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Highlights of my week: The Draghi Report took centre stage this week as it is intended to be the foundation of the Commission President’s second term. However, many such illustrious papers have just “gathered dust on the shelves” in the past…will this be different, even though industry and finance gave it a warm welcome. ICMA helpfully summarised the key messages for financial markets in four pages, while PCS went straight to the positive messages on securitisation on pages 60-61! A key suggestion was more EU debt even if it was just rolling over the NextGeneration debt in due course. POLITICO concluded it was politically impossible and indeed the probable next Chancellor of Germany – Friedrich Merz – ruled it out in familiar Merkel-era terms. SUERF pointed out that non-bank finance has resumed growth and the BIS published a case study on why this is happening. Beyond Draghi, capital markets union produced a slew of comments on many topics while Finextra highlighted a Capgemini paper that suggesting account-to account (A2A) payments using European banks’ new Wero wallet will take more than a third of the card payments market in the next few years. Brexit has taken a lower profile since the UK election as observers wait for the new Labour Government’s substantive moves but Bloomberg’s editors think Starmer has to make a bolder move if he is to galvanise a reluctant union.
Graham Bishop
Articles from 6-12 September 2024
Policy impacting Finance
Commission: The future of European competitiveness: Report by Mario Draghi : The report looks at the challenges faced by the industry and companies in the Single Market. View Article
BusinessEurope welcomes Draghi report and calls for urgent action to restore the EU’s competitive edge : We welcome the release of this comprehensive report and extend our gratitude to Professor Draghi and his team for the extensive work. The report will undoubtedly play a critical role in shaping future EU strategies and policies. View Article
InsuranceEurope: Draghi competitiveness report: insurers back ambition and highlight actions needed : Europe's insurance industry welcomes Draghi's report - backing prioritising EU competitiveness. It supports the call to increase the flow of investments and savings across the EU, ensure Europe’s ambitious decarbonisation plans are part of a larger coherent plan, and reduce regulatory burden. View Article
ICMA: Draghi report: Summary of recommendations on CMU and financial services : This ICMA note summarises, on four pages, the recommendations in the Draghi report, published on 9 September 2024, on Capital Markets Union (CMU) and financial services. View Article
PCS: Draghi report published - securitisation gets a supportive mention : If you are currently focusing on securitisation, we invite you to go straight to pages 60 and 61 of the main report. These contain both strong and explicit support for a revival of securitisation. View Article
BETTER FINANCE: Examining the Letta and Draghi Reports: Opportunities & Challenges for EU Retail Investors : Letta and Draghi have both presented crucial perspectives on how the EU can enhance retail investment and build a more robust Capital Markets Union (CMU). With the EU Commission's renewed focus on the Savings and Investments Union and the newly elected Parliament present an opportunity. View Article
PubAfairs Brussels/Bruegel: Draghi’s industrial masterplan has decarbonisation at its core : A report on the future of European competitiveness, prepared by former Italian prime minister Mario Draghi and long awaited in Brussels, is finally out. It is expected to significantly shape the work programme for the next five years of the European Commission, led by Ursula von der Leyen. View Article
FT: Brussels explores Draghi option of extending up to €350bn in EU debt : Without additional funding the European Commission fears debt obligations will hobble the bloc’s spending power View Article
POLITICO: Mario Draghi’s plan to fix a broken Europe already looks impossible : The Draghi report is full of good intentions to mend a continent losing its way. But while the vision is bold, the politics are practically impossible. View Article
German CDU leader pledges to do “everything I can” to prevent new EU debt : German CDU leader and chancellor hopeful Friedrich Merz pledged on Wednesday (11 September) to do “everything I can” to prevent the permanent issuing of EU joint debt, after the idea featured prominently in Mario Draghi’s report on European competitiveness earlier this week. View Article
POLITICO: Europe’s Draghi report unleashed: These are the 5 things to watch : A blueprint to make the EU more competitive with the rest of the world is published on Monday. It’s likely to prove controversial. View Article
ESAs warn of risks from economic and geopolitical events : The Report underlines ongoing high economic and geopolitical uncertainties. The ESAs warn national supervisors of the financial stability risks stemming from these uncertainties and call for continued vigilance from all financial market participants. View Article
IMF blog: How to Awaken Europe's Private Sector and Boost Economic Growth : by Cerdeiro, Hee Hong, Kammer: ..what is the cause of the problem? As we show in the forthcoming Regional Economic Outlook, Europe's aggregate productivity problem can be traced back to performance differences at the firm level. View Article
FSB: The Future of the International Financial Architecture : FSB Secretary General, John Schindler, spoke about tokenisation, artificial intelligence and non-bank financial intermediation during a session on Digital Finance, AI and Financial Stability at the 2024 Global Economy and Financial Stability Conference, held in Seoul. View Article
SUERF: EU non-bank finance returns to growth : by Portes, Kern, Bouvert, Oksenluk: Non-bank financial intermediation is playing a growing role in providing credit to the real economy and the financial sector, and 2023 saw the market return to its growth trajectory. View Article
