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Highlights of my week: All `financial’ eyes in Brussels are now swinging to the Parliament elections next June and the latest projections show the “coalition” (EPP, S&D, Renew) in a slightly improving position. After the surprising result in the Netherlands, they should retain a working majority – thus influencing the choice of the Commission President. However, enlargement to Ukraine is still the dominant focus of politics. But the next cycle of legislation will have to tackle CMU - and why it is not taking off already. Part of the unwelcome answer may lie in papers published for “retirement week”. Apart from the low level of pension savings, BETTER FINANCE produced a damning paper on the real returns earned from pension and life insurance. `Calamitous’ and `disastrous’ was the short answer! Why will citizens invest in capital market products if this is going to be the result? COP28 produced many papers/speeches but one factor that gathers little attention is the carbon footprint of military conflict. As the EU seizes the global initiative in ESG standards, an unwelcome side-effect is appearing: armaments companies are not seen as a ”sustainable” activity and are encountering financing difficulties. The Spanish Presidency is drawing to a close and continues to add to its list of negotiating successes: this week, Council agreed its position on EMIR 3 and reached agreement with Parliament on MREL `daisy chains’. In the UK, the Chambers of Commerce survey showed that 62% of manufacturers find customs declarations are a barrier to exporting but hardly dared mention the role of Brexit in exacerbating the problems.
Graham Bishop
Articles from 1-7 December 2023
Policy impacting Finance
Europe elects: 30 Nov - "coalition" improves its projected seats : View Article
Parliament: Survey shows Europeans value EU membership and interested in European elections : 72% of EU citizens think that their country has benefited from EU membership and 70% believe that the actions of the EU have an impact on their daily life; More than half of EU citizens (57%) are already interested in the upcoming European elections, taking place 6 - 9 June 2024. View Article
LSE:The Dutch general election featured unprecedented levels of electoral volatility : Geert Wilders’ surprise victory in the 2023 Dutch general election has rightly grabbed headlines, write Martin and Krouwel. But the election was remarkable for several other reasons, not least the realignment of the party system brought about by unprecedented levels of electoral volatility. View Article
Carnegie's Bechev:There Are No Quick Fixes for EU Enlargement : Enlargement remains the most powerful foreign policy tool at the EU’s disposal. But it is likely to remain dysfunctional irrespective of what European leaders decide next week. View Article
EIAG's Avery and Faull: Enlargement of the European Union : Some of the countries of the Western Balkans may join in the next five years, but only if they boost their economic growth and convergence with the EU, and solve problems of corruption, organised crime...Membership for Ukraine and its neighbours Georgia and Moldova will take longer. View Article
EFR: Paper on Future regulation in Europe – aligning with future realities : Priorities for the next European legislative cycle, a strong and competitive European financial sector - especially during transition where Europe needs to remain a global and relevant actor. A forward-looking regulatory calendar - in particular the financial services. View Article
Better Finance: Will you afford to retire? | The Real Return of Long-term and Pension Savings | 2023 Edition : For long-term and pension savers, 2022 was a calamitous one. Poor capital market performance and sky-rocketing inflation across all European Union (EU) Member States resulted in disastrous returns, both in nominal and real terms, for virtually all of the product categories analysed in this report. View Article
Pensions survey: more than one-third of Europeans are not saving for retirement : A Europe-wide survey has shown that more than one-third of Europeans are not saving for their retirement and 40% of people indicating that the current economic circumstances had negatively impacted their pension contributions. View Article
EBF: European associations set out recommendations to ensure pension adequacy for all : During the launch of European Retirement Week in Brussels, the 14 European associations presented to EU policymakers key recommendations to ensure pension adequacy for all. View Article
FT's Noonan:Top ECB official wants to give risk managers more power on bank bonuses : Supervisory board member Elizabeth McCaul says central bank could ‘do more to strengthen’ their hand View Article
