Welcome to our Gold Friends weekly e-mail.
My highlights of the week: The EU begins to grapple with two existential questions: what can be achieved by CoFE, and what plans do Member States have that warrant Next Generation EU funding? International standard setters try to find out what really happened amidst the 2020 margin calls. Protecting customers makes a rare appearance – MiFID’s appropriateness test for customer advice. The academics are beginning to wonder if CBDC is really such a good idea given the impact on ordinary commercial banking. The IMF reports that the dollar share of foreign exchange reserves hit a 25-year low – but is still about three times the euro’s share and other currencies remain virtually irrelevant. The Brexit deal was finally ratified by the European Parliament and Council – just as chief negotiator Barnier’s diaries took the lid off Boris’s `madman’ strategy!
Graham Bishop
Articles from 30 April - 6 May 2021
General Financial Policy
EP group leaders’ statement on the Conference on the Future of Europe : On Thursday, the leaders of Parliament’s political groups took stock of the ongoing preparatory work on the Conference on the Future of Europe with the co-chair of the Conference’s Executive Board and issued the following statement: View Article
Bruegel: Setting Europe’s economic recovery in motion: a first look at national plans : Plans for spending European Union recovery funds submitted by the four largest EU countries reflect rather different priorities. So far, only Italy is interested in borrowing from the EU. View Article
EURACTIV: Germany, France, Italy, Spain push for implementation of recovery fund : Finance ministers of Germany, France, Italy, and Spain urged member states to submit their recovery plans and pressed the European Commission to speed up the assessment of the investment and reform proposals. View Article
EPC: The von der Leyen Commission: On trial again : When the dust finally starts settling from the COVID-19 crisis, von der Leyen will have to refocus on her original agenda. Will she deliver? View Article
SSM's Enria: Basel III implementation: the last mile is always the hardest : Later this year we expect the European Commission to issue the legislative proposals to implement the final package of the reforms agreed by the Basel Committee on Banking Supervision (BCBS). View Article
City of London Corporation: London named a world leader in Environmental, Social and Governance by global institutional investors : In a major vote of confidence in London’s overall attractiveness as a top investment destination, a poll of global institutional investors shows that the city is leading the world in acceleration and adoption of the ESG agenda. View Article
Vox Frankel: What three economists taught us about currency arrangements : Richard Cooper, Robert Mundell, and John Williamson made important contributions on a variety of topics in international economics throughout their careers, particularly in terms of how we think about currency arrangements.. reviewing their work and drawing lessons for policymakers today. View Article
Banking Union
SRB issues new guidance on liquidity and funding in resolution : Banks are likely to face liquidity stress in resolution because of the reluctance of market participants to roll-over or provide funding to a bank in crisis. View Article
EBA launches discussion on NPL data templates : The EBA is improving its data templates on non-performing loans (NPLs) as a key action in facilitating sales of NPLs and the functioning of the secondary markets for NPLs. View Article
Capital Markets Union
BCBS, CPMI and IOSCO survey clients and non-bank intermediaries on margin calls : Standard-setters invite market participants to complete a voluntary survey on margin calls; Survey is part of an examination into liquidity shortfalls during the early stages of the Covid-19 pandemic; Results will ... improve the resilience of non-bank financial intermediaries View Article
Insurance Europe: Outdated VAT rules must be reformed to remove unfair disadvantages for insurers : The VAT Directive is outdated and is not correctly applicable to modern financial services, which it puts at a disadvantage compared to other sectors. View Article
CRE: Europe’s insurers call for EU’s VAT directive to be reformed : “Current VAT rules for financial and insurance services are criticised for being complex, difficult to apply and not having kept pace with the development of new services in the sector...." View Article
EURACTIV: Insurers and EU institutions discuss options for pandemic coverage : The European Commission, insurance regulator EIOPA, and the industry have started discussing options to better ensure the protection of businesses affected by the COVID-19 pandemic, as the withdrawal of state support measures is expected to reveal the real damage caused by the crisis in the private sector. View Article
SUERF: How the Capital Markets Union can help Europe avoid a liquidity trap : Europe hasn’t yet fallen into a liquidity trap. Yet, the eurozone has only marginally spent or invested the massive amounts of liquidity injected into economies to combat COVID-19 shocks—indicating unproductive use of this money.View Article
ESMA makes new bond liquidity data available : The European Securities and Markets Authority (ESMA), the EU’s Securities Markets Authority, has today made available new data for bonds subject to the pre- and post-trade requirements of MiFID II and MiFIR through its data register View Article
Environmental, Social, Governance (ESG)
ECB's Elderson: All the way to zero: guiding banks towards a carbon-neutral Europe : The challenge of climate change is daunting. This is certainly true for the consequences if climate change continues unabated, such as increased natural disasters and the loss of habitats and biodiversity. View Article
EU and global experts discussed the opportunities and challenges of audit and assurance of Environmental, Social and Governance (ESG) inform : A substantial transformation of the sustainability reporting landscape is underway, but for ESG information to meet users needs, allow for informed decision-making and ensure proper functioning of capital markets, its users need to be able to trust it. View Article
GRI: Companies commit to SDGs collaboration : Businesses sign up to GRI forum on reporting for the SDGs: A new GRI program to enhance corporate reporting on the Sustainable Development Goals (SDGs) by making it more relevant to stakeholders has commenced, bringing together senior representatives from multiple international companies. View Article
