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Highlights of my Week: UvL’s State of the Union message to the European Parliament focussed on the obvious topics of Ukraine, energy, climate and the economy but many proposals actually reflected recommendations from CoFE. Importantly, she committed the Commission to supporting Parliament’s call for a Convention to be summoned to include Treaty reform in its considerations. But the background is menacing as the ESAs warned of rising risks, BERTTER FINANCE calculated low interest rates have cost consumers more than €1 trillion via financial repression and Dombrovskis reported ECOFIN’s first goal is debt sustainability. Consumer Credit Directive reform drew comments from BEUC and Insurance Europe, while the EBF supported the `DEBRA’ proposal to improve the tax-induced debt/equity bias. Accountancy Europe published a poll that ought to be shocking – nearly 2/3 of people believe that government leaders are deliberately trying to mislead the people by falsehood or exaggeration.

 Living in the UK, one asks why even a third of people would believe the word of a government led by Boris Johnson and/or his acolytes! The abrupt sacking of Tom Scholar from the Treasury underlines the Federal Trust’s headline “Liz Truss gambles with the UK’s future”  just as Barry Eichengreen reminds us that Black Wednesday was exactly 30 years ago!

  Graham Bishop

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Articles from 9-15 September 2020

Policy impacting Finance

 

 

European Commission's von der Leyen: State of the Union 2022 : She outlined flagship initiatives which the Commission plans to undertake in the coming year. Many of them are made in response to recommendations citizens made through the Conference on the Future of Europe.

State of the EU: Ukraine, energy, climate change, economy : In the annual State of the European Union debate, MEPs quizzed President von der Leyen on the Commission’s work in the past year and its upcoming plans. 

EURACTIV: Von der Leyen: Treaty change needed to show EU is ‘serious’ on reform : “if we are serious about a larger EU, we must also be serious about reforming it. So as this Parliament has called for (treaty change), I believe the moment has arrived for a European Convention.”

EPC: Von der Leyen makes big promises, but will they be enough? : In her State of the Union (SOTEU) speech, President von der Leyen reaffirmed the EU's continued strong support for Ukraine and its people. The war and its aftershocks - skyrocketing energy prices and inflation - took up most of her speaking time.

Bruegel podcast: Assessing the State of the Union 2022 : Ursula von der Leyen, President of the European Commission, delivered the State of the Union address before the European Parliament.

CEPS: In this State of the Union, President von der Leyen must say it loud and clear – business as usual is over : It marks the start of the EU’s political year, her fourth as President of the European Commission, and her last full year before the 2024 European Parliament elections, the outcome of which will decide if she can stay on for another term.Article

BETTER FINANCE: Financial Repression | Low ECB Interest Rates & Inflation = Loss of €1 Trillion in Purchasing Power f in 202 : Financial Repression or Debt Relief through Inflation | Since the financial crises of 2008 and 2009, ‘Financial Repression’ has been the only game in town.

ESAs warn of rising risks amid a deteriorating economic outlook : The report highlights that the deteriorating economic outlook, high inflation and rising energy prices have increased vulnerabilities across the financial sectors. The ESAs advise national supervisors, financial institutions and market participants to prepare for challenges ahead.

Commissioner Gentiloni at the Eurogroup Press Conference of 9 September 2022 : Two keywords: one is uncertainty and the other one is cooperation...Digital euro: The Commission will continue to discuss these issues with Member States and the ECB as we work to prepare a balanced legislative proposal for 2023.

Executive Vice-President Dombrovskis at the ECOFIN Press conference : Today we had a rich discussion on the future of fiscal rules...Our first goal remains ensuring public debt sustainability. This will require fiscal adjustment, reforms as well as investments. 

Banking Union

Consumer Credit Directive: BEUC recommendations for trilogue : When shopping online, buying a new phone, or leasing a car, consumer credit is today only a click away. When affordable, credit can allow for investments in higher education, an electric car or a more energy efficient household appliance. V

Insurance Europe: Consumer Credit Directive: Including right to be forgotten for persons with prior diagnosis would be bad for consumers : To avoid unforeseen negative consequences for consumers, the implementation of any RTBF at EU level should be via a flexible code of conduct. 

GBIC Comments on RTS on groups of connected clients : GBIC is commenting EBA’s draft RTS on groups of connected clients. GBIC points out that there should be no additional requirements compared to the EBA guideline on groups of connected clients. V

Capital Markets Union

EBF position on the DEBRA proposal : The EBF agrees with the over-arching principle of mitigating the tax induced debt-equity bias in corporate investment decisions to render financing more accessible to EU business and to promote the integration of national capital markets into a genuine single market.

EFAMA: High-level response to ESMA consultation on notifications for cross-border marketing and management of AIFs and UCITS : EFAMA welcomes the European Securities and Market Authority’s continuous commitment to creating a single market for investment funds, confirmed by the draft regulatory standards currently under consideration.

ALFI responds to the ESMA consultation on draft technical standards on the notifications for cross-border marketing and management of AIFs a : ALFI understands and appreciates ESMA’s intention to achieve alignment between UCITS and AIF documentation, because this usually facilitates both filings and checks by regulators.

CPMI and IOSCO publish a report on access to central clearing and portability : CPMI and IOSCO report considers the benefits and challenges of new access models to central counterparty (CCP) clearing and client-position portability.

Environmental, Social, Governance (ESG)

UN EP FI: 500-plus institutional investors urge governments to step-up climate ambition : Investor groups publicly released a statement signed by 532 institutional investors with US$39 trillion in assets under management (AUM), advocating for governments to enact ambitious policies that would leverage the private capital required to effectively address the climate crisis.  

Protecting Customers

Accountancy Europe's Gisby: Accountants and ethics: promoting trust in the public sector : Nearly two-thirds of those polled in the Edelman Trust Barometer 2022 believed that government leaders are deliberately trying to mislead people by making falsehoods or exaggerations. This decline of trust in government is alarming and rebuilding it is urgent.

Fin Tech Regulation

BIS: Cyber risk in central banking : Only a few central banks fully agree that the financial sector is adequately prepared for cyber attacks, and over half of the respondents think that the sector's investment in cyber security has been inadequate over the past year. 

CEPS: The AI Act and emerging EU digital acquis - Overlaps, gaps and inconsistencies : An agreement seems possible by mid-2023, but this will depend on whether the co-legislators converge on key issues such as the definition of AI, the risk classification and associated regulatory remedies, governance arrangements and enforcement rules.

Brexit and the City

FT: Former Sky executive picked to lead City reforms : Boris Johnson ally Andrew Griffith chosen to lead overhaul of financial services regulation under Truss government

CITY AM: bankers’ bonus cap could be scrapped by Kwasi Kwarteng : The cap, which was brought in as part of EU-wide efforts after the financial crisis, has long been criticised as an anti-competitive stranglehold on the capital’s competitiveness. 

Brexit

Federal Trust's Stevens: VIDEO: Liz Truss Gambles with the UK’s Future : The new British Prime Minister, Liz Truss, is taking a dangerous gamble with the economic future of the United Kingdom, particularly in the context of the ongoing Brexit crisis.

Project Syndicate's Eichengreen: The Long Shadow of Black Wednesday : When the United Kingdom was forced to abandon the European Monetary System's exchange rate mechanism 30 years ago, British officials took it as a happy consequence that the UK would not qualify for the euro. 

UK and EU's Rutter: Sacking Tom Scholar - a move that undermines the Treasury, the civil service and the government? Three significant civil service changes were made in the immediate wake of Liz Truss’s ascent to the premiership...Kwarteng may think he has stamped his authority on HMT. But he may find instead that he has made his already hard task even harder.