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Highlights of my week: Ursula von der Leyen’s last State of the EU (SOTEU) speech raised considerable expectations beforehand but – as usual – they were disappointed in at least some ways by the event. Next week will surely produce a crop of reflections – and analysis about whether her prospects of re-appointment have been harmed or helped. One thing is sure – probably – the ground is being prepared for another major round of enlargement but how to resolve the governance issues? And can it be done without “Treaty change”? Gender equality has chalked about another victory with the nomination of Claudia Buch to be SSM Chair – though the current Chair set out a daunting list of challenges she will face, not least because German opposition to the European Deposit Insurance Scheme (EDIS) makes the EU’s banking system little more than a `collection of national banking sectors’. The Commission’s EMIR 3.0 plan to require `active accounts’ at EU CCPs for EU market participants continues to stir opposition from those private interests that will have to foot the modest bill as they do not appear to pay any attention to the potential massive costs to themselves of financial instability. The ESAs consultation on detailed measures for DORA (Digital Operational Resilience Act) drew widespread comment – and helpful suggestions. The latest Brexit polls show UK opinion continuing to move in favour of being “in” but the SOTEU underlined that the subject is not even on the EU’s radar screen!
Graham Bishop
Articles from 8-14 September 2023
Policy impacting Finance
2023 State of the Union Address by President von der Leyen : When I stood in front of you in 2019 with my programme for a green, digital and geopolitical Europe I know that some had doubts. And that was before the world turned upside down with a global pandemic and a brutal war on European soil. View Article
Parliament- von der Leyen: State of the EU: Ukraine, Green Deal, Economy, China, Artificial Intelligence : In the annual State of the European Union debate, MEPs quizzed President von der Leyen on the Commission’s work in the past and its plans until the June 2024 elections. View Article
SOTEU: Business welcomes renewed attention to economic challenges : The green deal, which according to von der Leyen remains EU’s core economic strategy, needs to be embedded in a cross-sectorial industrial policy that addresses the root causes of Europe’s weakening competitiveness View Article
EURACTIV: Von der Leyen’s lukewarm support for EU treaty change points to lost momentum : European Commission President Ursula von der Leyen gave lukewarm support for reform of the EU treaties in her State of the Union speech on Wednesday (13 September), in an indication that momentum for treaty reform has been lost. View Article
Bruegel's Buti: The State of the European Union speech must address the return of economic policy trade-offs : The European Commission president should set out the need for a new EU business model founded on the supply of genuine European public goods. View Article
Carnegie's Balfour: Ursula von der Leyen’s Three Tiers of Challenges : The European Commission president’s remarks will be a guide for understanding how she might navigate upcoming turbulence. View Article
Robert Schuman Fondation's Joannin: New political equations in Europe one year before the European elections : The European elections of spring 2024 (6-9 June) represent a political opportunity to assert and strengthen Europe's place and weight on the international scene. This election will be the starting point for an almost complete renewal of the European institutions... View Article
Parliament: 2024 European elections: 15 additional seats divided between 12 countries : Two additional seats for France, Spain, Netherlands; One each for Austria, Denmark, Belgium, Poland, Finland, Slovakia, Ireland, Slovenia, and Latvia ; MEPs criticise lack of sincere cooperation from the European Council View Article
EPC: From rhetoric to action on enlargement: A three-pronged way forward : It might be the rentrée, but the debate about EU enlargement has not taken a break, nor is it showing signs of slowing down. Since Russia’s war in Ukraine, the dossier has seen a meteoric rise on the EU’s agenda and has become the talk of the town – in Brussels and the member states’ capitals. View Article
Spanish Presidency: Highlights of the agenda of the informal ministerial meeting on economic and financial affairs (Ecofin) : From 15 to 16 September, the informal ministerial meeting on EU Economic and Financial Affairs will take place in Santiago de Compostela. The working sessions will focus on advancing strategic autonomy and strengthening international economic cooperation, especially with Latin America. View Article
BIS: Governors and Heads of Supervision endorse initiatives in response to the banking turmoil and reaffirm priority to implement Basel III : The first lesson learnt was the importance of banks' risk management practice and governance arrangements as the first and most important source of financial and operational resilience. View Article
Finance Watch's Grandjean, Symon: #NoMoreCrises: Unkept Promises of Reform : Fifteen years after the GFC, authorities are still forced to repeatedly syphon out hundreds of billions of already scarce public money to prop up failing institutions. European legislators must reawaken their 2008 ambition and finalise the post-crisis “never again” financial reform agenda. View Article
SUERF's Strauss-Kahn: The current Polycrisis versus the Global Financial Crisis : The update of my May 2020 note confirms three major similarities between now and the “Global Financial Crisis” (GFC) starting around 2008: persistent uncertainty, analogous economic ups and downs, and growing public debt to GDP. View Article
Project Syndicate's Eichengreen: How Global Currencies End : The dollar's role will hinge on whether the US brings its soaring debts under control, avoids another unproductive debt-ceiling showdown, and gets its economic and political act together more generally. View Article
Delors Centre's Dawson:How to Democratise Europe's Fiscal Rules : While the proposals seek an important set of goals – to insulate the EU against fiscal risks while allowing important social and environmental investments – the package also carries important democratic shortcomings. View Article
Bruegel's Grund, Steinbach: European Union debt financing: leeway and barriers from a legal perspective : The paper investigates the legal feasibility of the EU borrowing on the capital market to finance European public goods. View Article
Banking Union
ECB nominates Claudia Buch as Chair of Supervisory Board : The Governing Council of the European Central Bank (ECB) today nominated Claudia Buch for the non-renewable five-year position of Chair of the Supervisory Board, following consultation with the Supervisory Board. She is currently Vice-President of the Deutsche Bundesbank. View Article