SEE Initiative: How Derivatives Exchanges can Promote Sustainable Development – An Action Menu : The United Nations Sustainable Stock Exchanges (SSE) initiative today launches a new guidance for derivatives exchanges prepared in collaboration with the World Federation of Exchanges (WFE), the global industry group for exchanges. View Article
EuropeanIssuers: Business and individual investors organisations issue statement on the European Commission’s upcoming initiative on sustainable : One focus of strengthening sustainable corporate governance should be to facilitate and strengthen the long-term engagement of shareholders and investors, including individual shareholders. View Article
IFRS Foundation Trustees publish institutional arrangements for proposed new sustainability standards board : The Trustees are seeking feedback on proposed amendments to the Foundation’s Constitution to accommodate the potential formation and operation of the ISSB. View Article
Accountancy Europe: IESBA’s proposed revisions to the definitions of listed entity and public interest entity in the code : Accountancy Europe is pleased to provide its comments on the IESBA Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code. View Article
Protecting Customers
SMSG advice to ESMA on its Consultation Paper on “Guidelines on certain aspects of appropriateness and execution-only” : On the whole, the SMSG is of the opinion that the draft guidelines are sound and beneficial to the protection of investors. View Article
ESMA consultation on Appropriateness Guidelines Under MIFID II: EBF response : The EBF welcomes ESMA’s effort to give guidelines on how to best apply the appropriateness test requirements. View Article
BDB: Guidelines on certain aspects of the MiFID II appropriateness and execution-only requirements : The system of non-advised services and investment advice business is crucial for clients in theGerman market. View Article
The European Banking Authority publishes report on mystery shopping activities of national authorities : Mystery shopping allows NCAs to obtain greater insight into the conduct of financial institutions. The latter are then encouraged to take corrective actions and to better comply with applicable requirements, thus eventually enhancing the protection of consumers. View Article
European Commission Referral Scheme Consultation: EBF response : Such a system should not be conceived as a referral scheme but rather as one of making clients aware of a central source of information provided by public authorities. We recommend that public authorities further assess whether such a central source makes sense and whether it has a value added. View Article
Fin Tech Regulation
European Commission’s Digital Operational Resilience (DORA) proposal (2020): EBF position : The adoption of innovative technology by European banks requires a balance between a reliable and consistent framework of financial regulation and flexibility to adapt to changing business models. View Article
Project Syndicate: The Promise and Peril of Central Bank Digital Currencies : With China and others venturing into a realm once inhabited by private cryptocurrencies, there will be increasing pressure on the United States, Europe, and others to follow. But before everyone rushes in, policymakers would do well to consider the foreseeable risks and how they should be managed. View Article
Vox: Bank runs and central bank digital currency : One of the concerns in the debate on central bank digital currency is whether the ability for depositors to hold an account at the central bank could trigger a run on the banking system..look back to the French Great Depression of 1930-1931, when savers had a safe alternative to banks.. . View Article
Vox: The conflict between CBDC goals and design choices : This column argues that central bank digital currency alone will not achieve those goals unless central banks are willing to engage in all the steps of the payment system or complement their digital currency with ... regulatory changes to ensure competition and interoperability of payments. View Article
Discussion paper on blockchain and smart contracts in insurance: EIOPA invites comments : The European Insurance and Occupational Pensions Authority (EIOPA) published today a discussion paper on blockchain and smart contracts in insurance. The aim of the paper is to provide a high-level overview of risks and benefits of blockchain and smart contracts in insurance from a supervisory perspective as well as to gather feedback from stakeholders. View Article
Broadening the International Role of the Euro
IMF: US Dollar Share of Global Foreign Exchange Reserves Drops to 25-Year Low : Some analysts say this partly reflects the declining role of the US dollar in the global economy, in the face of competition from other currencies used by central banks for international transactions. If the shifts in central bank reserves are large enough, they can affect currency and bond markets. View Article
Brexit
European Parliament formally approves EU-UK trade and cooperation agreement : Political groups strongly welcome the agreement; Parliament must have a say in the implementation of the agreement; Agreement will enter into force on 1 May after Council conclusion View Article
EU-UK trade and cooperation agreement: Council adopts decision on conclusion : View Article
BusinessEurope: EU-UK: European Parliament ratification ends uncertainty for business : BusinessEurope President Pierre Gattaz said: "European business welcomes the ratification of the EU-UK TCA. The UK is the third biggest trading partner of the EU, which makes this deal one of the most important trade agreements the EU has ever finalised. View Article
FT: Boris Johnson’s ‘madman’ strategy dumbfounded Brussels’ Brexit chief : Michel Barnier diaries describe how EU lost trust in UK’s unpredictable and unprepared prime minister View Article
POLITICO: 7 takeaways from Michel Barnier’s Brexit book : Former EU Brexit negotiator doesn’t get on with Dominic Raab or Martin Selmayr. View Article
London 4 Europe: The Irish Brexit – conundrum and trilemma : The UK and Ireland both being members of the EU was a crucial factor in the path towards peace in Northern Ireland, argues Denis Loretto, a founder member and former Chair of the Alliance Party of Northern Ireland. View Article
City AM UK to scrap EU rule giving choice of clearer in derivatives : Britain will scrap a rule inherited from the European Union that aimed to open the listed derivatives market to more competition, saying it was not appropriate to implement alone. View Article
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