EFR: “Resilience and Protection Gaps” : ..the financial sector contributes to more resilient societies and stands ready to provide insight and expertise in risk management.The European economy is facing more and more risks with systemic features such as climate change, cyber-attacks, ageing, pandemic and geo-political developments. View Article
Pub Affairs' Salzinger: Addressing the military carbon footprint at COP28 : As global military spending is at an all-time high, we cannot continue to ignore the impacts of war and militarisation on the environment and greenhouse gas emissions View Article
Banking Union
Daisy Chains: Council and Parliament reach agreement : The proposal is a targeted amendment of the Bank Recovery and Resolution Directive or (BRRD) and the Single Resolution Mechanism Regulation or (SRMR) to include targeted proportionality requirements to the treatment of ‘internal MREL’ in bank resolution groups. View Article
AFME welcomes political agreement on EU implementation of final Basel III standards : AFME therefore calls on decision makers to resist further increases in capital requirements in the coming years as the banking sector goes through an important implementation phase and will need capacity to finance the real economy during the digital and green transition. View Article
ECB's Lagarde: 5th ECB Forum on Banking Supervision "Europe: banking on resilience" : In my remarks today, I will explain how European banking supervision has brought about key improvements to the supervisory landscape and to the effectiveness of monetary policy. View Article
SSM's Tuominen spech "crisis management and deposit insurance (CMDI)." : The CMDI proposal aims to improve the way we resolve crisis situations at mid-sized banks. But let’s not forget that this is a coherent package which hinges on having adequate funding in resolution. View Article
SRB Chair Dominique Laboureix at the ECON Committee : 2024 will see the SRB enter into a new phase. After eight years of capacity building, we will pivot towards more testing and ensuring that our resolution strategies are truly ready-to-use. View Article
FSB publishes toolkit for enhancing third-party risk management and oversight : The toolkit has been developed in response to concerns over the risks to financial institutions from outsourcing and third-party service relationships. View Article
BEUC's response on the roadmap on reporting duties : The Commission intends to make proposals to rationalise and simplify reporting requirements that oblige public authorities or business to provide information to competent authorities either at EU or national level, with initial proposals targeting the green, digital and economic thematic areas. View Article
EBF: Paper trail ends in jail time for 1013 money mules : 2822 Banks and financial institutions join forces with law enforcement agencies in global effort against money laundering View Article
Capital Markets Union
Capital markets Union: Council reaches agreement on improvements to EU clearing services : View Article
BIS Quarterly Review:Liquid assets at CCPs and systemic liquidity risks : Central counterparties (CCPs) are key players in financial markets, holding $1.3 trillion in liquid assets as of June 2023. The holdings are highly concentrated in the eight largest CCPs, mainly based in Europe and the United States. View Article
IAIS Global Insurance Market Report 2023 highlights key risks and trends facing the global insurance sector : Aggregate systemic risk scores of the global insurance sector declined slightly compared to last year’s analysis, remaining well below that of banks. View Article
ESMA: The Euro Risk-Free Rates Working Group concludes its work : In the statement published today, ESMA summarises the key achievements of the EUR RFR WG, such as the identification of €STR as risk-free rate for the euro area and the definition of EURIBOR fallback provisions for each asset class. View Article
Environmental, Social, Governance (ESG)
Commissioner McGuinness at EU side event at COP28 on European Sustainability Reporting Standards : The Commission adopted the first set of European Sustainability Reporting Standards in July. We're the first in the world to have a comprehensive, mandatory set of sustainability reporting standards. View Article
ISSB at COP28: Erkki Liikanen on progress and priorities to advance global sustainability disclosures : Mr Liikanen confirmed three further commitments in the IFRS Foundation’s efforts to support efficient and resilient capital markets through robust sustainability-related financial disclosures. View Article
EuropeanIssuers co-signs the ISSB COP28 climate declaration : Members welcome the work undertaken by the EU Commission, EFRAG and the ISSB to make the recently adopted European Sustainability Reporting Standards (ESRS) as much interoperable as possible with such international baseline to avoid duplication efforts for European issuers. View Article
