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09 November 2023

Friends Weekly Newsletter




Welcome to our Friends weekly e-mail.

 

Highlights of my week: Eurogroup marked the 30th anniversary of the Maastricht Treaty coming into force and noted progress on many items such as the Single Resolution Fund reaching its target size but the ESM cannot yet provide liquidity. The Commission recommended that accession talks be opened with Ukraine: a momentous development as it will require a fundamental overhaul of the EU’s governance – perhaps even including Treaty change. Council and Parliament agreed on “instant payments” – a game-changer for EU consumers and businesses but one which will pose great challenges to a banking system already wrestling with PSD2’s revision. EFAMA was congratulatory on the Commission’s newly-agreed reviews of UCITS and AIFMD. International insurance supervisors (IAIS) outlined actions to address the protection gaps for the now-intense natural catastrophes. Council and Parliament agreed on the electronic ID  to give all EU citizens a digital identity. The BIS published a paper on the performance of stablecoins - showing that not one of them kept its link at all times. Co-incidentally, EBA launched consultations on implementing the new Markets in Cryptoassets Regulation (MiCAR) – recovery plans for issuers and their supervisory colleges. SUERF’s McCauley pointed out that not paying interest on banks’ reserves could push euro-deposits offshore – an own goal! TheCityUK launched its new paper on UK exports data – showing the financial (and related) services now account of about a quarter of Britian’s exports

Graham Bishop


Articles from 3-9 November 2023

Policy impacting Finance

Remarks by Paschal Donohoe following the Eurogroup meeting of 8 November 2023 - main results : 30th anniversary of the entry into force of the Maastricht Treaty. ...The Single Resolution Fund, which is a key pillar of our EU Crisis Management toolkit, has now reached an important milestone as it has now reached its target capacity. View Article
ECA: Reform of the EU’s economic governance: most concerns addressed, but risks remain : The reform proposals address most concerns about the current framework; Ensuring fiscal adjustments that promote debt sustainability will be the main challenge of the new framework View Article
EURACTIV: European Commission recommends accession talks with Ukraine, Moldova : In a boost for the bloc’s floundering enlargement process, the European Commission recommended on Wednesday (8 November) opening accession talks with Ukraine and Moldova – as well as potentially Bosnia, at a much later stage – once they finalise implementing key outstanding reforms. View Article
Fondation Robert Schuman's Triantafyllou: Treaty revision: is Europe ready for a qualitative leap? : The idea of revising the Treaties is gradually gaining ground in view of a possible further enlargement of the European Union in the medium term.  View Article
CEPR's Bakker/Beetsma: EU-wide investment conditional on adherence to fiscal-structural plans : This column argues that an additional EU-wide fund focused on European public goods could introduce positive incentives for further improving fiscal sustainability. View Article

Banking Union

Instant payments: Council and Parliament reach provisional agreement : The Council and the European Parliament have reached a political agreement on the instant payments proposal, which will improve the availability of instant payment options in euro to consumers and businesses in the EU and in EEA countries. View Article
finextra: EU agrees game-changing deal for instant payments : Kjeld Herreman, head of strategy advisory at RedCompass Labs, says: "Although this legislation is good news for European consumers and businesses, the technical implementation is set to be an enormous challenge for banks. View Article
SRB bi-annual reporting note to Eurogroup : SRB’s views on CMDI; Lessons learned from the recent crisis cases and liquidity in resolution;Resolvability progress of SRB banks; Progress made on resolvability of less significant institutions; Single Resolution Fund activities View Article
SSM note to Eurogroup: Banking sector is resilient : Banks have proven resilient in the face of external shocks, says Supervisory Board Chair Andrea Enria. Their improved capital base, asset quality and profitability make them well prepared to weather possible economic downturns amid the current macro-financial uncertainty. View Article
CEPS' Arnal: The banking sector is increasingly looking to the cloud : But what are the real risks and opportunities for a new regulatory framework? View Article
FSB Europe Group discusses regional developments and lessons learned from March bank failures : The group discussed global and regional financial stability issues of particular relevance to Europe -including the FSB work to address risks arising from leverage in non-bank financial intermediation (NBFI) and from the outsourcing of critical services by financial institutions to third parties. View Article
ECON study - de Haan: How to involve other banks in bank rescue operations? : This position paper argues that public authorities’ aim to quickly find a buyer may have made them accept prices that were “too low”, thereby imposing losses on the state and on deposit guarantee schemes.  View Article
ECSAs call for clarity on the application of SCA obligations to payments under eIDAS 2.0 : The European Credit Sector Associations (ECSAs) consider eIDAS 2.0 a very significant..reiterate our concern on the persistent lack of a clear indication on whether the strong customer authentication (SCA) obligations apply to payments or not .. is it limited to e-commerce /online/remote situations View Article

