06 April 2016

Deepening EMU – Round-up of Key Events – March 2016

The UK Government published two reports on the process for withdrawing from the EU and the possible alternatives to EU membership. The CBI and the City of London Corporation made the case for staying In. The EU Council published the Annual Growth Survey and several documents of conclusions on taxes.

By Paula Martín Camargo, Editor

Graham’s articles, comments and speeches

 

Graham Bishop analysed the responses to the Commission’s Call for Evidence on the EU Financial Services Regulation; in his view, some clear trends emerged from the submissions by the trade associations, while ECON and the ECB called for a much more comprehensive and continuous review process. Bishop also wrote that ‘FinTech’ payments may revolutionise the financial system far more than can be imagined easily today.  

Political

The UK Government published two papers aimed at shedding light on the process for withdrawing from the European Union, and at explaining the possible models for the UK outside the EU. One of the most important conclusions is that the process would lead to “up to a decade or more of uncertainty.”  

The BoE’s Mark Carney wrote to Andrew Tyrie, chair of the Treasury Select Committee, saying that "EU membership reinforces the dynamism of the UK economy" in response to a request for the Bank's view on David Cameron's renegotiation settlement. The BBA’s survey among the banking sector found that a majority of respondents believe their business would suffer a “negative impact” in the event of a Brexit.  

Commissioner Hill explained the next steps of the CMU Action Plan in a speech and talked about the benefits of the Single Market for the UK, underlining that "if the UK were to vote to leave, it's a fantasy to suggest it could quickly secure access to the single market on the same terms as it has today."  

This is a widespread idea, with City of London Corporation pointing out how access to the single market in financial services provides significant benefits for the UK financial services industry and for consumers.  Chairman Mark Boleat wrote in City AM defending the City of London Corporation position in favour of EU membership. TheCityUK published its practitioner's guide to Brexit to address the practical questions businesses need to be aware of in the event of Britain withdrawing from the European Union.

The CBI will finally make the economic case to remain in the EU after 80% of its members voted that being in EU is best for their business. A new PwC analysis commissioned by the Confederation concluded that leaving Europe would cause a serious shock to the UK economy, with a potential cost to the national GDP of £100 billion.  [...]

Graham Bishop gave his informed view in the matter in a speech at the Institute of Economic Affairs, saying supporters of free markets should back Britain’s continuing membership of the EU.

Financial

Banking

The Basel Committee proposed a consultative document on its measures to reduce the variation in credit risk-weighted assets. The EBF responded to the second BCBS consultation on the revision of the Standardised Approach for Credit Risk saying it improves certain aspects of the first paper following a quick but thorough analysis.   [...]

Securities

Investors, issuers and other market participants represented by AFME, EFAMA, ICMA and InsuranceEurope united to support STS securitisation.  The FT published that securitised loans were and still are originated mainly by EU regulated banks and in line with prudentially established underwriting standards, and therefore securitisation does not deserve a toxic tag. [...]

Insurance

The European Commission published an amendment to a delegated act under Solvency II that will make it more attractive and cheaper for insurers to invest in infrastructure projects.  But insurers are voicing concerns over regulators’ plans to develop a single, global framework for the insurance industry as reported by Commercial Risk Europe and the Financial Times. [...]

Asset Management

EIOPA’s stress test have been criticised by PensionsEurope – the association said that the results show that the holistic balance sheet methodology does not work – and the Dutch Pensions Federation, which affirmed that EIOPA’s use of the holistic balance sheet for stress tests has led to confusing results.  These opinions might prove determining: the Commission is mulling whether to continue developing a personal pension product and wants to have “an informed view” by year-end.  [...]

Economic

The ECB added the corporate sector purchase programme to the APP and also decided to adjust the parameters of the public sector purchase programme (PSPP). ICMA published a briefing note on how it intends to respond to the CSPP, and to help ensure that it achieves its objective without compromising resilient and well-functioning European corporate bond markets.  

The Governor of Banque de France said at a Bruegel event that the lack of economic coordination has a high growth cost for euro area citizens, and that full coordination can only be achieved by setting up a legitimate decision-making institution, embodied by a Finance Minister of the euro area. [...]

Graham Bishop launched his CPD courses with a lecture at Cass Business School - organised by The CISI. This was the first of a series of ten online lectures as his bold plan to explain how and why the current system of financial services regulation has come into existence across the EU.  

Full article available for consultancy clients here