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07 September 2015

Deepening EMU – Round-up of Key Events – August 2015

The European Commission signed a new ESM programme for Greece, after which Greek PM resigned and called for a snap election. The Chinese stock markets turmoil may pose a bigger concern for the global economy if turned into a crisis, and some European leaders called for further integration in the EU.


The European Commission signed the third ESM programme for Greece, after which Greek PM Alexis Tsipras resigned and called for a snap election on 20th September. We’ll see what outcome the Hellenic polls will bring, but in the meantime, Chinese stock markets turmoil may be a bigger concern for the global economy: what could be the consequences to a still fragile European economy in the event of a serious slowdown in China?  Raoul Ruparel analyses how exposed the EU is to a Chinese crisis in Forbes.

The ‘ever closer union’ concept established by the Treaty of Rome was brought to the present by French PM François Hollande, who called for a 'eurozone government' to further integrate member states as an answer to the muddled response to the Greek debt crisis. This ‘Jacques Delors' vision of the EU was supported by Italian MP Pier Carlo Padoan, who called for ‘political union’ in the eurozone to save the euro. The Financial Times also engaged with this appeal, and asked Berlin to lead the vanguard. Finally, German Think-tank CEP presented an innovative idea: a sovereign default regime for the euro area which would allow again member states to make their own decisions, and would prevent future sovereign debt crise.

The fear for a Brexit has turned this summer into a British government ‘European tour’ seeking for support for its EU reform plan, with PM Cameron and Chancellor Osborne meeting with various European leaders. Open Europe wonders how does the UK vision for EU reform fit with the Eurozone’s challenges? It also recognises that “Britain has a unique opportunity to change the direction of the EU, making it work better for both Britain and its other member states”.



The BIS issued a study analysing how has the Countercyclical Capital Buffer affected mortgage pricing after Switzerland became the first country to activate this Basel III macroprudential tool. It also published a FAQ document on the standardised approach for measuring counterparty credit risk exposures under Basel III.

The EBA published technical advice on protected arrangements in a resolution situation in response to a request for advice from the European Commission. Additionally, the Banking Authority consulted on technical standards on exemption of NFCs from CVA risk charge.

The current weakness of European banks is an important matter of concern for regulators and influencers: the EBA published key information on the systemic importance of the 37 largest banks in the EU, which Bruegel considers to remain vulnerable unless urgent restructuring. The eurozone’s small and medium-sized banks remain under considerable stress too, according to VoxEU. All of them might be subject to EU’s 2016 stress tests, which will include 50-60 euro zone banks as said by ECB’s Nouy.


The ECON released its draft reporton stocktaking and challenges of the EU Financial Services Regulation, a document that shows the way forward towards a more efficient and effective EU framework for Financial Regulation and a Capital Markets Union. But the efforts to build a CMU are stirring banker’s concerns as it might be seen as a way to reducebanks’ role in funding EU companies, according to a senior German banker quoted by the Financial Times. For SMEs, though, initiatives under the Capital Markets Union umbrella can help to reduce their financing gap.

The European Commission published new rules on central clearing for interest rate derivatives in the form of a Delegated Regulation—the first such to implement the clearing obligation under the EMIR. ESMA recommended changes to EMIR framework and consulted on the review of EMIR standards relating to CCP client accounts. In this regard, the ESCB issued a report on the need for any measure to facilitate the access of CCPs to central bank liquidity facilities. The ESMA also advised the Commission on the implementation of the CSD Regulation.

Full article available for consultancy clients

© Graham Bishop

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