Articles from 16 July - 9 September
General Financial Policy
EPC: Uninspired or indifferent? EU policy in the 2021 German election manifestos : With less than a month to go before the 2021 German federal election, the EPC scrutinised the election manifestos of the six political parties and compared their promises regarding EU policy. Which party has the most ambitious proposals for the EU? What are their perspectives on European integration and the future of Europe? Are there any changes from their promises in 2017?
EURACTIV: German far left courts SPD and Greens for three-way coalition : Germany’s far-left Linke pitched themselves on Monday (6 September) as would-be coalition partners for the Social Democrats and Greens after the 26 September election, arguing they offer the two larger parties the best chance of delivering their social policies.
ESAs highlight risks in phasing out of crisis measures and call on financial institutions to adapt to increasing cyber risks : Vulnerabilities in the financial sector are increasing, not least because of side effects of the crisis measures, such as increasing debt levels and upward pressure on asset prices. Expectations of inflation- and yield growth, as well as increased investor risk-taking and financial interconnectedness issues, might put additional pressure on the financial system.
ESMA sees risk of market corrections in uneven recovery : The Report highlights the continued rise in valuations across asset classes in an environment of economicrecovery and low interest rates, the increased risk taking of investors and the materialisationof event risks such as GameStop, Archegos and Greensill.
ECB: Stress test shows euro area banking system resilient under challenging macroeconomic scenario : Average final CET1 ratio for 89 ECB supervised banks under three-year adverse scenario is 9.9%, down 5.2 percentage points from starting point of 15.1%
BCBS Rodgers: “I don’t see Basel III as a burden – I see a compelling case to get it done” : The objective of marking this clear end – what is now referred to as the “hard stop” – was to bring stability to the framework so that member jurisdictions and banks could move forward with implementation.
Bloomberg: Banks lobby across the Berlaymont to water down capital reforms : Industry seeks support from top Commission officials to weaken Basel III reforms.
Banking Union
Commisssion launches anti-money laundering package : Speeches by Vice-President Dombrovskis and Commissioner McGuiness, public consultation
POLITICO: 5 reasons money launderers won’t worry about EU crackdown : Dirty money could still haunt the bloc even after the announcement of a new anti-money laundering watchdog.
EU Tax Observatory: Have European banks left tax havens? Evidence from country-by-country data : Despite the growing salience of these issues in the public debate and in the policy world, European banks have not significantly curtailed their use of tax havens since 2014.
AFME: EU banking system remains resilient in face of harshest ever stress test : AFME is pleased to note that the European banking system remains well capitalised even after taking account of the impact from extremely harsh assumptions which formed the basis of the test.
EBA’s study shows that EU banks’ funding plans are poised to gradually return to a pre-pandemic funding composition by 2023 : The plans point to a gradual ‘normalisation’ of banks’ sources of funding over the next three years. This implies in particular a partial replacement of central bank funding with market-based funding.
The EBA observes that the number of high earners in EU banks remained overall stable in 2019 : The analysis shows that in 2019, 4 963 individuals working for EU banks received a remuneration of more than EUR 1 million, which is mostly the same as in 2018. (71% in UK) The average ratio between the variable and fixed remuneration for high earners decreased from 139% in 2018 to 129% in 2019.
Capital Markets Union
Commission: Calls for advice to the European Supervisory Authorities on the protection of retail investors : The strategy will cover a range of initiatives designed to provide the necessary level of confidence and assurance for retail investors.
European Commission consultation on retail investment strategy: EBF Response : While the EBF and its members support a high level of investor protection, the EBF also highlights the need for a flexible approach in order not to disincentivize investors from investing in corporates via financial markets.
Insurance Europe: EU Retail Investment Strategy chance to address disclosure flaws, information overload and facilitate more retail investme : The consultation on the RIS therefore provides an excellent opportunity to learn lessons from the successes and failures of previous EU legislative initiatives.
EFAMA: EU retail investments: comprehensive strategy to increase retail investor participation required : EFAMA wholeheartedly supports a retail investment strategy that gives EU citizens the necessary tools and the confidence to put their savings to work by investing in capital markets.
Insurance Europe: EIOPA’s unit-linked proposals would needlessly limit consumer’s retail investment opportunities : EIOPA should focus on ensuring that the current rules are properly applied by national supervisors.
BEUC: PUBLIC CONSULTATION ON A RETAIL INVESTMENT STRATEGY FOR EUROPE : Consumers often rely on financial advice when investing into investment funds, lifeinsurance policies or pension products. Unfortunately, the current legal frameworkgoverning financial advice in the EU does not adequately protect them
ALFI RESPONDS TO THE EUROPEAN COMMISSION’S CONSULTATION ON A RETAIL INVESTMENT STRATEGY FOR EUROPE : ALFI’s strongly held view is that financial education serves as the foundation for life-long financial well-being, entrepreneurship, retirement, social mobility and inclusive growth.
