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Highlights of my week: With year to go to its election, the size and composition of the Tenth European Parliament is now an issue between Parliament and Council. The ECB’s annual review of the international role of the euro shows its resilience in the face of great uncertainties and the Ukraine war. The BIS Annual Economic Report finally grapples with political scepticism and lays out a real justification for CBDCs: as part of a broader overhaul of the financial system. A CEPR study shows a disturbing cluster of large banks with low capital buffers relative to their contribution to systemic risk. The FSB and IOSCO launched a consultation to address the vulnerabilities from liquidity mismatches in Open Ended Funds (OEF). The Commission launched its proposal on simplifying Withholding Tax. If it comes into force on schedule, it will be just a quarter-century since this author participated in the Giovannini Group calling for such a simplification to remove a major barrier to an efficient capital market. ECGI laid out a list of (deep-seated) factors killing the London equity market. What the UK thinks’ Poll of Polls shows how far electors’ opinions have moved since the disastrous Brexit referendum: In 59%, Out 41%. It may not be long before opinion matches the actual outcome of the 1975 referendum: 67:33% remain in.
Graham Bishop
Articles from 14-22 June 2023
Policy impacting Finance
European elections 2024: Parliament proposes more seats for nine EU countries : MEPs demand progress be made on the revision of the EU electoral law, stuck due to some countries’ reticence View Article
ECB: The international role of the euro : Against this challenging background, a composite index of the international role of the euro remained resilient over the review period. View Article
Banque de France's de Galhau: The euro as a complementary asset in a more multilateral system : All these forces could lead to changes to some of the balances of the currentinternational monetary system. Admittedly, despite its gradual erosion fromaround 65% in 2016 to 58% in 2022, the weight of the dollar is likely to remainstrong in the medium and long term. View Article
BIS 2023 Annual Economic Report: Blueprint for the future monetary system: improving the old, enabling the new : Tokenisation of money and assets has great potential, but initiatives to date have taken place in silos without access to central bank money and the foundation of trust it provides. View Article
SSM's McCaul: Change as a constant: trends and shifts in the financial sector : Second, I will discuss the shift in lending from the banking sector to other market participants and the interconnectedness between banks and the non-bank financial intermediation (NBFI) sector. View Article
Politico: Franco-German showdown makes EU fiscal rules reform unlikely this year : ‘We need common rules that are the same for everyone,’ German finance minister says. View Article
Bloomberg: Switzerland Takes a Step Towards Negotiating a New EU Treaty : The Swiss government agreed on the parameters for possible future negotiations with the European Union, part of its long-running effort to arrange new treaties with the bloc. View Article
Banking Union
SRB publishes liquidity in resolution data guidance : New guidance builds on previously issued “Expectations for banks”; Targets banks’ capacity to measure and report liquidity in resolution View Article
The EBA publishes the final amending ITS on supervisory disclosure under CRD : These specify the format, structure, contents list and annual publication date of the supervisory information to be disclosed by competent authorities. View Article
Eurojust organises first expert meeting on Money Laundering and Asset Recovery : Eurojust has organised the first-ever major meeting of high-level experts on Money Laundering and Asset Recovery. The aim of the meeting was to gather the broadest group of specialists to develop a common approach to take on the increasing crime of money laundering and to improve asset recovery. View Article
CEPR: The market view: What the prices on credit default swaps imply about macroprudential bank buffers in Europe : This column quantifies systemic risk using data on credit default swaps for European banks. It finds a cluster of large banks with low capital buffers relative to their contribution to systemic risk. View Article
Capital Markets Union
FSB and IOSCO Open-Ended Funds Consultations Launch : The proposed changes set out the key objectives of an effective regulatory and supervisory framework to address the vulnerabilities arising from liquidity mismatch in OEFs. View Article
ESMA launches Data Strategy for the next five years : Over the coming five years, ESMA will work to facilitate the use of new data-related technologies, reduce reporting compliance costs by regulated entities, enable the effective use of data at both EU and national level; and make data more broadly available to the public. View Article
