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Hot on the heels of the Franco-German €500 billion proposed funding, Commission President von der Leyen launched the Commission’s complete recovery package – totalling €2.4 trillion. Fondation Robert Schuman describes the complete package below, and EURACTIV provides an excellent over-view of the state-by-state reactions. However, the ECB’s Financial Stability Review reminded us of the gravity of the financial situation – especially when one reads the small print. But ECB President Lagarde upstaged the FSR the saying the 2020 GDP decline was more likely to be in the 8-12% range rather than the Review’s assumption of 8%. As that is getting for three times the magnitude of the GDP decline in the Great Financial Crash a decade ago, perhaps we should be bracing for Non-Performing Loans to exceed by a margin the near €1 trillion pile of NPLs by 2014.
Graham Bishop
Articles from 22 May 2020 - 28 May 2020
General Financial Policy
President von der Leyen at the European Parliament Plenary on the EU Recovery package : This is why the Commission is today proposing a new recovery instrument, called Next Generation EU – EUR 750 billion...sits on top of a revamped long-term EU budget of EUR 1.1 trillion.It goes alongside the three safety nets of EUR 540 billion in loans...,our recovery effort totals EUR 2.4 trillion. View Article
EU future at stake: MEPs broadly welcome Commission’s recovery package proposals : Focussing on future generations, Commission President von der Leyen discussed the €750 billion recovery instrument within a revamped long-term EU budget in plenary. View Article
EURACTIV: How EU member states reacted to the Commission’s Recovery Fund proposal : The proposal’s advocates are now pushing for a quick approval; however, a compromise is not expected before July, when Germany takes over the rotating EU Presidency. The EURACTIV network gives regional and state-by-state reactions. View Article
POLITICO: Sebastian Kurz cautious on Commission’s €750B recovery blueprint : Austrian chancellor, speaking for the frugal faction, tells POLITICO he sees some positives in proposal. View Article
Fondation Robert Schuman: The European Commission’s Recovery Plan Key points for a full picture : Commission President Ursula von der Leyen presented a €750 billion recovery plan. This massive plan, based on unprecedented debt pooling and financial transfers, which has yet to be approved by the Member States, is an important step in the history of European integration. (The full plan is below) View Article
Business Europe: EU recovery fund should restore business confidence : Businesses across the EU will be looking to the Commission to deliver an economic recovery plan that matches the size of the crisis. We need to ensure a rapid bounce back in the EU economy that protects employment and reduces long-term scarring to our business eco-system. View Article
WWF: EU Recovery Package: "repair & prepare" not yet fully green and fair : The EU Recovery Package presented by the European Commission today has reconfirmed its ambition to achieve the European Green Deal, but many key elements including the role of nature are still missing, and backdoors seem to be left open for unsustainable investments to continue. View Article
MEPs: Focus on crisis response when coordinating economic and budgetary policies : -Tailor-made recovery and resilience plans -Transformation must be social, economically fair and green -Fighting youth unemployment a priority View Article
Project Syndicate: One Giant Leap for Europe? : The Franco-German proposal for a COVID-19 recovery fund is not quite the “Hamiltonian moment” that some have claimed. But, by reshaping the debate on risk mutualization and the benefits of transfers, it could set the stage for one. View Article
Der Spiegel: Half a Trillion Euros - Merkel and Macron Find the Strength for Europe : Editorial: France and Germany have once again banded together for the greater good in Europe. Their show of unity was long overdue. View Article
Vox: Europe in the time of Covid-19: A new crash test and a new opportunity : This column takes stock of the progress on addressing the crisis on the three axes of European-level support – monetary, banking and fiscal policy. The EU Recovery plan that is taking shape looks promising and could represent a significant sign of European solidarity and unity. View Article
Paul Goldschmid: Disappointments : The Franco-German communiqué pre-empts both the Council and the Commission.The Brexit dead end is taking too much room. View Article
COVID-19: Single market must emerge stronger from the crisis, say MEPs : - State aid must be temporary, limited and designed to avoid bankruptcies - Single market, climate and digital goals crucial for recovery - Striking a balance between strategic independence, trade and open economy View Article
Bruegel: An equity fund for a zombie-free and EU-wide recovery : Four guiding principles can help ensure a well designed EU equity fund. View Article
