Welcome to our Gold Friends weekly e-mail.
My highlights of the week: Phew! the German Constitutional Court did not find it necessary to damage Europe’s economic recovery by holding up the `Next Generation EU’ plan. Pezzulli gives us the remarkable story beneath the dry prose of press releases on how Italy fended off the `pillaging’ of its financial infrastructure. Even more powerfully and urgently, a trio of leading commentators in Vox critiques the critical deficiencies in the implementation of banking union. Meanwhile, the Commission is to push ahead on convergence of insolvency rules – again!
Climate change was at the forefront this week: the co-legislators agreed a Climate Law for a 55% Co2 reduction by 2030 and then climate neutral by 2050. The Commission published its key steps on the Taxonomy – with avowed intention of making the EU a global leader in the field. The Petersen Institute put a pin in some of the hype around China’s dash for digital currency leadership. Brexiteers were on the back foot this week as it looks as though the use of English law for securities may meet its “Waterloo” at Lugano - Watch my video “Brexit and the City of London: April 2021 Update”
Graham Bishop
Articles from 16 - 22 April 2021
General Financial Policy
POLITICO: German court rejects bid to block EU recovery fund : The court will still assess the complaint’s merits, but the decision means the German president can now ratify the Own Resources Decision. View Article
Remarks by Commissioner Gentiloni at the Eurogroup press conference : "This reflects the request from the Euro Summit last December for the Eurogroup to prepare “a stepwise and time-bound work plan on all outstanding elements needed to complete the Banking Union”. View Article
Remarks by Executive Vice-President Dombrovskis at the informal ECOFIN press conference : We are entering the final stage in preparing the national recovery and resilience plans. View Article
EURACTIV: EU pushes for convergence of insolvency rules to support recovery : The European Commission is preparing a series of proposals to drive the capital markets union to facilitate the recovery from the COVID-19 pandemic. One of the most difficult battles will be reducing the differences between national insolvency frameworks. View Article
Conference on the Future of Europe: launch of the multilingual digital platform : The Conference’s central hub, unveiled today by the Co-Chairs of the Executive Board, will allow citizens to help shape the Union’s future. View Article
Long Finance Pezzulli: Italy Narrowly Fended Off The Pillaging Of Its Financial Markets Infrastructure. The question Is, For How long? : Milan Italy's Financial Powerhouse - Since 2007, Borsa Italiana, the operator of the Milan Stock Exchange, had been wholly-owned by the London Stock Exchange Group (LSEG) View Article
Banking Union
ECB’s large-scale review boosts reliability and comparability of banks’ internal models : Review resulted in €275 billion increase in RWAs over the last three years and more than 5,000 findings for banks to remediate View Article
SRB responses to the European Commission targeted consultation on the review of the crisis management and deposit insurance framework : In the aftermath of the global financial crisis, the EU laid down the rules for handling bank failures and enhancing depositor protection. View Article
Vox: Urgent reform of the EU resolution framework is needed : The existing European resolution framework, an essential part of the European banking union, is still largely deficient. National resolution authorities often bypass the European framework, with the result that, since its creation in 2015, the SRB has adopted only one resolution decision. View Article
Capital Markets Union
ESMA highlights need for increased efforts on EMIR and SFTR data quality : The Report is the first review of data quality since the introduction of the EMIR and SFTR reporting regimes. It also reviews the quality of data reported by trade repositories and gives an overview of actions taken by both ESMA and the NCAs to improve data quality. View Article
ISDA Margin Survey Year-End 2020 : The ISDA Margin Survey analyzes the amount and type of initial margin (IM) and variation margin (VM) posted for non-cleared derivatives. The survey also reviews the amount of IM posted by all market participants to major central counterparties (CCPs) for their cleared interest rate derivatives (IRD) and credit default swap (CDS) transactions. View Article
Insurance Europe: e-Privacy Regulation must not deprive consumers of access to telematics-based insurance products : The co-legislators should preserve the exemption for the “services requested by the end-user” to allow data collection from terminal equipment, as this is the only way insurers can continue to offer telematics-based insurance products. View Article
Environmental, Social, Governance (ESG)
European climate law: Council and Parliament reach provisional agreement : The Council's and the European Parliament's negotiators reached a provisional political agreement setting into law the objective of a climate-neutral EU by 2050, and a collective, net greenhouse gas emissions reduction target (emissions after deduction of removals) of at least 55% by 2030 compared to 1990. View Article
Commission welcomes provisional agreement on the European Climate Law : The Commission welcomes today's provisional agreement between the co-legislators on the European Climate Law. View Article
MEPs reach deal with Council on obligation for EU to be climate neutral by 2050 : Independent EU scientific body to be set up to monitor progress; Greenhouse gas budget must guide 2040 target; Deal reached in time for US President Biden’s Leaders’ Summit on Climate View Article
Sustainable Finance and EU Taxonomy: Commission takes further steps to channel money towards sustainable activities : By enabling investors to re-orient investments towards more sustainable technologies and businesses, today's measures will be instrumental in making Europe climate neutral by 2050. They will make the EU a global leader in setting standards for sustainable finance. View Article
ACCA welcomes the publication of the European Commission’s package on Directing finance towards the European Green Deal : As a practical and globally consistent outcome will better serve preparers, auditors and users of financial and non-financial information, ACCA urges policy-makers to work together with all actors, and in particular the other standard-setters across the globe. View Article
AFME welcomes EC legislative proposal on sustainability disclosures but emphasises the need for appropriate sequencing of regulatory measure : The proposal marks a significant milestone towards enhancing the availability and reliability of ESG information and introduces a range of crucial provisions. View Article