SUERF's Niepelt: the EU Money Market Fund Regulation fit for purpose? Lessons from the COVID-19 turmoil : We assess the effectiveness of the EU’s regulatory framework from a financial stability perspective and draw three important lessons. View Article
IAIS: Public consultation on a new Stakeholder Engagement and Consultation Policy : Effective stakeholder engagement should ensure that stakeholders are properly consulted in the development of IAIS policy and that the opportunity for timely, substantive and high-quality contributions from stakeholders is maximised. View Article
Environmental, Social, Governance (ESG)
AFME welcomes the Sustainable Finance package recently published by the European Commission: It contains a number of important elements: A legislative proposal for the regulation of ESG ratings providers to enhance the integrity, transparency, responsibility, good governance, and independence of ESG rating activities, contributing to the transparency and quality of ESG ratings. .. View Article
ECGI's Lafarre/van der Elst: The Viability of Blockchain in Corporate Governance : Blockchain technology, along with distributed ledger technologies (DLT), has gained recognition as a potential game-changer in corporate governance View Article
Fin Tech Regulation
CoinDesk: Digital Euro: The Bill Is Ready but Politicians Aren’t Convinced : A plan to legislate for the central bank digital currency may still be on track for publication, but there is still significant political skepticism about the purpose. View Article
SUERF's Niepelt: Digital Euro: An assessment of the first two progress reports : Some motivations for a digital euro remain vague, some fundamental tradeoffs receive limited attention. Most importantly, the reports lack an analysis of why digital euro holdings as stores of value are not desirable and whether strategies to limit such holdings cause collateral damage. View Article
ESAs consult on the first batch of DORA policy products : This includes four draft regulatory technical standards (RTS) and one set of draft implementing technical standards (ITS). View Article
Economic Policies Impacting EU Finance
Fair and simple taxation: better withholding tax procedures will boost cross-border investment and help fight tax abuse : This initiative – a key element of the Communication on Business Taxation for the 21st Century, and the Commission's 2020 Action Plan on the Capital Markets Union – will promote fairer taxation, fight tax fraud, and support cross-border investment throughout the EU. View Article
BETTER FINANCE Praises the Latest Proposal from the European Commission on Withholding Tax in Europe : We are particularly pleased that the Commission is giving Member States the option to implement relief procedures that prevent double taxation from the beginning. View Article
Council: European Semester 2023: country-specific recommendations agreed : This step is part of the 2023 European Semester process , which enables the coordination of member states’ economic, employment and fiscal policies. View Article
Project Syndicate's Stigliz/Faccio: The Global Minimum Corporate Tax Needs More Work : Two years after a “historic” deal to establish a new global corporate-tax regime, the consensus is eroding, and developing countries are taking matters into their own hands. Their efforts are perfectly understandable, given that the agreement’s main provisions may have done more harm than good. View Article
Brexit and the City
UK Finance: Unlocking potential: Financial Services and Markets Bill advances towards Royal Assent : The House of Lords has just completed its consideration at ‘Report Stage’ of the Financial Services and Markets Bill. View Article
ECGI's Cheffin/Reddy: Murder on the City Express - Who is Killing the London Stock Exchange's Equity Market? : We canvass several of those factors: Britain’s listing requirements and corporate governance regime, a paucity of public company investment research, the withdrawal of U.K. pension and insurance firms as public company investors, a U.K. investment culture that prioritises dividends over growth, a lack of world-leading British corporations, and managerial shortcomings. View Article
Brexit
BCC: UPTICK IN EXPORTS BUT TRADE WITH THE EU REMAINS WEAK : ...trade with the EU remains weak, even before the additional cost pressures on imports due to the introduction of new customs arrangements in the Target Border Operating Model later this year. View Article
What UK thinks: Post-Brexit Poll of Polls : This page summarises the results of the last half-dozen polls on whether the UK should be inside or outside the EU. In 59%, Out 41% View Article
UK and EU's Wyatt: The Sunak government should back EU and offer closer political links : Derrick Wyatt looks at what the Sunak Government could do if it wants to forge closer geopolitical links with the EU in the post ‘Windsor Framework’ context. View Article
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