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19 October 2023

Friends Weekly Newsletter




 

Welcome to our Friends weekly e-mail.

 

Highlights of my week: Audible sighs of relief in Brussels as the Polish election results came through…However, the basic problem of the EU’s fiscal rules is not yet resolved. Political commentators are looking at the differentiation of circles of EU membership ahead of a possibly major enlargement, especially after the European Political Community meeting in Granada as a larger EU cannot just be a talking shop without common policies. The IMF blogged about the problems for many banks of “higher for longer” interest rates but anyone with a sense of history will just think that normality has finally returned. The SRB/SSM seminar on CMDI tackled the basic issue of why the post-GFC resolution framework has hardly been used in practice. The German banking industry is supporting stronger banks/financial markets but others are wondering if “CMU” has not provided a label for many different goals. The Commission’s “Platform” has opened an excellent Q&A method of getting feedback on practical problems flowing from the green Taxonomy while the FSB reports that all jurisdictions have taken steps to enforce climate-related disclosure (even if only at the level of proposals). The EBF requested clarity on the precise data requirements for the ECB’s climate stress test. The digital euro may be a big step closer: the ECB has finished its investigation phase and will move to testing – but still without a commitment to an actual launch. Eurogroup welcomed this.  A high profile Brexit blow was reversed  as the market capitalisation of Paris fell below London’s, but questions arose about the global leadership of the UK’s green finance, while the Bank of England announced that it would implement completely in the UK the new CPMI standards for cross-border payments.

Graham Bishop


Articles from 13 -19 October 2023

 

Policy impacting Finance

POLITICO: Poland election results: Opposition secures win, final count shows : The Law and Justice party comes up short after ruling since 2015, ushering in radical change for the country. View Article
POLITICO: Franco-German disagreement stalls EU fiscal rules reform : Fiery meeting in Luxembourg sets the scene for more difficult negotiations in the weeks to come. View Article
Eurogroup - 16 October: : Exchange of views with US's Yellen on Transatlantic economic dialogue; Future of European capital and financial markets; Euro area priorities in the recovery and resilience plans and implementation of euro area recommendations; Digital euro View Article
LSE's Wunderlich/Ganzle/Hofelich: Why differentiation is now at the heart of Europe’s political system : The UK’s exit from the EU and the stalled EU enlargement process have raised the prospect of different models of cooperation being developed for different European countries. The authors argue that differentiation should be recognised as an integral part of Europe’s emerging political order. View Article
CER's Scazzieri: Can the European Political Community survive? : The European Political Community (EPC) summit in Granada may have been labelled a disappointment. But it is too early to write off the EPC. View Article
Klaas Knot: Introductory remarks - ECB Fifth Macroprudential Policy and Research conference : ...the new frontiers of macro-prudential policy, including non-bank financial institutions, or NBFIs, crypto-assets and climate. All these areas affect our financial stability, requiring action. View Article
IMF blog: New Look at Global Banks Highlights Risks From Higher-for-Longer Interest Rates : Higher interest rates have exposed vulnerabilities in some banks, and many more would be weakened by a prolonged period of tight monetary policy  View Article
Questions and Answers on the proposal to amend the European Supervisory Authorities (ESAs) and the European Systemic Risk Board (ESRB) : Regulations to facilitate data sharing and re-use by financial sector authorities.  View Article
Delivering today and preparing for tomorrow: The 2024 Commission Work Programme : ..over 90% of the commitments made in the 2019 Political Guidelines delivered.. commitment to reduce reporting requirements by 25% .. View Article

Banking Union

FISMA DG Berrigan at the SRB/SSM seminar on the crisis management and deposit insurance (CMDI) : We proposed the CMDI reform, because our resolution framework works well in theory but does not fully function as intended. Actual experience since 2015 has revealed, a pervasive reluctance to use the resolution framework as it now stands. We have only used it once in all that time. View Article
CPMI: Linking fast payment systems across borders: considerations for governance and oversight : The interlinking of FPS is one of the most promising solutions for enhancing cross-border payments, offering the prospect of significantly faster, cheaper, more accessible and transparent cross-border payments...especially when interconnected payment systems are real-time and 24/7 . View Article
CPMI: Harmonised ISO 20022 data requirements for enhancing cross-border payments – final report : The 12 data requirements in this report are an important step towards further harmonising the use of ISO 20022 and helping to achieve the G20 cross-border payment target of improving cross-border payments for all. View Article

