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26 March 2020

This week in "Brussels"


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We are closing this trial so this is your last weekly e-mail unless you subscribe to either our Standard service - or the Gold service that effectively makes your personal researcher.

However, as the coronavirus pandemic grips the financial system ever-more tightly, we have decided to break for Easter early. I fear that the equity market is foretelling a very different system at the end of the crisis and that will require fresh thinking all round. In the meantime, take care and be safe.

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Articles from 19 March 2020 - 26 March 2020 

General Policy

Joint statement on the need of keeping European markets open : A group of ten associations (AFME, Better Finance, Insurance Europe, EFAMA, AIMA, European Issuers and others) has written to several European and national policymakers to emphasise the importance of keeping European financial markets open during the COVID-19 pandemic. View Article
Joint market trade associations statement: Keeping financial markets open amid coronavirus : The associations (such as ISDA, The Managed Fund Association, FIA, Financial Services Forum, NASDAQ, AIMA and others) declare that the US financial markets are critical infrastructure to our nation, and they continue to function as designed despite the volatility caused by the coronavirus. View Article
ECGI: Why financial regulation keeps falling short : In this paper, authors identify the key drivers of this mismatch between finance and financial regulation, demonstrate how it contributes to undesirable policy outcomes, and lay the conceptual foundations for understanding how the processes governing how financial regulation is made can be improved. View Article
FSB coordinates financial sector work to buttress the economy in response to COVID-19 : The FSB, representing a broad and diverse membership of national authorities, international standard setters and international bodies, is actively cooperating to maintain financial stability during market stress related to COVID-19. View Article

Banking Union

EBA provides clarity to banks and consumers on the application of the prudential framework in light of COVID-19 measures : The EBA issued a second statement to explain a number of additional interpretative aspects on the functioning of the prudential framework in relation to the classification of loans in default, the identification of forborne exposures, and their accounting treatment.  View Article
ECB banking supervision provides further flexibility to banks in reaction to coronavirus : The European Central Bank announced further measures to ensure that its directly supervised banks can continue to fulfil their role to fund households and corporations amid the coronavirus-related economic shock to the global economy.  View Article
BIS: Basel Committee coordinates policy and supervisory response to Covid-19 : The Basel Committee on Banking Supervision held a conference call to discuss the impact of the rapid worldwide spread of the coronavirus disease (Covid-19) on the global banking system.  View Article
Bank of England announces supervisory and prudential policy measures to address the challenges of Covid-19 : The Bank of England and PRA announced a number of measures aimed at alleviating operational burdens on PRA-regulated firm and Bank-regulated financial market infrastructures in the wake of the Covid-19 outbreak.  View Article
Vox EU: Covid Perpetual Eurobonds: Jointly guaranteed and supported by the ECB : This column argues that no institutional or legal constraints prevent this policy response. Prompt action is critical since allowing one crisis to morph into many could disrupt the European project, with far-reaching and unpredictable political implications. View Article
Bruegel: Banks in pandemic turmoil : The banking system is critical to society and requires attention and support. In doing so, however, tough love is preferable to complacency, writes Nicolas Véron. View Article
Vox EU: ‘Stress tests’ for banks as liquidity insurers in a time of COVID : This column argues that regulators should plan in advance for such a severe stress test posed by the coronavirus crisis by ensuring that banks prevent any further capital depletion through dividend payouts or share buybacks.  View Article
European Parliament: Is the current “fit and proper” regime appropriate for the Banking Union? : EU rules on fit and proper are a patchwork of high-level principles and national law. Deep cross-country differences affect both the assessment process and the criteria used. New Level 1 measures are required to impose common requirements, and to unify procedural aspects across Member States.  View Article
CEPS: Overcoming the gridlock in EMU decision-making : The completion of EMU, and banking union as its critical component, requires that certain taboos in the policy debate are brought out in the open, write Stefano Micossi and Fabrizia Peirce. View Article
EBA launches call for papers for its 2020 policy research workshop : The European Banking Authority launched a call for research papers in view of the 2020 Policy Research Workshop taking place on 12-13 November 2020 in Paris on the topic "New technologies in the banking sector – impacts, risks and opportunities".  View Article

