07 March 2022

Joint Statement on the U.S.-EU Joint Financial Regulatory Forum

U.S. and EU participants in the U.S. - EU Joint Financial Regulatory Forum (“the Forum”) met virtually on March 1-2, 2022, to exchange views on topics of mutual interest as part of their ongoing financial regulatory dialogue.

EU participants included representatives of the European Commission, the European Banking
Authority (EBA), the European Securities and Markets Authority (ESMA), the European
Insurance and Occupational Pensions Authority (EIOPA), the European Central Bank (ECB),
the Single Supervisory Mechanism (SSM), the Single Resolution Board (SRB), and the
European Systemic Risk Board (ESRB).

U.S. participants included officials from the U.S. Department of the Treasury and staff from
independent regulatory agencies, including the Board of Governors of the Federal Reserve
System (FRB), Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance
Corporation (FDIC), Securities and Exchange Commission (SEC), and Office of the
Comptroller of the Currency (OCC). U.S. participants expressed views on issues in their
respective areas of responsibility.

The Forum underscored U.S. and EU cooperation and focused on six themes: (1) market
developments and current assessment of financial stability risks, (2) operational resilience and
digital finance, (3) sustainable finance and climate-related financial risks, (4) regulatory and
supervisory cooperation in capital markets, (5) multilateral and bilateral engagement in
banking and insurance, and (6) anti-money laundering and countering the financing of
terrorism (AML/CFT).

The United States and the European Union are currently experiencing robust economic
recoveries. However, the current geopolitical situation creates significant uncertainty and
downside risks. Both the United States and the European Union also still face the ongoing
COVID-19 pandemic, inflationary pressures stemming in part from higher energy prices, and
supply-chain bottlenecks. The resilience of the financial sectors on both sides of the Atlantic
has helped to absorb the effects of the turbulent environment. As we contend with continued
high levels of uncertainty, cooperative international engagement to mitigate financial stability
risks remains essential.

During the meeting, participants shared views on digital finance, including recent
developments regarding crypto-assets and so-called stablecoins. Participants also discussed
considerations regarding any potential central bank digital currencies. Participants
acknowledged the importance of ongoing international work on digital finance and recognized
the benefits of greater international supervisory cooperation with a view to promote responsible
innovation globally.

In addition, participants discussed recent efforts by the United States and the European Union
on operational resilience in the financial sector. They exchanged views on regulatory
cooperation on third-party providers and discussed the EU’s Digital Operational Resilience
Act.

Participants discussed issues related to sustainable finance. They recognized the importance
of addressing climate-related challenges for the financial sector and climate-related financial
risks, consistent with their respective mandates and with a view of achieving coherent
approaches for a problem that is global in nature. Participants discussed their ongoing work
on climate and other sustainability-related financial disclosures. In that regard, the European
Union referred to its proposed Corporate Sustainability Reporting Directive and to the
development of EU sustainability reporting standards, and SEC staff provided an update
regarding their work to develop rule proposals addressing disclosures around climate risk and
human capital and also addressing fund disclosures and naming conventions. Both sides
recognized the value of continuing the recent bilateral technical-level exchanges on
sustainability-related disclosures. Participants also discussed assessment of and possible
financial regulatory and supervisory responses to climate-related financial risks, including with
respect to the insurance sector. They acknowledged work being done on sustainable finance
issues in international forums, including the G20 Sustainable Finance Working Group and the
International Platform for Sustainable Finance.

On capital markets, participants discussed their continued monitoring of the transition from
panel reference rates and the progress in their respective legislative and supervisory efforts to
ensure a smooth transition away from LIBOR. Participants discussed CFTC implementation
of new capital and financial reporting requirements for swap dealers, and recent SEC
rulemaking proposals addressing Treasury markets trading platforms, the settlement cycle, the
reporting of large security-based swap positions, and securities lending. They also discussed
the EU review of the Markets in Financial Instruments Directive and Regulation and its planned
review of the European Market Infrastructure Regulation. They also compared notes on their
respective efforts in the area of fund reform, and took stock of ongoing discussions regarding
data transfers and the registration of EU funds in the United States.

Regarding banking, participants discussed the implementation of Basel III reforms and the
treatment of foreign bank branches, as well as the implementation in the EU of the rules
concerning investment firms. They also discussed issues from the Foreign Account Tax
Compliance Act (FATCA) relevant to citizens and financial firms, and developments in the
field of insurance, including the EU’s review of the Solvency II framework and its new
framework for recovery and resolution of insurers and reinsurers, and implementation of the
U.S.-EU Covered Agreement. The EU also provided an update on finalization of the common
backstop to the Single Resolution Fund.

Participants also discussed progress made in strengthening their domestic AML/CFT
frameworks. The EU provided an update on its AML/CFT legislative package, and the United
States provided an update on its ongoing implementation of the Anti-Money Laundering Act
of 2020, enacted as part of the National Defense Authorization Act for Fiscal Year 2021.
Participants acknowledged the importance of the Forum in fostering ongoing financial
regulatory dialogue between the United States and European Union. They agreed that regular
communication on regulatory and supervisory issues of mutual concern is necessary to support
financial stability, investor protection, market integrity, and a level playing field.

Participants will continue to engage on these topics, as well as on other topics of mutual
interest, ahead of the next Forum meeting, which is expected to take place in the summer of
2022

Commission

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