Capital Markets Union

Banken Verband's Sewing: Stronger banks and financial markets crucial for sustainable transformation : Mobilisation of private capital needed Capital market in Europe remains underdeveloped Increasing the minimum reserve sends out the wrong signal View Article
ISDA: Clearing Infrastructure - Addressing Porting Challenges : This paper considers porting across all product classes, given that many of the identified issues are common across over-the-counter and exchange-traded derivatives. View Article
EURACTIV's Allenbach-Ammann: Capital Markets Union: A goal or an excuse? : Recently, calls to complete the EU’s Capital Markets Union (CMU) have become more frequent, but it’s not always clear whether the CMU’s most recent supporters really want a more integrated financial market or whether they just use the vagueness of the term to hide other political objectives. View Article

Environmental, Social, Governance (ESG)

EU taxonomy: The Platform on Sustainable Finance together with the Commission is launching today the stakeholder request mechanism : The stakeholder request mechanism allows stakeholders to submit suggestions based on scientific and/or technical evidence on new economic activities that could be added to the EU taxonomy or on potential revisions of technical screening criteria of existing activities. View Article
FSB publishes annual progress report on climate-related disclosures : All FSB member jurisdictions either have requirements, guidance, or expectations in respect of climate-related disclosures currently in place, or have taken steps (for instance, made proposals) to do so.  View Article
One-off Fit-for-55 climate risk scenario analysis EBF response to the EBA consultation : Clarity on the timing, rationale and the interaction with the ECB climate stress test; Suggestion to pre-fill templates with information that is common for all banks; Suggestion to omit data request that cannot be reasonably aggregated  View Article
GBIC comments on EBA’s draft templates and template guidance for collecting climate related data from EU banks :  View Article

Fin Tech Regulation

Eurosystem proceeds to next phase of digital euro project : Preparation phase will lay foundations for a potential digital euro, with work to include finalising rulebook and selecting providers to develop platform and infrastructure View Article
Statement by the Eurogroup on the decision of the ECB’s Governing Council to launch the next phase of the digital euro project : Today, we reach another milestone as the Eurosystem has concluded its investigation phase. We welcome the decision of the ECB’s Governing Council to proceed to the next phase of the project during which the Eurosystem will further explore and test design aspects and functionalities of a digital euro.  View Article
EBF encourages wider debate on a digital euro and close public-private collaboration as the project moves to its next phase: It cannot be stressed enough – and it is also apparent by today’s announcement – that the digital euro is a highly complex project with long-term and potentially far-reaching impact on society, economy and the financial industry.  View Article

Brexit and the City

Bloomberg: London Wins Back Europe’s Stock Market Crown From Paris : Paris loses out to London as luxury stocks are dented by China; Energy stocks like Shell and BP drive the FTSE 100 higher View Article
FT's Cumbo: Pension funds resist UK government push to invest £50bn in growth projects : Executives want greater incentives to back high-risk areas and a broader choice of opportunities for their capital View Article
UK Government: Burdensome legislation withdrawn in latest move to cut red tape for businesses : The Government has withdrawn draft regulations after consultation with companies raised concerns about imposing additional reporting requirements. Welcomed by financial sector. View Article
Reuters' Jones: Bank of England considers changes to regulation of foreign bank branches : The experience with SVB UK raised an uncomfortable question for the BoE on how it decides a branch must convert to a subsidiary, based on level of deposits. View Article
Bank of England welcomes release of BIS CPMI harmonised ISO 20022 data requirements for cross-border payments : The Bank believes that global adoption of the CPMI ISO 20022 data requirements will help to reduce inefficiencies which arise along the cross-border payment chain due to misaligned message flows and inconsistent data usage. View Article
EU-UK Forum's Hall: The UK’s ambitions to provide global leadership in green finance face uncertainty : In one of the main areas that has been identified as a source of growth for UK finance post Brexit – green and sustainable finance - important uncertainties and a relatively slow pace of regulatory change remains. View Article

Brexit

EU-UK Forum's McShane: Grandmothers’ footsteps on reconnecting with Europe : Today the PiS nationalist experiment is over as the people of Poland vote for Europe. And every opinion poll in Britain says a majority regard Brexit as being very negative for the UK. View Article

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