EBF and its Members Call for Balanced Reforms to Boost Competitiveness and Investor Participation in EU Capital Markets CMU Action plan : Developing EU capital markets will contribute not only to ensuring that the digital transformation and green transition of our economies are properly funded, but will secure the bedrock upon which EU competitiveness can be relaunched. View Article
Banking Union
Parliament case studies: Accountability of the European Banking Union : The European Banking Union has marked a substantial transfer of powers for banking supervision and resolution from the national to the supranational arena. With power and independence comes accountability to ensure that the competences are exercised in accordance with their legal framework. View Article
BIS: Non-bank lending and the transmission of monetary policy : by Cucic, Gorea: While banks reduce lending in response to a monetary tightening, non-banks increase their credit supply and gain market share. View Article
CEPR: Much money, little capital, and few reforms: The 2023 banking turmoil : by Angeloni, Claessens, Senu, Steffen, Weder di Mauro: The events of March 2023 in the US and Switzerland showed, once again, that banking systems remain fragile. View Article
Capital Markets Union
EIOPA proposes a broad reform of the PEPP to tackle Europe’s pension gap and support the digital and green transitions : EIOPA published today a Staff Paper on the future of the Pan-European Pension Product (PEPP). The paper sets out the reasons behind the limited uptake of the PEPP and suggests improvements to its design to overcome supply-side, demand-side and structural barriers hindering its broader adoption. View Article
ICMA responds to ESMA consultation on the scope of CSDR settlement discipline : ICMA’s response covers both the secondary market angle as well as relevant aspects from a primary market perspective, incorporating feedback from ICMA’s CSDR-SD working group, as well as input from ICMA’s Primary Market Practices Committee (PMPC). In general, ICMA is supportive of ESMA’s proposals.. View Article
FESE: Oxera note on market data fees and revenues : With the debate around the costs of data in EU equity trading markets ongoing, FESE has commissioned Oxera to undertake an analysis on the evolution of market data fees and revenues since MiFID II. This study builds on similar analysis Oxera conducted in 2019 and 2022. View Article
Retail Investment: Value for Money - Pablo Pernía Martin, Vice-chair, Conduct of Business Committee, Insurance Europe : Consumer satisfaction is essential to the success of any insurer and a necessary condition to stay ahead of the curve in a competitive market. View Article
ALFI responds to the EBA/ESMA discussion paper on IFD/IFR : ..there is no need to impose additional capital requirements for UCITS management companies and AIFMs providing MiFID ancillary services, nor to restrict the amount of such service, as the UCITS and AIFM Directives have been reviewed and contain a specific regime for management companies and AIFMs. View Article
EFAMA: Significant expansion of European Fund Classification system (EFC) : 62,000+ new fund share classes have been added, including new categories View Article
ISDA and IIF Respond to BCBS Consultation on CCR Management : ISDA and the Institute of International Finance (IIF) submitted a joint response to the Basel Committee on Banking Supervision’s (BCBS) consultation on guidelines for counterparty credit risk (CCR) management. View Article
Environmental, Social, Governance (ESG)
SSM's Elderson: Nature-related risk: legal implications for central banks, supervisors and financial institutions : ..focus on the legal implications of nature-related risk for our central banking and supervisory work. I will outline the growing trend of nature-related litigation. Then I will look at how nature-related risk should be considered in the context of the mandates of central banks and supervisors. View Article
New CFA Institute report argues ESG Fund classification needs more rigor : A report published today by the CFA Institute Research and Policy Center seeks to improve ESG fund classification through an in-depth review of current classification frameworks and rigorous definitions of fund-level features, as well as providing examples of rigorous definitions in practice. View Article
Fin Tech Regulation
finextra: European card transactions to fall as A2A payments take off - report : The number of card transactions in Europe is set to plummet by more than a third over the next three years, driven by the rise of account-to-account payments as ventures such as the EPI's new Wero wallet gain traction, claims a Capgemini report. View Article
Economic Policies Impacting EU Finance
ACCA's Piper: Radical reshaping of tax system could have positive impact across society : Focus on taxing corporate profits needs to widen to encourage ethical and sustainable business behaviours. Governments need to look beyond profit as the basis of taxing companies and consider their impacts on the environment and society if we want businesses to support a sustainable future. View Article
Brexit and the City
The FCA’s new listing rules and what's to come : After undertaking the biggest change to the listing rules in over three decades, we followed up weeks later with a package of measures to further boost the UK’s position as a global and vibrant financial centre... Success is measured in the long-term economic growth of UK capital markets. View Article
House of Lords: It’s time for tough decisions to tackle our national debt : The UK’s national debt risks becoming unsustainable unless tough decisions are taken in this Parliament to address the major challenges the UK faces and put debt on a gradual downward path. View Article
Brexit
Bloomberg's Editors: Brexit Burned Both the UK and the EU, But This Relationship Can Be Saved : The current frayed state of affairs underserves both sides. Keir Starmer still has to make a bolder offer to galvanize a reluctant union. View Article
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