Welcome to our Friends weekly e-mail.
My highlights of the week: In a somewhat thin news week, the Commission issued guidance to EU members on fiscal policy for next year – reflecting the lack of agreement yet on the proposed new fiscal rules. Many observers believe the conclusions flowing from the Conference on the Future of Europe will fizzle out, but the EPC’s Duff believes the Parliament will trigger Treaty change – albeit limited. Council adopted the revised framework for ELTIFs – a rather modest step towards CMU. Rather more importantly, the institutions agreed on the EU Green Bond Standard (EUGBS); the key global standards from the ISSB seem to be getting closer and the EBF thinks that an additional €4 trillion of bank lending could be unlocked by suitable regulatory change. Commissioner McGuinness said we are now beginning to understand what a digital euro might mean, but the fallout from the recent cyber rout continues and the IMF warned that the prudential framework for cyber urgently needs improvement. Brexit news remains dominated by the Windsor Framework, but the key DUP in Northern Ireland have yet to pronounce on their views of it. The London equity market – a former `crown jewel’ – continues to atrophy.
Graham Bishop
Articles from 4 - 9 March 2023
Policy impacting Finance
Commission: Fiscal policy guidance for 2024: Promoting debt sustainability and sustainable and inclusive growth : Overall, fiscal policies in 2024 should ensure medium-term debt sustainability and promote sustainable and inclusive growth in all Member States. View Article
EPC's Duff: Raising the stakes on constitutional reform: The European Parliament triggers treaty change : Its central demand is to change the decision-making procedure behind the passerelle clause from unanimity to qualified majority voting. View Article
CEPS's Ellina: Why the EU’s new fiscal framework hits the nail near the head : While the new framework is encouraging, without sufficiently considering climate risks and fully bottom-up fiscal adjustment paths, it feels like a touch of spice from the overall recipe is missing. View Article
Project Syndicate's Campanella: Europe’s Next Gas Crisis : As complex as Europe’s energy situation may be, it can be understood with some relatively simple arithmetic. Barring another extraordinarily warm winter, Europe will have a natural-gas deficit of at least 60 billion cubic meters, which it will have to close with imports and consumption reductions. View Article
Banking Union
SRB Chair Dominique Laboureix's first speech at the ECON Committee : I want to see how the SRB could function and deliver better. We will undertake a strategic review this year. We will listen to, and engage with our staff, the wider SRM community as well as industry. View Article
EBA: Women’s representation on boards has gradually improved, but imbalances remain : The key findings of the Report, depicting the situation as of 31 December 2021, have been visualised in a dynamic way... 27.05% of institutions still lack the mandatory diversity policy. View Article
GBIC Statement on the European Digital Identity Framework (eIDAS 2.0) - Concerns about mandatory acceptance for payments : A mandatory comprehensive and vague requirement for the integration of EUDI wallets in payments would pose significant technical difficulties for Member States. View Article
Capital Markets Union
Capital markets union: Council adopts revised framework for European long-term investment funds : Today, the Council adopted a redesigned regulatory framework for European long-term investment funds (ELTIF) which makes these types of investment funds more attractive. View Article
EIOPA launches new survey to map financial innovation in insurance : The rapid rate of digital innovation is changing the way businesses operate and the adoption of new business models and technologies can have a significant impact on the insurance value chain View Article
EIOPA consults on technical advice for the review of the IORP II Directive : The draft advice is given in response to a call for advice from the European Commission. EIOPA will provide its final advice in October 2023. View Article
AFME announces establishment of T+1 industry taskforce : The Association is issuing a call for interest for participation from a broad and diverse group of industry associations representing stakeholders who will be impacted by a shortening of the securities settlement cycle in Europe. View Article
Environmental, Social, Governance (ESG)
PCS: EU Green Bond Standard getting close : This week the European Parliament, European Council and European Commission reached an agreement on a text for the European Union Green Bond Standard. This much anticipated piece of legislation will create a statutory standard for EU green bonds. View Article