AFME calls for action on mandatory buy-in rules : “It is helpful that the Commission has stated its intention to consider amendments to the mandatory buy-in regime, subject to an impact assessment. Given that amendments may now be made at a later date, it does not make sense for the current rules to be implemented and enforced on 1 February 2022...
IPE: European pensions sector bemoans overreach in EIOPA costs, DC opinions : ...warning that the Frankfurt-based authority is taking a level of EU harmonisation too far, that it involved a confusing re-definition of defined contribution (DC) schemes, and that its ideas could be too costly.
IOSCO publishes results of examination of ETF behavior during COVID-19 induced market stresses : Overall, available evidence has not indicated any significant risks or fragilities in the ETF structure, although a subset of ETFs temporarily experienced unusual trading behaviors.
European Commission: Targeted consultation on the functioning of the EU securitisation framework : The consultaion helps prepare the report mandated by Article 46 of the Securitisation Regulation.
Environmental, Social, Governance (ESG)
Call for feedback by the Platform on Sustainable Finance on preliminary recommendations for technical screening criteria for the EU taxonomy : The Platform’s main mandate under the Taxonomy Regulation is to advise the Commission on the development of the EU taxonomy, and in particular on the development of technical screening criteria (TSC) for the 6 environmental objectives as set out in the Taxonomy Regulation.
ICMA submitted its feedback on the draft Report of the EU Platform on Sustainable Finance on a Social Taxonomy : The focus on environmental issues, and especially climate change, through the work on the EUTaxonomy to date in effect tackles issues that can also be defined as social issues, given theexistential threat they create for society.
ALFI RESPONDS TO THE EUROPEAN COMMISSION’S CONSULTATIONS ON SOCIAL TAXONOMY AND AN EXTENDED TAXONOMY : ALFI responded to the Call for feedback on the Platform on Sustainable Finance’s Draft report on social taxonomy as well as the Call for feedback on the Platform on Sustainable Finance’s draft proposal for an extended taxonomy to support economic transition.
EFAMA: Brown taxonomy: An opportunity to transition away from significantly harmful activities : "The proposal to extend the taxonomy and include significantly harmful activities in urgent need of transition, would allow asset managers to bring to market financial products that help the "hard-to-decarbonise" sectors confront climate change and accelerate their necessary transformation".
Insurance Europe: EC proposals for Corporate Sustainability Reporting Directive welcomed : Insurance Europe is very supportive of the CSRD initiative
AFME: The challenge of defining climate finance : Defining green investments is not an exact science. A lack of clarity around what should be classed as a climate-friendly investment has long been an obstacle preventing funding from flowing to green projects.
Accountancy Europe: IFRS Foundation’s Exposure Draft: Proposed targeted amendments to the IFRS Foundation constitution to accommodate an ISS : Accountancy Europe welcomes the IFRS Foundation’s progress in addressingsustainability reporting. We support creating the International Sustainability Reporting StandardsBoard to set sustainability reporting standards material to enterprise value, within the structures of theIFRS Foundation.
Insurance Europe: Insurers support IFRS Foundation proposals for ISSB, call for refinements in approach : Insurance Europe said it supports initiatives in Europe aimed at embedding environmental, social and governance (ESG) criteria into all aspects of business and individual behaviour
Protecting Customers
CPA Canada, ICAS and IFAC explores ethics in an era of complexity and digital change : “Ethical leadership is crucial to the future success of the accountancy profession, and the global financial system as a whole,” said Kevin Dancey, CEO of IFAC.
Fin Tech Regulation
EPC: The investigation phase of the digital euro project is about to start : "We have launched the Eurosystem retail payment strategy and started a two-year investigation phase of a digital euro."
IMF: Cryptoassets as National Currency? A Step Too Far : Some countries may be tempted by a shortcut: adopting cryptoassets as national currencies. Many are indeed secure, easy to access, and cheap to transact. We believe, however, that in most cases risks and costs outweigh potential benefits.
FCA Charles Randell: The risks of token regulation : Considerations: how to make it harder for digital tokens to be used for financial crime; how to support useful innovation; the extent to which consumers should be free to buy unregulated, purely speculative tokens and to take the responsibility for their decisions to do so.
BETTER FINANCE feedback to ESMA's call for evidence on Digital Finance : The existing regulatory and supervisory framework may not fully capture and address these new developments.
Brexit and the City
City AM: TheCityUK: London at risk of losing global financial crown in next five years : In a new report, TheCityUK worked with 60 financial services groups to set out international strategy proposals to return the UK’s financial capital to being the “world’s leading financial centre” within the next five years.
FT: City of London grapples with wave of post-Brexit regulation : A wave of UK government reforms designed to make the City of London more attractive after Brexit has already had one unintended consequence:Finance industry executives cancel summer holidays to deal with workload
Brexit
EPC: After Brexit: Could bilateral agreements facilitate the free movement of persons? : Some of the millions of EU nationals in the UK and British nationals in the EU are already suffering from Brexit’s drastic curtailment of the right to free movement. How can migration now be governed and facilitated between the two parties? View Article