Capital Markets Union

Securities regulators coordinate responses to COVID-19 through IOSCO : Members of IOSCO, who regulate over 95% of the world’s capital markets, are cooperating closely on their responses to the disruption in capital markets resulting from the macroeconomic impact of COVID-19 on the global economy. View Article
ECMI: Can Europe's finance sector resist COVID-19? : General Manager of ECMI Karel Lannoo writes that we are back in crisis mode. In a matter of only three weeks, Europe has turned from boom to bust for markets and businesses. View Article
Market activities continuity during the coronavirus pandemic– the AMF states its expectations : In order to fully accompany financial market professionals in the current context, the AMF reminds the financial industry of the various requirements arising from the European texts. Where possible, e.g. in the case of non-critical requirements, AMF has decided to grant participants time extensions. View Article
Commercial Risk Europe: Few European buyers have cover for Covid-19 closures: Moody’s : Insurers in the UK, France and Germany will face “moderate” business interruption (BI) losses from disruption and closures as a result of coronavirus, with the bulk of policies excluding pandemic-related claims, according to a report by Moody’s. But it warned this could cause the industry reputational damage. View Article
IIF statement on COVID-19 regulatory response : The Washington-based Institute of International Finance (IIF) issued a statement from Dr. Axel Weber, IIF Chairman and Chairman of the Board of Directors of UBS Group AG, and Tim Adams, President and CEO of the IIF. View Article
ESMA sets out approach on MiFIR tick-size regime for Systematic Internalisers : This approach is needed in response to developments related to the COVID-19 pandemic and the related actions taken by the EU Member States. View Article
ESMA sets out approach to SFTR implementation : This approach is needed in response to the effect of current adverse developments events as a result of the COVID-19 pandemic. View Article
EFAMA: Net sales of UCITS and AIFs nearly double in January 2020 : The European Fund and Asset Management Association (EFAMA) has published its latest monthly Investment Fund Industry Fact Sheet, which provides net sales data of UCITS and AIFs for January 2020.  View Article
IAIS releases 2019 Global Insurance Market Report (GIMAR) : The (re)insurance sector operates in a challenging global financial setting that is highly prone to vulnerabilities. Persistent trade tensions and slower economic growth may lead to the repricing of risks. This in turn may amplify low-yield vulnerabilities that have built up over previous years.  View Article
EIOPA issues recommendations on supervisory flexibility regarding deadlines of supervisory reporting and public disclosure by insurers : Recommendations provide for flexibility regarding upcoming supervisory reporting deadlines, will enable insurers to concentrate efforts on monitoring and assessing impact of Coronavirus/COVID-19 and maintaining business continuity. They are addressed to national competent authorities to provide a consistent approach to supervision. View Article
IAIS publishes issues paper on the use of big data analytics in insurance : The paper notes that increasing digitisation of insurance provides tremendous opportunities for the sector; however, this rapid innovation could unintentionally create risks of poor outcomes for policyholders and increased vulnerabilities for the sector as a whole.  View Article
Insurance Europe: IFRS 17 deferral and improvements to standard welcomed, but disappointing that important issues remain unaddressed : Olav Jones, deputy director general of Insurance Europe, commented on the announcement by the International Accounting Standards Board (IASB) to defer the effective date of IFRS 17 – insurance contracts – to annual reporting periods beginning on or after 1 January 2023. View Article

Environmental, Social, Governance (ESG)

ESMA issues guidance on accounting implications of COVID-19 : ESMA issued a Public Statement on some accounting implications of the economic support and relief measures adopted by EU Member States in response to the COVID-19 outbreak. View Article
Accountancy Europe: Coronavirus crisis: implications on reporting and auditing : The economic effects of the coronavirus have an impact on accounting, reporting and auditing financial statements of the companies or groups concerned.  View Article
EurActiv: Governments urged to attach green strings to long-term coronavirus recovery plans : Governments and financial institutions are under growing pressure to make economic bailouts designed to counter the coronavirus pandemic dependent on climate action in the longer term. View Article
FRC publishes 2020/21 strategy for reform : The FRC has published its strategy for 2020/21 following positive responses to its consultation. The FRC is promoting a more resilient audit market and will develop its longer term strategy once the Government has finalised its position on key public policy issues related to the audit market. View Article
FRC: Technological Resources: Using technology to enhance audit quality : Building on the FRC’s recent thematic review, the use of technology in the audit of financial statements, the FRC is seeking further insight through this discussion paper into the use of technology and its potential impact on audit quality. View Article
IASB consults on ways to help investors hold companies to account for acquisitions and on goodwill accounting : The IASB has published a Discussion Paper on possible improvements to the information companies report about acquisitions of businesses to help investors assess how successful those acquisitions have been.  View Article
ESMA issues guidance on accounting implications of COVID-19 : The ESMA has issued a Public Statement on some accounting implications of the economic support and relief measures adopted by EU Member States in response to the COVID-19 outbreak. View Article
ACCA report reveals challenges and opportunities for digital accountants : Being able to predict where market disruption is coming from is imperative, there is a fundamental need for accounting and finance professions to have a robust and comprehensive digital skill set.  View Article

