Weekly highlights: The €672 billion RRF is about to go live – finally! So the next Commission economic forecast in the spring should look a bit healthier. Several regulatory speeches about EU banks share a theme “We are not out of the woods yet”. The Sustainable Corporate Governance plan draws more warnings about unintended consequences.
The fall-out from Brexit becomes ever more apparent. My new paper (see below) explains why a generalised regime of equivalence is very unlikely as the UK diverges. Right on cue, cross-party Parliamentarians advocate changing UK regulations to be more competitive and a new lobby group of “Leavers” is founded to promote “bold new initiatives” in regulation. Does the Commission read the UK press?
Graham Bishop
Graham Bishop/Federal Trust: Brexit: Ending the City’s Dominance of European Finance?
Articles from 12-18 February 2021
General Financial Policy
Video conference of the Eurogroup, 15 February 2021 : "From a Eurogroup perspective, it is important that we approach national budgetary preparations in a coordinated manner to help shape our policy decisions, particularly as the process of vaccination gathers steam and our recovery begins to slowly start. "Paschal Donohoe, President of the Eurogroup
Remarks by Commissioner Gentiloni at the Eurogroup press conference : Topics included: Winter forecast (Next Generation is not factored in), General Escape Clause operation in 2022, corporate insolvencies, international role of the euro
Informal video conference of economic and finance ministers, 16 February 2021 : Topics included: economic situation, RRF, borrowing under SURE, borrowing strategy for Next Generation, legislative proposals in the field of financial services.
Remarks by Executive Vice-President Dombrovskis at the informal ECOFIN press conference : Our discussions today focused on Europe's overall response to support the recovery and the implementation of the Recovery and Resilience Facility. As the Minister already said, it will enter into force in a few days' time.
EURACTIV: Investors ‘concerned’ about EU recovery fund rollout, warns ESM chief : Money from the EU’s €800 billion coronavirus recovery fund could start flowing to member states before summer. Still, investors are “concerned” about the speed of the implementation of the EU’s joint stimulus programme, the chief of the European Stability Mechanism said on Monday (15 February).
Banking Union
SSM: “We are not out of the woods just yet” : Kerstin af Jochnick, Member of the ECB’s Supervisory Board, looks back at the road travelled by banks and supervisors during the pandemic – and is confident that the resoluteness shown so far will stand European banks in good stead for the challenges of the year ahead.
Il Sole: Interview with Elizabeth McCaul, Member of the Supervisory Board of the ECB : When the pandemic crisis struck, European banks were in much better shape than at the start of the great financial crisis, boasting solid capital ratios and ample buffers. Non-performing loans (NPLs) have more than halved in the last five years.
IIF: Elke König's speech on the priorities for the SRB and the outlook for the financial: The measures put in place since the financial crisis of 2007/08 were well warranted. They ensured that the banks, this time round, are and hopefully stay part of the solution. So far, I think we can say that banks have weathered the storm well.
EBA consults on guidance to assess breaches of the large exposure limits : The European Banking Authority (EBA) launched today a consultation on the criteria that competent authorities should use to assess a breach of the large exposure limits. The consultation paper also details the criteria to determine the period of time and the measures for institutions to return to compliance with those limits.
Capital Markets Union
Targeted consultation on the review of the Directive on settlement finality in payment and securities settlement systems : the Commission is interested in the views of a wide range of stakeholders, in particular those participating directly or indirectly in SFD designated systems (e.g. credit institutions, investment firms, public authorities, CCPs, system operators)...
Targeted consultation on the review of the Directive on financial collateral arrangements : the Commission is interested in the views of stakeholders, in particular those participating in financial collateral arrangements, organisations representing the interests of stakeholders participating in financial collateral arrangements, payment institutions, e-money institutions, CSDs...
ESMA highlights risks to retail investors of social media driven share trading : The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has released a statement to highlight to retail investors the risks connected with trading decisions based exclusively on exchanges of views, informal recommendations and sharing of trading intentions through social networks and unregulated online platforms.
Environmental, Social, Governance (ESG)
UNEP - FI: Net-Zero Asset Owner Alliance calls on asset managers to support blended finance : The UN-convened Net-Zero Asset Owner Alliance has issued a call to asset managers to collaborate in driving the development of blended finance vehicles, with the aim of drastically ramping up investment in climate solutions.
IPE: EC’s sustainable governance play: Asset owners wary of potential snags : The idea of drawing up EU rules to ensure companies embed sustainability into the way they operate has met with steady applause from pensions and asset management industry representatives – as well as warnings of potential unintended consequences.
EuropeanIssuers favours a recommendation and denies the need of an EU legislation for a Sustainable Corporate Governance Framework : EuropeanIssuers favours a recommendation and denies the need of an EU legislation for a Sustainable Corporate Governance Framework
Protecting Customers
Bruegel: Regulating big tech: the Digital Markets Act : The European Union’s proposed Digital Markets Act will attempt to control online gatekeepers by subjecting them to a wider range of upfront constraints
Economic Policies Impacting EU Finance
European Commission: Winter 2021 Forecast: A CHALLENGING WINTER, BUT LIGHT AT THE END OF THE TUNNEL : The near-term outlook for the European economy looks weaker than expected last autumn, as the pandemic has tightened its grip on the continent.
Brexit
Federal Trust: Brexit: Ending the City’s Dominance of European Finance? : The future of the financial services industry – centred in the City of London – matters enormously to the health of the United Kingdom’s economy. The Trade and Co-operation Agreement (TCA) has few provisions on financial services...
CITY AM: Brexit is 'remarkable opportunity' to change City regulations, say MPs : Brexit will provide the UK with a “remarkable opportunity” to change its financial services regulation in a bid to make the City more competitive globally, according to a cross-party group of MPs.
City AM: Bim Afolami MP: Brexit gives us the chance to refit our financial regulation for the 21st century : With Brexit complete – and many regulatory powers returning to the UK for the first time in decades – it is crucial that we now get the new framework for financial services regulation right.
FN: Politicians and ex-trading bosses launch new City lobby group to tackle Brexit : Initiative aims to promote ‘bold new initiatives to exploit the UK’s expertise in financial services’. A new lobby group has been formed to tackle Brexit on the back of complaints from the Prime Ministers office about the EUs unwillingness so far to grant the UK equivalence