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18 September 2019

154th Brussels for Breakfast – CPD Notes

Organised by the Centre for the Study of Financial Innovation (CSFI), hosted by CISI and with co-presenters Sir John Redwood and Brian Polk (PWC).

This meeting was the first of our new approach – focusing on 3 or 4 major topics since our last meeting. This blog complements the subsequent Brussels 4 Brunch 30-minute CISI webinar that is also available to Friends of GrahamBishop.

We want to involve the Brussels Finance Watchers community in the choice of future topics so the invitation will include my then-current thinking of the top three topics but we will welcome your suggestions to


Sir John Redwood made introductory remarks about the state of Brexit and we agreed to differ.

The new European Commission

Ursula von der Leyen (UVL) laid out her political guidelines in a 24-page manifesto that was just sufficient for her to be elected by the European Parliament with 383 votes.  327 were cast against her – underlining the complexity of the battles ahead to get Parliamentary approval for proposals. I highlighted the “greening” of policy – including the green commitment of the newly-appointed ECB President Lagarde. For the audience, perhaps the key is the continuity in the push to complete Banking Union, capital markets union and boost the global role of the euro. Commissioner Dombrovskis was also tasked to keep the EU together on crypto-currencies and create a new, comprehensive approach to AML.                                          

The Green Finance agenda

The greening of finance will be the hallmark of the next legislative period and the Commission’s 2018 proposals are now grinding their way through. These cover the framework for sustainable investment – including the key taxonomy of definitions; corporate disclosures; green bonds and green benchmarks. The difficulties in creating a taxonomy of conditions to be fulfilled to avoid “greenwashing” triggered much discussion about the difficulties inherent in such a ground-breaking exercise. The Technical Expert Group (TEG) has produced its first recommendations and it became apparent how wide-ranging these will be as banks will soon find that it becomes a part of their SREP supervision to show how their loans are helping to meet the targets. Importantly, Europe may get the first-mover advantage by developing these standards first – though in consultation with other global authorities.

Regulation of crypto currencies

Facebook’s LIBRA proposals have triggered much thinking in the regulatory community about the real consequences of cryptocurrencies. Are all global players taking the same view?? Switzerland was thought to be the most relaxed. Should central banks issue their own “public money” digital currency? An ECB paper considered some of the implications if citizen chows to hold this digital public money rather than private, bank money. If LIBRA is backed by real assets such as currencies, would it become a currency board? Or an asset-backed security so subject to securities laws? If the controllers changed the basket of assets, could they benefit from a devaluation? What about money-laundering on the `dark web’? Many questions but no answers yet… so crypto currencies have a long way to go before rivalling `legal tender’.

The EU “equivalence” regime

The Commission recently published a review of it equivalence process – just ahead of Brexit. What is clear is that the process will be one of continuous monitoring after any grant of equivalent status. This will be risk-sensitive and proportionate – especially for states that are especially significant to the EU’s financial system. Needless to say, the recent Swiss example was seen as a warning to the UK.


© Graham Bishop

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