Articles from 21- 28 January 2021

General Financial Policy

European Commission: Targeted consultation on the review of the crisis management and deposit insurance framework : Experience with the application of the current crisis management and deposit insurance framework until now seems to indicate that adjustments may be warranted.

CEPS:How crisis-proof are financial market infrastructures? : The pandemic has caused unprecedented volatility in the financial markets. The corporate sector has been hit by supply disruptions and weak demand. Amid such turbulence, providers of infrastructure services for financial markets, such as exchanges, clearinghouses, trade depositories and custodians, financial data, and technology providers, are vital to providing robust and stable platforms and operations as well as timely information to allow for efficient transactions. 

Vox: Moral hazard, the fear of the markets, and how central banks responded to Covid-19 : While some Fed interventions had little or no impact on market fear, the most powerful were the US dollar swap lines, which strongly reduced the perceived likelihood of global market losses decades into the future. The results suggest that the Fed's relative global role has been strengthened, possibly at the cost of increased moral hazard.

London leads global finance rankings in new benchmarking researc : New figures published by the City of London Corporation, show that, London continues to hold the top spot for financial and professional services, when compared to other global destinations, including New York, Singapore, Hong Kong and Frankfurt.

Banking Union

Commissioner McGuiness: Banking Union – New Year, new momentum : The start of the New Year gives us a chance to reflect on what’s next for the Banking Union. We cannot stop here. Completing the Banking Union is essential for the future of the Economic and Monetary Union. 

Bloomberg: ECB Steps Up Scrutiny of Loan Risk Before Potential Defaults : Regulators seek more information on quality of lending books;ECB member says ‘won’t shy away’ from new capital demands

SUERF: Buffer usability and potential stigma effects : In light of the Covid-19 pandemic and its effects on the economy and financial markets, supervisors and policy makers at the international level are concerned that banks could refrain from using its capital buffers to support lending due to pay-out restrictions following the breach of the combined buffer requirement (CBR). 

EBA announces timing for the launch of its 2021 EU-wide stress test exercise : The European Banking Authority (EBA) will launch its 2021 EU-wide stress test exercise with the publication of the macroeconomic scenarios on 29 January at 18:00 CET.

 Capital Markets Union

Financial services: Commission adopts equivalence decision for US central counterparties : Today's decision is an important first step for US CCPs registered with the SEC to be recognised in the European Union. It will allow such US CCPs to apply for recognition by the European Securities and Markets Authority (ESMA). Once recognised by ESMA, these US CCPs will be able to provide central clearing services in the EU.

EFAMA Transforming ELTIFs into a product of choice for investors : The European Fund and Asset Management Association (EFAMA) today shared its recommendations to the European Commission on measures to be taken to improve the European Long-Term Investment Fund (ELTIF) regime.  

ISDA: A Big Milestone for Benchmark Reform : ISDA Chief Executive Officer Scott O'Malia offers informal comments on important OTC derivatives issues in derivatiViews, reflecting ISDA's long-held commitment to making the market safer and more efficient.

Environmental, Social, Governance (ESG)

ECB's Lagarde: Climate change and central banking : Central banks are not the main actors when it comes to preventing global heating...are not responsible for climate policy and the most important tools that are needed lie outside of our mandate. But the fact that we are not in the driving seat does not mean that we can simply ignore climate change. 

EBF-UNEP FI report outlines path for application of EU Taxonomy to core banking services : The report is based on case studies analysing transactions and existing client relationships across a large spectrum of sectors, economic activities and geographical locations.

Ten UNEP FI members call on governments to step up action on adaptation finance, make climate risk reporting commitments : At the Climate Adaptation Summit 2021, the leading financial institutions delivered a statement calling for greater action on assessment, reporting and management of the physical risks of climate change, and asking policy makers to deliver mandatory disclosure requirements on climate risk.

Protecting Customers

CRE/DLA Piper: GDPR fines up 39% in 2020 : Regulatory fines for data breaches under the GDPR increased 39% in Europe during the past year to €158.5m, according to new research from law firm DLA Piper.

Fin Tech Regulation

BIS: Digital currencies and the future of the monetary system : Remarks by Mr Agustín Carstens, General Manager of the BIS, at the Hoover Institution policy seminar... A technological revolution is changing our economy and even money itself. In addition to improvements to existing payment systems, new digital currencies have been unleashed.

BIS: Ready, steady, go?  Results of the third BIS survey on central bank digital currency : Most central banks are exploring central bank digital currencies (CBDCs), and their work continues apace amid the Covid-19 pandemic. 

 Economic Policies Impacting EU Finance

ECON: EU tax haven blacklist is not catching the worst offenders : Criterion to judge if a country’s tax system is fair or not needs to be widened; Countries should not be removed from the blacklist if they only make symbolic tweaks; A 0% tax rate policy should automatically lead to being placed on the blacklist...

Tax havens: MEP Giegold - Landmark decision on the EU list of tax havens: so that it can finally live up to its potential! : With a broad majority of 587 MEPs (with 50 votes against and 46 abstentions), we are making strong demands to the Commission and the Council to finally develop the EU list of tax havens into a powerful instrument against tax avoidance and tax evasion.

Brexit

Bloomberg: EU Warns City of London That Brexit Finance Deal Is Distant : No deadline on equivalence, Commissioner McGuinness says; Brexit has ‘come home to roost’ for U.K., access will change. The European Union’s top financial-services official warned the City of London that any deal for the industry remains a distant prospect.

FT: City warned EU will do London no favours on financial services : Former Brussels commissioner Jonathan Hill says threat to Square Mile from Europe reinforces need for reform

 Vox: Brexit uncertainty and trade disintegration in Europe and beyond : Following the Brexit referendum five years ago, firms in the UK and also those in the EU and other countries operated in an environment with increased uncertainty over future trade policies. This column presents evidence of the detrimental effects of this uncertainty on trade in the UK before any changes to trade policy had taken place.