Capital Markets Union

EFAMA: Newly agreed AIFMD & UCITS rules will improve the EU funds market : As the EU Member States conclude technical discussions around the AIFMD & UCITS review, EFAMA would like to congratulate the European Commission and the co-legislators for keeping the key elements of both Directives intact during their review.  View Article
Macro, markets and digitalisation risks are insurers’ top concern according to EIOPA’s Insurance Risk Dashboard : The European Insurance and Occupational Pensions Authority (EIOPA) published today its November 2023 Insurance Risk Dashboard, which shows that insurers’ exposures to macro, market and digitalisation risks are currently at a high level and the main concern for the sector.  View Article
IAIS outlines actions for insurance supervisors in addressing natural catastrophe protection gaps : The frequency and intensity of natural catastrophe (NatCat) events are expected to grow due to climate change, this may challenge the insurability and affordability of insurance coverage – leading to increasing protection gaps. View Article
ICMA publishes updated Guide to Best Practice in the European Repo Market : It provides detailed guidance, best practice recommendations, and clarifications that are intended to support the well-organized trading and settlement of repos.  View Article

Environmental, Social, Governance (ESG)

UN EP FI: How can policy makers support finance industry action on net-zero: Committing to transparent reporting of GHG emissions : Financial institutions committed to net zero not only look into their own emissions, but also assess the climate impact associated with their financing, investment and underwriting activities. In doing so, they proactively support and incentivise the transition of the economy as a whole. View Article

Protecting Customers

Insurance Europe publishes key messages on the EC framework for financial data access (FIDA) : Insurance Europe has called the Commission’s legislative proposal on financial data access only a ‘partial success’... the federation of insurance associations shared its position paper which sets out how to improve the proposal and ensure it is coherent with other EU rules.  View Article
BEUC: Access to consumers' financial data : The sharing and use of data by financial and non-financial institutions could improve consumer conditions in terms of new services and products but it also increases risks of financial exclusion, discrimination and data protection breaches. View Article

Fin Tech Regulation

European digital identity: Council and Parliament reach a provisional agreement on eID : With a view to ensuring a trusted and secure digital identity for all Europeans, the Council presidency and European Parliament representatives reached today a provisional agreement on a new framework for a European digital identity (eID). View Article
The EBA consults on draft technical standards on supervisory colleges under MiCAR : The European Banking Authority (EBA) today launched a consultation on draft Regulatory Technical Standards (RTS) specifying the criteria for determining the composition of supervisory colleges for each issuer of a significant asset referenced token (ART) or of a significant e-money token (EMT). View Article
The EBA consults on draft Guidelines on recovery plans for issuers of asset-referenced tokens and e-money tokens under MiCAR : The European Banking Authority (EBA) today launched a consultation on draft Guidelines on recovery plans to be drafted by issuers of asset-referenced tokens (ARTs) and e-money tokens (EMTs).  View Article
BIS: Will the real stablecoin please stand up? : Do stablecoins live up to their name and can they serve as a reliable means of payment and store of value? We study 68 stablecoins and show that not one of them has been able to maintain parity with its peg at all times.  View Article
EBF response to European Commission ‘Have Your Say’ Consultation on Financial Data Access Framework proposal : The EBF emphasizes the need for a measured approach, striking a balance between the mandatory data sharing elements, and the potential risks on the one hand, and the market driven elements on the other. View Article
FCA and Bank of England publish proposals for regulating stablecoins : The Financial Conduct Authority (FCA) and the Bank of England (the Bank) are today requesting feedback on their proposed approach to regulating stablecoins. View Article
ACCA: AI will only work if ethics and transparency are at the core : ACCA says benefits of AI can be realised as it pledges to ensure its members have the skills and ethical knowledge necessary  View Article

Economic Policies Impacting EU Finance

InvestEurope's Clark/Zeider: Driving the Positive Tax Agenda - Working towards consensus and clarity : The question of what constitutes a "good" tax law is a political issue that is open to debate. There are certain criteria that taxpayers and stakeholders consider important, such as a clear purpose, a robust consultation process, clear drafting, and achievability. View Article

Broadening the International Role of the Euro

SUERF's McCauley: Shrinking the Eurosystem’s footprint without offshoring the euro : Foisting central bank losses onto euro area commercial banks by not paying interest on banks’ reserves with the Eurosystem would be an own goal. If large unremunerated reserves are required, banks and depositors would respond by shifting euro deposits offshore. View Article

Brexit and the City

ISDA Letter on Vision for UK as a Global Finance Center : The letter proposes how the City of London Corporation, in partnership with UK authorities, can leverage ISDA’s work on digitization in the derivatives industry and the expansion of the voluntary carbon market. View Article
TheCityUK: Exporting from across Britain: Financial and related professional services 2023 : Our 'Exporting from across Britain 2023’ report reveals that financial and related professional services exports from across Britain grew by 3.1% in the year to 2021 (latest available data). Industry exports reached £134.7bn – approximately £25 in every £100 of exports income in Great Britain. View Article
Investment Week: UK to outline regulatory rules for ESG ratings industry as early as January 2024 : The UK Treasury is set to outline the regulatory regime for ESG ratings providers at the start of next year. View Article
Banking Risk and Regulation: UK bonus cap scrap poses risk nightmare : The City of London cheered last week when the bonus cap was scrapped...almost a decade after it was first ushered in during a wave of post-financial crisis remorse. View Article
PCS: UK PRA publishes a paper on future capital calibrations : The initial suggestions of the PRA in all 3 areas deviate from the current trends in EU regulation and are not altogether cheerful... View Article
AIMA: PRA considers issues related to capital requirements for securitisation exposures : The Prudential Regulatory Authority (PRA) published a discussion paper (DP3/23) outlining issues related to capital requirements for the securitisation exposures of PRA-authorised firms under the Capital Requirements Regulation (CRR). View Article

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