Fin Tech Regulation

ESBG response to EU Commission consultation on EU framework for markets in crypto-assets : The ESBG has published its response to the European Commission to express its views on the best way to enable the development of a sustainable ecosystem for crypto-assets while addressing the major risks they raise. View Article
Insurance Europe: No one-size fits all approach to increase EU financial sector cyber resilience : Insurance Europe has published its response to a consultation by the European Commission on its proposal for a digital operational resilience framework for financial services. View Article

Economic Policies Impacting EU Finance

Video conference of the Eurogroup : The Eurogroup took stock of all the measures taken at national and EU level to respond to the COVID-19 fallout. Ministers also discussed further policy responses that are being explored by EU institutions. View Article
Teleconference of economics and finance ministers : Finance ministers focused on measures adopted by the Commission and the ECB to reduce the negative impact of the COVID-19 virus on member states' economies, which would in turn significantly facilitate the implementation of the necessary activities at Member States level. View Article
Statement by the European Fiscal Board on Covid 19 : The European Fiscal Board (EFB) commends the efforts undertaken by individual Member States in recent days and weeks as well as the actions taken by the ECB to boost bank liquidity and undertake massive additional asset purchases.  View Article
IBTimes: EU finance ministers split on coronavirus rescue plan : EU finance ministers argued over crisis measures to help European countries withstand the economic shock of the coronavirus outbreak, with powerful Germany cautious about rewriting the rulebook. View Article
PIIE: Italy, the ECB, and the need to avoid another euro crisis : Former IMF chief economist Olivier Blanchard proposes a large increase in Italy's debt ratio to cushion the large economic and fiscal costs of the coronavirus crisis. View Article
Carlos Costa - Bloomberg
Reuters: ECB's Costa calls for 'coronabonds' to prevent new euro debt crisis : Eurozone governments should ponder the issuance of common “coronabonds” specifically in response to the coronavirus pandemic to prevent a potential new sovereign debt crisis, European Central Bank policy maker Carlos Costa said. View Article
ECB's Schnabel: Interview with Frankfurter Allgemeine Sonntagszeitung : Interview with Isabel Schnabel, Member of the Executive Board of the ECB, regarding the ECB's asset purchases programme, boosted to counter the impact of coronavirus on European economy, and banks preparedness in reflection to the current crisis. View Article
ECB's De Guindos: Interview with Telediario 2, Televisión Española : Interview with Luis de Guindos, Vice-President of the ECB, in which he endorses the ECB's €750 bn investment in a new asset purchase programme, the coronavirus crisis and its possible consequences on the European and global economy. View Article
Vox EU: A proposal for a Covid Credit Line : This column proposes a Covid credit line in the European Stability Mechanism, with allocation across member states proportionate to the severity of the public health and economic challenges encountered.  View Article
OECD: COVID-19: Joint actions to win the war : The pandemic brings with it the third and greatest economic, financial and social shock of the 21st Century, after 9/11 and the Global Financial Crisis of 2008. Stringent measures being applied, albeit essential to contain the virus, are thrusting our economies into an unprecedented “deep freeze” state, from which emergence will not be straightforward or automatic. View Article
Federal Reserve announces extensive new measures to support the economy : The central bank committed to buy as many US government bonds and mortgage-backed securities as needed “to support smooth market functioning.” View Article
ECB: Real-time weakness of the global economy: a first assessment of the coronavirus crisis : Motivated by recent events that signal a potentially global synchronized slowdown, authors propose an econometric framework able to provide timely and accurate real-time inferences about the state of the world economy.  View Article
City AM: Coronavirus sparks record collapse in Eurozone output : The coronavirus pandemic caused the biggest collapse in Eurozone business activity ever recorded in March, preliminary survey data has shown, in an early sign of the havoc the virus is wreaking on European economies. View Article
POLITICO: Coronavirus could slash German economy by over 20 percent : The coronavirus crisis could cause the German economy to shrink by up to 20.6 percent this year, draining hundreds of billions of euros from the public budget, the Munich-based Ifo Institute said. View Article
