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27 April 2023

Friends Weekly Newsletter




Welcome to our Friends weekly e-mail.

 

Highlights of my week: ECB and EIOPA concluded that only a quarter of EU climate-related catastrophe losses were insured – an alarming vulnerability of the EU economy. The chances of “Treaty change” may have receded but Carnegie Europe believes that the crises have allowed the Commission to get back into the EU’s driving seat. The think tanks are rolling up their sleeves to identify the lessons from the recent bank crisis - and find solutions. Momentum seems to be building behind the ECB’s researching of the case for a digital euro – with a decision now planned for this autumn. However, private banks are preparing to launch an EU-wide `instant payment solution’. Consumers will be spoilt for choice! Synthetic securitisations may get a boost from the EBA’s RTS on `synthetic excess spread’ – according to PCS. ICMA published the second of its new series on EU and UK bond trading. It shows that the great majority of euro denominated bonds are now traded in EU jurisdictions – a proportion that can only increase as the ECB desk-mapping exercise forces trading of euro securities into the oversight of the EU. Presumably the trading of euro interest rate derivatives will, in due course, follow the location of the risks - and its management. The UK’s dismal export performance is increasingly laid at the Brexit door.

Graham Bishop


Articles from 21 - 27 April 2023

Policy impacting Finance

ESAs call for vigilance in the face of mounting financial risks : The second half of 2022 witnessed a worsening of the macro environment due to high inflation and tighter financial conditions, and the economic outlook remains uncertain.  View Article
EIOPA and ECB call for increased uptake of climate catastrophe insurance : Only one-quarter of EU climate-related catastrophe losses currently insured; gap expected to widen as impact of climate change grows; Insurance gap poses risks to economy and financial stability; EIOPA and ECB outline policy options to promote climate catastrophe insurance View Article
Carnegie Europe' Lehne: The Comeback of the European Commission : A decade and a half of constant crises has gradually restructured the power dynamics in the EU institutions. The European Commission is now in the driver’s seat. View Article
Fondation Robert Schuman: Giorgia Meloni's first six months : On several fronts however great uncertainty remains. They concern the implementation of the National Recovery and Resilience Plan (NRRP), European alliances and, above all, on the domestic front, the management of immigration... View Article
POLITICO: By the numbers: Europe’s pensions problem : The present and future of retirement ages across the Continent, in figures and charts View Article
CEPR's Weder di Mauro: Announcing a new Vox debate: Lessons from recent stress in the financial system : After a decade of regulation and reform, the world seemed to be dangerously close to another ‘Lehman moment’. View Article

Banking Union

Bruegel's Veron: The US and Swiss messes may nudge the EU towards better international bank capital standards compliance : Bank collapses show the importance of strong capital and liquidity positions and should signal to the EU the benefits of closer adherence to Basel III  View Article
EPI Company announces acquisitions, additional shareholders and the coming launch of its new instant payment solution : We are developing a new, scalable platform to address the modern and evolving payment needs of European consumers and merchants in the best possible way, with efficient, state-of-the-art technology. View Article
ESBG calls upon European Institutions to ensure a level playing field in response to EPI's new instant payment solution : EPI – backed by its shareholder companies including major European banks and payment services providers- is building the foundation for a response to calls from the European Institutions in their respective Retail Payments Strategies for home-grown, pan-European payment solutions View Article
SRB's Laboureix: speech at the Press Breakfast : First take a look at recent events in the banking sector; Before then taking a look at current priorities for the SRB; And finally looking to the future. View Article
SRB: EU resolution authority to look at how to handle digital bank runs after US crisis : SRB is looking at adapting its framework for a bank run that “takes another format with this digitalization of the relationship between customers and banks". View Article
SSM's Enria: Twenty years of (bumpy) progress: harmonising supervisory reporting in the EU : We were motivated by the belief that a common financial reporting framework would reduce the reporting burden for credit institutions that operated across borders and would help to promote a level playing field in Europe while lowering barriers to an efficient internal market in financial services. View Article
ECB: A positive neutral rate for the countercyclical capital buffer – state of play in the banking union : This article discusses the possible implementation of a positive neutral rate for the countercyclical capital buffer (CCyB).. it explains why a positive neutral rate is needed to enhance the effectiveness of the current macroprudential framework.  View Article