ECB: Pandemic increases risks to financial stability : Pandemic greatly amplified existing vulnerabilities of the financial sector, corporates and sovereigns; Policy responses to pandemic essential to preserve financial stability; Euro area banks, although now better capitalised, likely to face significant losses and further pressure on profitability View Article
IAIS: Financial policymakers discuss responses to COVID-19 with the private sector : FSB’s Standing Committee on Supervisory and Regulatory Cooperation (SRC),BCBS,CPMI,IAIS,IOSCO - met representatives of central banks, regulators and finance ministries as well as about 30 international banks, insurance firms, asset managers, market infrastructures and credit rating agencies. View Article
Politco: EU green finance plans may be pushed back three months : The European Commission may delay its proposals to boost green finance as the coronavirus crisis derails its timetable, according to an internal document seen by POLITICO. Delays likley for other files. View Article
2020 Commission Work Programme - adjusted for Covid : The European Commission has adjusted its Work Programme for 2020 but fully determined to deliver on its flagship initiatives, the European Green Deal and the Digital Strategy. The Commission is refocusing its work and prioritising the actions needed to propel Europe’s recovery and resilience. View Article
Banking Union
POLITICO: EBA says banks can withstand COVID-19 and boost lending : Banking industry has more capital than losses foreseen and could lend up to €1.3T more, according to regulator’s first estimate. View Article
EBA: COVID-19 is placing unprecedented challenges on EU banks : The European Banking Authority (EBA) published today a preliminary assessment of the impact of COVID-19 on the EU banking sector....This capital buffer should allow banks to withstand the potential credit risk losses derived from a sensitivity analysis based on the 2018 stress test. View Article
Vox: Beyond the pandemic: Eight proposals to revive the banking union : It identifies three strategic goals for regulatory and supervisory action aimed at reviving the banking union: reduce overbanking among weaker players; favour consolidation and enhance efficiency among the stronger ones; strengthen balance sheets further, while encouraging area-wide diversification View Article
Capital Markets Union
UK and EU fund managers at odds over Mifid II revamp : French and German groups lobby Brussels for a change to research unbundling View Article
Commercial Risk Europe: Insurers’ capital strength stands up to AM Best’s Covid stress test : The Covid-19 pandemic will hit insurers’ earnings but capital levels are strong enough to withstand the crisis, according to stress-test analysis from AM Best. View Article
Commercial Risk Europe: Ferma calls on EU to create framework for pan-European NDBI pooling system : Ferma has called on the EU to create a resilience framework that would include member state insurance pools and coordination between national governments to address the severe shortage of non-damage business interruption insurance (NDBI) for a range of catastrophic risks. View Article
EFAMA calls for changes to investor protection rules in the MIFID II / MIFIR Review? : "We reiterate our support for the overarching objectives of the MiFID II and MiFIR framework... calling for targeted improvements... View Article
Capital Markets Union: Commission launches public consultation on the protection and facilitation of investment within the EU : The European Commission has today launched a public consultation on the protection and facilitation of cross-border investment within the EU. View Article
Environmental, Social, Governance (ESG)
IPE: ECB presents climate-related risks expectations for consultation : The European Central Bank (ECB) has published for consultation a guide setting out how it expects banks to “safely and prudently” manage, and disclose, climate-related and environmental risks. View Article
WBCSD: New governance tools helping companies set priorities and credible goals aligned with system resilience and ESG : As we restart the global economy, companies will be under pressure to demonstrate that their strategy aligns with meeting the needs of society and the planet. View Article
Protecting Customers
Insurance Europe: Insight Briefing: GDPR two years on - EC should examine innovation impact, role of EDPB & application consistency : On the second anniversary of the introduction of the EU General Data Protection Regulation (GDPR), Insurance Europe has published an insight briefing setting out its views on the Regulation ahead of the European Commission’s upcoming review. View Article
Economic Policies Impacting EU Finance
Recommendations for Improving the Flow of Credit to SMEs Joint Statement SMEunited and EBF : Recommendations for Improving the Flow of Credit to SMEsby SMEunited and the European Banking Federation View Article
Brexit
FT's Martin Wolf: A no-deal Brexit amid the pandemic would be disgraceful : The wisest thing to do would be to reach a comprehensive free trade agreement with the EU View Article
FT: Michel Barnier says EU remains ‘open’ to transition period extension : Talks between London and Brussels stall with sides far apart on fisheries and regulatory alignment View Article
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