Project Syndicate: A greater depression? : With the COVID-19 pandemic still spiraling out of control, the best economic outcome that anyone can hope for is a recession deeper than that following the 2008 GFC. But given the flailing policy response so far, the chances of a far worse outcome are increasing by the day, writes Nouriel Roubini. View Article
Project Syndicate: This time truly is different : The vast uncertainty surrounding the possible spread of COVID-19 and the duration of the near-economic standstill required to combat it make forecasting little different from guessing. Clearly, this is a “whatever-it-takes” moment for large-scale, outside-the-box fiscal and monetary policies. View Article
LSE: Coronavirus crisis: There is no way back to business as usual in the EU : Patrick Kaczmarczyk writes that if the EU was to go back to business as usual after the current crisis, right wing and anti-EU parties across the continent might come into power– and the coronavirus may turn out to be the catalyst for breaking apart Europe’s monetary union. View Article
Vox EU: Corporate debt burdens threaten economic recovery after COVID-19: Planning for debt restructuring should start now : Authors argue that in light of already elevated debt burdens, provisions for future debt restructuring should be made as soon as possible. These include carefully designed bailout packages, speedier in-court insolvency proceedings, and a stronger role of the state in dealing with renegotiations. View Article
Vox EU: COVID-19: A euro area safe asset and fiscal capacity are needed now : This column uses an empirically calibrated model to show that the creation of a safe asset and fiscal capacity at the centre – on which the debate has been ongoing for a long while – would be a powerful means to mitigate the economic impact of the crisis. View Article
Paul Goldschmidt: European Union: the suspension of budgetary rules. : It would seem that the opportunity offered by the coronavirus epidemic has been wasted, writes Goldschmidt; this was a unique chance to reinforce significantly the powers exercised by the European Institutions, but the EU's hasty and poorly thought decision is likely to be irreversible. View Article
ECB: The state of play regarding the deepening agenda for Economic and Monetary Union : This article provides an overview of progress with various aspects of the deepening of Economic and Monetary Union (EMU). The start of a new legislative period for the European Union (2019-24) provides a natural and opportune moment to take stock of progress towards completion of the architecture of EMU. View Article
Graham Bishop retweeted
Lucy Meakin Lucy Meakin
The U.K. economy will contract at least 10% in the first half of the year as the fallout from the coronavirus hammers output, according to Bloomberg Economics' @DanHanson41…
Graham Bishop retweeted
Mujt<a href=aba Rahman" src="" /> Mujtaba Rahman
IMPORTANT. @ecb President @Lagarde has **de-linked an ESM credit line (ECCL) from OMT support**. Why? @Lagarde unhappy at how unambitious Eurogroup's fiscal plans were proving ; wants to pressure finance ministers to do more. "Whatever it takes" now has a pretty serious wrinkle
Graham Bishop retweeted
Bloomberg Brexit Bloomberg Brexit
NEW: Angela Merkel's government approves an unprecedented 750 billion euro ($800 billion) package to protect Germany against the fallout from coronavirus
Graham Bishop retweeted
<a href=FT Brussels" src="" /> FT Brussels
EU plans fiscal firepower boost to tackle coronavirus fallout
Graham Bishop retweeted
European Central Bank European Central Bank
The ECB estimates the impact of the Pillar 2 relief measures announced on 12 March to total €120 billion in CET1 capital. This enables banks to absorb losses or to potentially finance up to €1.8 trillion in loans to households and companies.
Graham Bishop retweeted
Bloomberg Bloomberg
Boris Johnson dismissed calls to postpone Brexit, even as the coronavirus crisis delays trade talks and gradually monopolizes government time and resources
Graham Bishop retweeted
Bloomberg Brexit Bloomberg Brexit
The ECB launches an emergency bond-buying program worth 750 billion euros in the latest attempt to calm coronavirus-hit markets
Graham Bishop retweeted
<a href=FT Brussels" src="" /> FT Brussels
Brexit transition deadline in doubt as talks called off
Graham Bishop retweeted
Bloomberg Bloomberg
Italy’s Prime Minister Giuseppe Conte called on European Union nations to issue “coronavirus bonds” to fund their response
Graham Bishop Graham Bishop
Looking at the market reactions to the weekend central bank moves, one can only be deeply disturbed... I've analysed the latest data from markets & looked into other #financialpanic crisis to see if there are parallels we can learn from #coronavirusimpact

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