Capital Markets Union

EBA publishes final draft technical standards on the determination of the exposure value of synthetic excess spread in synthetic securitisat : These draft RTS clarify the calculation of the components that should be included in this exposure value taking into account the relevant losses expected to be covered by SES. View Article
PCS: EBA publishes the RTS on “synthetic excess spread” achieving a sensible and balanced approach : Although a seemingly exceedingly dry and technical subject, the impact of this paper on the European banking industry should not be underestimated.  In the last few years, synthetic securitisations have become a key capital management tool for an increasing number of European banks.  View Article
ISDA's O'Malia: Responding to Market Stress : While the post-mortem into the recent banking turmoil is in its very early stages, the regulatory review of the various market liquidity stress events is well progressed. Among other things, global policymakers are working on a comprehensive review of margining practices... View Article
ICMA publishes the second semi-annual report that provides detailed data on EU and UK bond market trading activity : The report captures more than 80% of all secondary bond market transactions reported in the EU and UK and is therefore relatively representative of the aggregated bond market data as reported under the MiFID II/MiFIR obligation. View Article
ALFI response to ESMA's consultation on the review of the methodology included in the Guidelines on stress test scenarios under the MMF Regulation : This consultation is related to a proposed update of the stress-testing methodologies applicable in the context of Article 28 of the MMF Regulation. View Article

Environmental, Social, Governance (ESG)

EBF: Clarifying greenwashing to prevent greenhushing : The risk could be averted by building on the existing legislative framework. Unambiguous principles for both financial and non-financial undertakings, which are applied consistently across the various legislative initiatives, could be established with the aim of eliminating the risk of greenwashing. View Article
IOSCO welcomes the initiative by the IAASB for early engagement and broad inputs in the consultation on the new international sustainabil : This work will serve to support the consistency, comparability and reliability of sustainability-related information provided to the market, enhancing trust in the quality of that information. View Article
ISSB prepares to consult on future priorities and international applicability of the SASB Standards : Based on research into the information needs of investors, the ISSB has identified four potential projects: biodiversity, ecosystems and ecosystem services; human capital; human rights; and integration in reporting. View Article
Accountancy Europe calls for an ambitious EU due diligence framework : We commend the European Parliament’s (EP) legal affairs committee (JURI) for adopting its position on the Corporate Sustainability Due Diligence Directive (Directive). View Article

Protecting Customers

ICGN chief Kerrie Waring: ‘Corporates should stop holding virtual-only AGMs’ : ICGN's CEO warns online-only AGMs come at the expense of shareholder rights and diminishes board accountability View Article

Fin Tech Regulation

Parliament: Crypto-assets: green light to new rules for tracing transfers in the EU : Uniform legal framework for crypto-assets markets in the EU; Operations with crypto-assets will be traced in the same way as traditional money transfers; Enhanced consumer protection and safeguards against market manipulation and financial crime View Article
ECB publishes progress report on digital euro and study on possible features of a digital wallet : Digital euro potentially available initially to euro area residents, merchants and governments; Digital euro could be made available via existing banking apps and Eurosystem app; Offline and person-to-person payments across euro area seen as highly valued  View Article

Economic Policies Impacting EU Finance

EURACTIV: Commission inches towards Berlin in EU debt rules proposal : The European, moving closer to the position of Germany but keeping the key concept of country-specific debt reduction plans. View Article
POLITICO: It’ll be a tough job getting countries to approve EU’s spending rules reform : “I’m relatively confident that we can bridge the differences.” Commissioner Gentiloni tells POLITICO. The European Commission’s proposal to reform government spending rules is only a few hours old yet it's already been met with a chorus of complaints. View Article
ALFI response to the EC consultation on the proposal for a Council Directive amending Directive 2011/16/EU on administrative cooperation in : ALFI responded to the European Commission public consultation on improved cooperation between national tax authorities on the exchange of information concerning crypto-assets (DAC 8) View Article

Brexit and the City

Bloomberg: US Banks Face Shifting Hundreds of Billions in Assets to EU at ECB Request : Citigroup is due to get feedback on its EU set-up today; Latest shifts come after EU ‘desk-mapping’ review last year View Article
ECON Study presentation: Brexit financial sector regulation stocktake : ‘Recent trends in UK financial sector regulation and possible implications for the EU, including its approach to equivalence’. The UK's new strategy in financial services regulation/supervision, changes already enacted in the UK and outlines the possible consequences for the EU... View Article

Brexit

NIESR's Mortimer-Lee: UK Trade and the Exchange Rate : The most recent ONS data published in March showed that UK export volumes, excluding precious metals, in 2022 Q4 were more than 9 per cent below the 2019 pre-pandemic average. Is this a Brexit effect? View Article
UKandEU: Labour's Britain reconnected foreign policy: slogan or substance? : Tom Howe analyses Shadow Foreign Secretary David Lammy’s vision for a Labour foreign policy that sees ‘Britain reconnected’, examining the extent to which it would represent a departure from the current government’s approach.  View Article

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