ICMA supports voluntary nature of EU Green Bond (EU GB) label and of wider sustainable bond disclosures : Looking ahead to the implementation challenges of the EU GBS, ICMA will continue to make recommendations to ensure, among other things, that the proposed voluntary disclosure templates minimise duplication or inconsistencies across other EU sustainable finance legislation. View Article
Seven key takeaways from the IFRS Sustainability Symposium : Onsite in Montreal, the room was abuzz as businesses, investors, policymakers, regulators and other stakeholders engaged in meaningful discussion about the forthcoming standards from the International Sustainability Standards Board (ISSB). View Article
EBF's Mijs To fuel sustainable growth in Europe, we must rethink the banking regulatory framework : A review of the current capital requirements and supervisory processes for EU banks could provide capacity for around €4tn in additional bank lending to finance the green and digital transitions, and strengthen the competitiveness of the EU economy. By Wim Mijs, CEO, European Banking Federation View Article
UN EP FI: The 2023 Climate Risk Landscape : The report assists financial institutions in better understanding the diverse and dynamic landscape of climate risk tools. The report explores the major market trends in physical risk and transition risk tools and provides detailed analysis on dozens of individual tools. View Article
Protecting Customers
Better Finance: It is time to address the negative impacts of the conflicts of interest generated by sales commissions : BETTER FINANCE pointed out that it is unfortunate that discussions on the RIS over the last two and half years have focussed solely on one possible EC proposal related to just one of the Commission’s RIS priorities, namely “ensuring bias-free advice”. View Article
Fin Tech Regulation
Speech by Commissioner McGuinness at the European Parliamentary Financial Services Forum on a digital euro : Because we're now beginning to understand what a digital currency is, what a digital euro might mean...But we need it to translate and we need it transmitted beyond a technical exercise. View Article
EBF key considerations following the publication of the Cyber Resilience Act (CRA) proposal : View Article
BIS: Project Icebreaker concludes experiment for a new architecture for cross-border retail CBDCs : A collaboration between the BIS Innovation Hub Nordic Centre, Bank of Israel, Norges Bank, and Sveriges Riksbank, the project tested the technical feasibility of conducting cross-border and cross-currency transactions between different experimental retail CBDC systems. View Article
Bloomberg: Silvergate Plans to Wind Down Bank Operations and Liquidate : Company specialized in services for crypto clients like FTX; As digital assets plunged Silvergate lost billions in deposits View Article
IMF's Adrian/Ferreira: Mounting Cyber Threats Mean Financial Firms Urgently Need Better Safeguards : Regulators and supervisors must act now to strengthen the prudential framework ...56 percent of the central banks or supervisory authorities do not have a national cyber strategy for the financial sector. View Article
InsuranceEurope: Cyber stress tests should have clear objectives, appropriate timescales and be proportionate : Any stress test exercise should have clear objectives, appropriate timescales and be proportionate to its objectives. There is no one-size-fits-all approach to stress testing of cyber resilience risk and cyber underwriting risk. View Article
Economic Policies Impacting EU Finance
Accountancy Europe: EU Pillar 2 Directive: impacts on businesses : Large groups based in Europe need to take action to determine whether they are in the Directive’s scope, what information systems need to be implemented, what the likely impact will be and whether any exemptions are available. View Article
Brexit and the City
Reuters' Jones: EU restarts work on EU-UK regulatory forum after Northern Ireland deal : The European Union's executive body said on Wednesday it will finalise a long-delayed discussion forum for EU and UK financial regulators, once the deal on Northern Ireland has been implemented by Britain. View Article
FT: L&G boss laments ‘drift’ away from London’s equity market : Nigel Wilson warns UK held back by low-growth economy and ‘political infighting’ View Article
Brexit
EU-UK Forum's Stephens: The meaning of Rishi Sunak’s Northern Ireland deal : View Article
ECIPE's Henig: Ten aspects of the UK-EU deal on Northern Ireland : Unionist politicians have yet to decide if the deal is sufficient to lift their veto on the devolved government, and implementation of complex texts leaves much to be decided that could cause many issues. View Article
Federal Trust's Savic: The EU’s Foreign Subsidies Regulation: A new risk for British business? : New EU extra-territorial level playing field rules may adversely impact UK investment in the bloc View Article
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