GFANZ delivers on the year of the transition plan with continued growth and progress to close key gaps in the global financial system and ac : GFANZ welcomes more than 100 new financial institutions as signatories of the net-zero alliances; Principals Group meets in-person at COP28 to announce 2024 priorities View Article
EBA reaffirms its commitment to enhance climate-related and broader sustainability considerations in the EU banking sector : The EBA highlighted its effort to integrate sustainability aspects in many areas of its work, including risk management, disclosures, supervisory practices, climate stress testing and the Pillar 1 framework. View Article
ESAs put forward amendments to sustainability disclosures for the financial sector : The ESAs propose adding new social indicators and streamlining the framework for the disclosure of principal adverse impacts of investment decisions on the environment and society. View Article
IOSCO publishes a final report presenting supervisory practices across its members to address greenwashing. : View Article
EBF response to the EC Call for evidence: EBF calls for a fitness check on sustainable finance framework : As a matter of urgency, the Commission should not only focus on the identification of reporting requirements that may be considered overwhelming, obsolete, unclear or costly, but also allow for pragmatic approaches and consider providing common tools that will substantially reduce the costs... View Article
EFR: Paper on Sustainable Finance – The case for a simpler regulatory framework : EFR believes that regulatory fragmentation should be avoided and that requirements which meet a baseline standard, whilst unlikely to be fully aligned, should be interoperable to avoid placing excessive and duplicative compliance burdens on firms. View Article
How can policymakers support finance industry action on net-zero: Considering investments required for a Just Transition : The current level of finance falls significantly short of what is required to achieve net-zero emissions by 2050. While many financial industry leaders step up their efforts to drive the transition forward, there is still a substantial shortfall in investment that is needed to reach the global climate objectives. View Article
New cooperation agreement reached, as GRI-ESRS Interoperability Index is made publicly available : ...substantiates the benefits of the alignment achieved between the European Sustainability Reporting Standards (ESRS) and the GRI Standards and commits the organizations to continue working together to deliver technical support for reporting companies. View Article
OECD: Assessing net-zero metrics for financial institutions : Financial markets need clear information and credible metrics to inform climate-related investment and financing decisions. View Article
Bruegel's Zachmann: Bypassing the German debt brake and continuing climate spending : There are ways around Germany’s debt brake, which limits government borrowing and is seen as a threat to the climate transition. View Article
The ESAs provide clarity and tips to consumers on sustainable finance : The factsheet provides tips to consumers considering to buy financial products with sustainability features, including loans, savings, investments, insurances and pensions. View Article
Protecting Customers
EPC's Torchio:Meta’s ‘Pay or Okay’: Is this the final challenge for EU GDPR? : Since the first week of November, Meta has forced its European users to accept intrusive privacy practices or pay €156 per year to access Facebook and Instagram without tracking advertising. View Article
Brexit and the City
Reuters's Jones: Britain sets out marketing rules for EU investment funds in the UK : After Britain left the EU, it gave temporary permission for EU-based investment funds known as UCITS to continue taking UK customer cash until a permanent set of UK rules on market access for overseas funds is put in place in the first half of 2024. View Article
FCA seeks views on regulatory approach for overseas funds : In preparation for the new Overseas Funds Regime (OFR), the Financial Conduct Authority (FCA) has set out its proposals for how the regime should operate. View Article
Brexit
UK in a Changing Europe: The state of public opinion: 2023 : ..Even the most ardent Leavers and Remainers want to talk about something else. This is one reason why none of the major national parties is anxious to make the future of the UK-EU relationship an electoral issue.... View Article
BCC: Red Tape, Regulation & Costs Holding Back Exports : Almost half (49%) of businesses say current customs checks and declarations are a barrier to exporting. This rises to 62% for manufacturers View Article
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