ECB's Enria- Eurofi interview: The integration of the EU banking sector and the challenges of global competition : The situation did not change significantly after the establishment of the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM): the banking sector is still, by and large, a collection of national banking sectors. View Article
CEPS's Lanoo: Bank stress tests only lift a tip of the veil : It seems that both EBA and ECB reports started from very static assumptions, and that the lessons of the Silicon Valley Bank (SVB) debacle have not been taken into account. View Article
BIS: Upside down: when AT1 instruments absorb losses before equity : As demonstrated by the recent Credit Suisse episode, outside resolution, some Additional Tier 1 (AT1) bonds may be written down entirely before the wipe-out of Common Equity Tier 1 (CET1). This situation implies a transfer of value from holders of such AT1 bonds to shareholders. View Article
Eurofi article by SRB Chair Dominique Laboureix - The SRM is critical for a complete single market for financial services : One of the issues that pan-European banks could face is ringfencing of capital, loss absorption and liquidity requirements on subsidiaries. Ringfencing is a circular problem as it inconsistent with a complete Banking Union but it is also a reaction to an incomplete Banking Union. View Article
CEPR's Weder di Mauro, Langwiler: Global lessons from the demise of Credit Suisse : Following the publication of a report from the Expert Group on Banking Stability which discusses lessons and makes recommendations to address gaps in the regime, this column presents findings that focus on the ‘why’ and ‘how’ of the crisis, emphasising the lessons with broader implications.. View Article
Capital Markets Union
EFAMA + 11 Trade associations call for deletion of active account proposal in EMIR 3.0 : The associations urge EU policymakers to delete the proposed Active Account Requirement and instead focus efforts on streamlining the supervisory framework for EU CCPs across member states while making the EU CCPs’ offering for clearing in the EU more attractive and innovative. View Article
Environmental, Social, Governance (ESG)
Opening remarks by Commissioner McGuinness at the European Parliament's Committee on Legal Affairs : So today and briefly, I want to outline the Commission's proposed draft delegated act in the CSRD; also to look at global alignment; and the next steps then in the sustainability reporting process. View Article
ALFI position paper on the calibration of the depositary duties as regards the monitoring of ESG investments : The ALFI position paper is primarily aimed at reacting at §46 of ESMA May 2022 supervisory briefing on sustainability risks and disclosures in the area of investment management, regarding depositary duties. View Article
InsuranceEurope: Less, simpler, coherent: insurance industry calls on EU to tackle excessive reporting requirements : "we urge the Commission to recognise that this burden is created by too many reporting requirements,and also by duplications and overlaps across different pieces of legislation, lack of sufficient time to implement the requirements, as well as lack of clarity and timely provisions of Q&As’ View Article
Fin Tech Regulation
DORA Level 2 consultation: Insurance Europe underscores need for proportionality and a risk-based approach : While appreciating the work undertaken by the ESAs in preparing the draft measures within the designated short timeframe, in its response the insurance and reinsurance industry calls for clarifications... View Article
EFAMA: Proposed changes to DORA require more proportionality and simplicity : The main issue that EFAMA highlights is the need for comprehensive incorporation of the proportionality principle of DORA. The scope of entities subject to DORA is very broad and ranges from credit and payment institutions, to insurance companies, to asset managers, as well as others. View Article
FESE: Response to the ESAs consultation on the first batch of DORA policy products : The consultation papers cover the ICT risk management framework, criteria for the classification of ICT-related incidents, policy on ICT services performed by ICT third-party providers and templates for the register of information. View Article
DK-comments to ESAs Joint Committee consultation on Technical Standards under DORA : The DK points out that the detailed requirements presented in the technical standards leave little room for proportional application. In addition, the implementation of the information register in the proposed form will require considerable resources to implement and fill it. View Article
ALFI responds to ESAs consultation paper on DORA draft regulatory technical to further harmonise ICT risk management tools, methods, process : The ESAs’ mandates under Article 15 and Article 16(3) of DORA both relate to the area of ICT risk management framework by detailing specific elements applicable to the financial entities View Article
EURACTIV's Allenbch-Ammann: EU Parliament risks missing the point on Digital Euro : With next year’s European elections closing in and conspiracy theories about the Digital Euro flying through the ether, the European Parliament is taking an overly cautious stance, risking squandering the opportunity to build a promising piece of European infrastructure. View Article
Economic Policies Impacting EU Finance
Commission: Summer 2023 Economic Forecast: Easing growth momentum amid declining inflation and robust labour market : The EU economy continues to grow - with reduced momentum. The forecast revises growth in the EU economy down to 0.8% in 2023, from 1% projected in the Spring Forecast, and 1.4% in 2024, from 1.7%. It also revises growth in the euro area down to 0.8% in 2023 (from 1.1%) and 1.3% in 2024 (from 1.6%). View Article
Brexit and the City
Federal Trust's Stevens/Donnelly Video: Join the Euro, Rejoin the EU : Thay argue that membership of the euro will be necessary to sustain the UK’s re-entry into the European Union after Brexit. View Article
FT Former MEP Corbett: Letter: On Schengen and the euro, UK could still get opt-outs : The EU now has seven member states which have not joined the euro, six of which show no intention of joining. View Article
Brexit
What UK Thinks - Poll of Polls- Curtice: : August/ Sept: In 58%; Out 42% View Article
EU-UK relations: Commission and UK reach political agreement on UK participation in Horizon Europe and Copernicus : View Article
FT's Sandbu: The EU’s transformations will reshape its ‘British question’ too : Ukraine’s likely accession to the bloc and the process of internal reform will have a transformative effect View Article
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