you have views on the subject!)
Graham Bishop
(This e-mail provides the headers of a selection of the articles published this week. If you would like to upgrade to our Gold service and access all articles - with live links to the underlying news - please click on the button)
Articles from 15-21 Januaryt 2021
General Financial Policy
EP: MEPs hope for a new dawn in transatlantic ties with the new US President: MEPs welcome the inauguration of Joe Biden as an opportunity for Europe to strengthen EU-US ties and tackle common challenges and threats to the democratic system.
EURACTIV: EU calls on Biden to form ‘new transatlantic pact’ : Hours before Joe Biden was to be sworn in as the next US president on Wednesday (20 January), EU leaders extended the invitation to cooperate more closely but also warned that four years of the Trump administration had changed the nature of transatlantic ties.
Remarks by Paschal Donohoe following the Eurogroup video conference of 18 January 2021 : The Commission presented an analysis showing how the COVID-19 crisis runs the risk of aggravating the pre-existing macroeconomic imbalances in the euro area. But, of course, while we acknowledged that risk, we also acknowledged in recent weeks that there have been very positive developments.
ECOFIN: Informal video conference of economic and finance ministers, 19 January 2021 : Recovery and Resilience Facility; Non-performing loans; Relaunching the economy in Europe; Strengthening the Economic and Monetary Union; Addressing new challenges, including the green and digital transitions,
Banking Union
SSM: Crisis management for medium-sized banks: the case for a European approach : Keynote speech by Andrea Enria, Chair of the Supervisory Board of the ECB, at the Banca d’Italia workshop on the crisis management framework for banks in the EU
SSM's Fernandez-Bollo: Interview with Revue Banque : If a severe economic scenario were to materialise, several banks would need to take action to continue to comply with their minimum capital requirements but, according to our estimates, the overall shortfall would remain contained.
Capital Markets Union
AFME: Equity and hybrid markets hold solution to European COVID-19 corporate recapitalisation : AFME/PwC report an equity shortfall of up to €600bn threatens Europe’s economic recovery despite the significant public support measures and private capital made available across Europe to support economies during the pandemic. AFME calls for measures to bolster Europe’s equity and hybrid markets..
Environmental, Social, Governance (ESG)
EURACTIV: Brussels postponed green finance rules after 10 EU states wielded veto : The European Commission was forced to delay publication of detailed implementing rules on the EU’s sustainable finance taxonomy because of the sheer number of comments received and a threat of blockage from eastern and southern EU member states, EURACTIV can reveal.
GRI backs EU proposal for separate pillar on non-financial reporting : Plans for EFRAG to broaden role requires establishment of a professional sustainability standard setting function. As part of the European Commission review of the Non-financial Reporting Directive (NFRD), it is exploring how new European sustainability standards could be created and managed.
Insurance Europe: Supervisors should support insurers in helping to facilitate the transition towards sustainability : Insurance Europe has today published its response to a consultation by the International Association of Insurance Supervisors (IAIS) regarding the supervision of climate-related risks.
Fin Tech Regulation
IMF: Legally Speaking, is Digital Money Really Money? : Countries are moving fast toward creating digital currencies. Or, so we hear from various surveys showing an increasing number of central banks making substantial progress towards having an official digital currency.
Joint statement by the European Commission and the European Central Bank on their cooperation on a digital euro : The European Commission and the European Central Bank (ECB) are pursuing their efforts towards ensuring a strong and vibrant European digital finance sector and a well-integrated payments sector to respond to new payment needs in Europe.
Broadening the International Role of the Euro
Commission takes further steps to foster the openness, strength and resilience of Europe's economic and financial system : The European Commission today presented a new strategy to stimulate the openness, strength and resilience of the EU's economic and financial system for the years to come. This strategy aims to better enable Europe to play a leading role in global economic governance, while protecting the EU from unfair and abusive practices.
EURACTIV: Brussels launches new offensive against US dollar supremacy : On the eve of Joe Biden’s inauguration as US president, the European Commission will launch a new offensive to promote the use of the EU’s single currency on a global level, aiming to address the vulnerabilities of financial markets, which are seen as “too reliant” on the US dollar.
Brexit
EP: New EU-UK agreement is welcome but thorough scrutiny remains, insist lead MEPs : Foreign Affairs and Trade MEPs welcome the new EU-UK agreement as a good deal but demand proper parliamentary scrutiny powers and thorough access to information.
Institute for Government: UK–EU future relationship: the deal - Services : What does the agreement say? What does it mean?
FT: Sunak says Brexit will ‘reinforce’ City as world leading financial centre : Despite chancellor’s confidence, UK officials fear lengthy stand-off with EU over crucial equivalence decisions
FT: Sadiq Khan: Financial services have been badly let down by Brexit : The needs of a sector central to the UK’s competitiveness have been overlooked by the government
BoE Governor at Treasury Select Committee: "do not become a rule-taker" : Will the UK become a rule taker in financial services? In our session with the Bank of England yesterday, Andrew Bailey told us: “I would strongly recommend that we do not become a rule-taker. […] If the price of that is no equivalence then I am afraid that will follow.”
Bloomberg: Brexit Driving Top Dealmakers Out of London and Into the EU : Goldman Sachs moving bankers to the continent amid new rules; EU-based chaperones are now required for London pitches
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