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25 March 2010

This week in "Brussels" + Podcast

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  Articles from 18 March 2010 - 25 March 2010

  Financial Services Policy

Federal Trust report on financial regulation: Britain’s next European challenge?
The report’s joint authors Sir Brian Unwin and Graham Bishop said “We see the European Commission’s current proposals for European regulation and supervision of the financial services industry as an important opportunity to create a more stable and integrated European financial sector.”  View Article
Barroso at EP plenary session: financial stability and Greek situation not on EC’s formal agenda
The EC believes it is now appropriate to create, within the euro area, an instrument for coordinated action which could be used to provide assistance to Greece in case of need. It should be clear that the creation of such a mechanism would not imply its automatic activation.   View Article
EU spring summit: Europe must decide on Greece now
EP Liberal leader Guy Verhofstadt is calling on the EC to bring clarity and unity in its response to the financial crisis. Policy makers do not, he said, have the luxury of time and must not delay their response to the Greek problem.  View Article
Eurogroup President: IMF could help Greece.
Speaking at the ECON Committee, Jean-Claude Juncker said a number of member states increasingly favoured this idea. Excluding a member state from the Eurozone, he added, should not be considered a possibility.  View Article
IMF strengthens financial data dissemination
In the run-up to the global crisis data gaps masked key financial sector vulnerabilities. These information gaps need to be closed. IMF proposals include adding a simplified table on countries’ external debt in order to monitor the vulnerability of domestic economies to external shocks.  View Article
Trichet on Greece and tougher economic governance
At Monday’s meeting of ECON MEPs, ECB President Jean-Claude Trichet outlined how he sees the economy evolving in the months ahead, stressing his faith in the stability and growth pact rules, and the system of peer pressure among European governments.   View Article
IMF: Europe needs authority to deal with failing banks
Speaking at a Commission conference in Brussels, Strauss-Kahn said existing schemes for dealing with failed cross-border banks have proved inadequate. As a result, national and cross-border bank failures have been difficult to handle and have been costly for governments and taxpayers.   View Article
Greek Prime Minister to MEPs: time to end "opportunistic speculation"
The measures taken by Greece reflect its commitment to protect the stability of the common European currency, said Papandreou. But Europe must recognise that the measures put in place, and those still to come, will need time to take effect.   View Article
Trichet: establishing central counterparty facilities is key to enhancing resilience of CDS markets
At the EC conference “Building a Crisis Management Framework for the Internal Market” he stressed that the key question is how to limit pure financial “game” in markets and the potential abuse of market power.  View Article
US CFTC: Gary Gensler on OTC reform
At Chatman House in London the Commodity Futures Trading Commission Chairman said that there will be a comprehensive regulatory framework governing OTC derivatives which should apply not just to CDS but to all dealers and derivatives.   View Article


ESBG newsletter warns approach to supervisory architecture reform too revolutionary
Given the existing enforcement mechanisms under EU law, ESBG takes the view that any decisions taken by the new authorities directed at institutions would not be legally binding. They could only be regarded as recommendations.  View Article
EC/US: new negotiations on bank data transfer
EP rapporteur on the “SWIFT” dossier Jeanine Hennis-Plasschaert welcomed the proposals. She said the EC has to ensure greater transparency, effective rights to redress and rectification, a review mechanism and limitations on the scope and length of data storage.  View Article
BBA paper addresses crisis resolution mechanisms
The BBA's latest Next Steps chapter addresses questions about the role and risks of the financial sector, the measures being pursued to reduce these risks, the too-big-to-fail issue and the contribution of the financial services sector to public finances.  View Article
Paul Tucker on resolution of large and complex financial institutions: “The Big Issues”
He supports the increased adoption by national authorities of special resolution regimes. But he stresses that each country having its own SRR does not address the resolution of cross-border banking groups or investment banks with complex trading books.   View Article
Basel committee recommendations on cross-border bank resolution group
The Committee's report presents an internationally agreed set of recommendations for improving resolution. It recommends that national authorities seek convergence of national resolution tools and measures to promote the coordinated resolution of banks active in multiple jurisdictions.  View Article


EuropeanIssuers’ response to EC consultation on MiFID data consolidation
EuropeanIssuers believes that data consolidation problems in equity markets relate both to pre-trade and post-trade transparency: trade data is divided among multiple venues. Data should be available in a centralised, aggregated way at EU level.  View Article


FSA: key risks facing insurance sector
At the Insurance Sector Conference 2010, FSA Director Ken Hogg said that there are major unresolved issues on Solvency II. In the UK on the life side, for instance, the debate was on the illiquidity premium as a way of valuing life company annuities, particularly annuity liabilities.   View Article

  Corporate Governance/Accounting

CESR: comments on EFRAG's draft response to IASB's measurement of liabilities in IAS 37
CESR has concerns about the due process applied to this project. It shares the views of EFRAG and of the two dissenting board members that the IASB should re-expose not only the proposed measurement requirements but also the entire proposed standard.  View Article
Nicolas Véron: The global accounting make-or-break
Véron analyses the challenges that lie ahead in realizing a single global accounting language. He argues that the next 18 months are likely to determine the eventual success or failure of the project to have International Financial Reporting Standards adopted and applied around the world.  View Article

  Competition: Financial Services

Almunia: thanks to state aid rules, EC avoided massive competition distortion in financial markets
The Commissioner said that current efforts to better regulate financial institutions such as CRD III do not run counter to the aims of competition instruments. On the contrary, they should create a framework for better competition without the need for state support to remedy market failures.  View Article
CEA: concerns about impact of partially renewed Insurance Block Exemption Regulation (BER)
The EC has decided to renew just two of the four areas in which certain cooperation agreements in the insurance sector are currently exempt from EU competition law. CEA is concerned about the legal uncertainty of unrenewed exemptions.  View Article

  Brief Opinions/Commentaries

Paul Goldschmidt: comments on "Building a crisis management framework for the internal market" EC conference
For any substantial progress to be made in dealing efficiently with “crisis management”, two important decisions should be prioritized. First, to negotiate at G20 level a separation of commercial and investment banking activities, and, second, to move speedily ahead at EMU level.  View Article

  Financial stability - policy analysis

BIS: the role of margin requirements and haircuts in procyclicality
The report recommends several enhancements to haircut-setting and margining practices in order to slow the build-up of leverage in good times and soften the system-wide effects during a market downturn.   View Article
Global Financial System Committee: functioning and resilience of cross-border funding markets
The study analyses the pre-crisis pattern of cross-border funding among internationally active financial institutions. It also reviews what happened in various funding markets as the crisis unfolded and the policy responses that ensued, and distils five policy lessons from the experience.   View Article
Bruegel paper: “Two crises, two responses”
Using Spain and Greece as examples, this paper makes policy recommendations for both scenarios. It explains how budgetary surveillance can be strengthened to prevent crises. It also says the scope of Article 143 of the Lisbon Treaty should be extended.  View Article



© Graham Bishop

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