ESG Disclosure Landscape for Banks and Capital Markets in Europe : AFME is a strong supporter of the EU’s aim to be a leader in driving the development of a more sustainable financial system, including via the implementation of its Sustainable Finance Action Plan and the European Green Deal. View Article
Insurance Europe: Insurers call for improvements to EIOPA advice to EC on Taxonomy KPIs : While agreeing with EIOPA that the KPI for insurers’ investment activities should be based on a ratio of assets and the KPI for underwriting activities based on a ratio of premiums, the industry also has some important concerns about the technical details of EIOPA’s advice. View Article
ACCA: Changing business for the planet: A simple guide to natural capital management for internal and external auditors : In the context of natural capital management and its reporting, ACCA (The Association of Chartered Certified Accountants), the European Confederation of Institutes of Internal Auditing (ECIIA) and Deloitte outline the core principles governing the approach that auditors should take. View Article
EFAMA calls for prompt adoption of ambitious mandatory sustainability disclosures under the Corporate Sustainability Reporting Directive : Insufficient availability of meaningful, comparable, reliable and public ESG data is a key impediment to realising the full potential of the EU's sustainable finance regulatory framework. EFAMA, therefore, encourages the co-legislators to maintain the ambition of this proposal. View Article
IAIS: Press Release: Key inclusive insurance stakeholders to discuss the role of insurance in achieving the Sustainable Development Goals (S : The repercussions of the pandemic on people's lives and economies have reignited discussions around the role of insurance in sustainable development efforts View Article
EIOPA issues Opinion on the supervision of the use of climate change risk scenarios in ORSA : In this Opinion EIOPA sets out expectations on the supervision of the integration of climate change risk scenarios by insurers in their ORSA. View Article
UNEP FI: 43 banks launch Net-Zero Banking Alliance as key part of consolidated Glasgow COP climate action : The Glasgow Financial Alliance for Net Zero (GFANZ). Also today, UNEP FI brings together 43 of the world’s leading banks to form the UN-convened Net-Zero Banking Alliance. View Article
ESBG responds to EC consultation on CMDI : ESBG and its members stressed that the CMDI framework should go for an evolution, not a revolution, and that it must take into account the principle of subsidiarity and proportionality. View Article
Fin Tech Regulation
FT: Is the central bank panic about the PBOC coin justified? : The Bank of England has united with the Treasury to explore the basis for a UK central bank digital currency, but will it also fairly a View Article
PIIE: China’s pursuit of leadership in digital currency : Hype has far outpaced the reality in digital currencies, CBDCs, and China's digital RMB in particular. Cryptocurrencies like bitcoin are booming, but these are mostly for speculation, as they are ill-suited to large volumes of payment transactions View Article
FT: Europeans raise privacy concerns over digital currency : ECB’s work on monetary innovation should ensure spending cannot be tracked, consultation shows View Article
Friends' Standard Services
Federal Trust Video: Brexit and the City of London: April 2021 Update : Our Council member Graham Bishop provides an update on the Brexit ‘hit’ to the City of London, following his recent and well-received blog and video conversation with the Director of the Federal Trust, Brendan Donnelly, on “Brexit: Ending the City’s Dominance of European Finance?”. View Article
Economic Policies Impacting EU Finance
Der Spiegel: Joe Biden Declares War on Tax Havens – in Europe, Too : U.S. President Joe Biden is calling for a minimum corporate tax rate of 21 percent for companies. But countries like Ireland and Luxembourg have established a lucrative revenue stream through big breaks for multinationals. A number of EU countries could soon feel the pinch. View Article
POLITICO: Ireland frets as Biden tax plan throws doubt on economic model : The US plan threatens a key economic advantage for Ireland — its 12.5 percent corporate tax rate. U.S. President Biden often proclaims a sentimental soft spot for Ireland. But his administration’s vision of a 21 percent tax rate on American firms’ overseas profits could hit the Irish the hardest. View Article
Brexit
City AM: City needs EU equivalence deal to function properly, warns asset management chief : The UK government should step up efforts to secure an equivalence deal for financial services as such an agreement is “very important” for the Square Mile, the CEO of one of the world’s largest asset managers has said. View Article
FT letters: The reason euro swaps clearing is in London : The whole legal system in the jurisdiction in which the clearing system is located must be robust. View Article
City AM: Enforcement of judgments: Brussels opposes UK entry to the Lugano Convention legal pact : The UK applied to join the Lugano Convention in order to maintain stability on previous legal judgements on cross-border disputes. View Article
Simmons & Simmmons: Cross-border disputes: no Lugano Convention, so what next? : The EU-UK Trade and Cooperation Agreement contains nothing to replace the previous civil justice framework. What does this mean for cross-border disputes? View Article
New Financial: Brexit & The City: The Impact So Far : More than 440 firms in banking and finance have moved or are moving part of their business, staff, assets or legal entities from the UK to the EU. While this is higher than previous estimates, it underestimates the real picture – and the potential longer-term impact. View Article
European Commission: Interview with Michel Barnier : The EU-UK agreement in December was in large part thanks to you as the EU’s chief negotiator; what in particular did you take away from that rather extraordinary four-year experience? View Article
EY Financial Services Brexit Tracker: UK Financial Services Firms continue to incrementally move assets and relocate jobs to the EU, but cha : 43% (95 out of 222) of Financial Services Firms* have moved or plan to move some UK operations and/or staff to Europe, taking the total number of Brexit-related job moves to almost 7,600, up from 7,500 in October 2020; Since the Referendum, 24 Financial Services Firms have publicly declared they will transfer almost £1.3trn of UK assets to the EU View Article
EP committees recommend giving consent to EU-UK agreement : The Foreign Affairs and Trade committees voted in favour of the agreement that sets the rules of the future relationship between the EU and the UK. View Article
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