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30 April 2020

Standard Weekly Newsletter

(A selection of articles from This Week in Brussels)


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 The results of EUCO's virtual meeting dominated the week as proposals for a financial "package" multiplied - together with varied thoughts on "corona" bonds. Bank shares hit a new historic low but have rallied nearly 20% as early results for the first quarter were not as bad as some feared and the Commission announced an emergency package of amended bank regulations to ease the pressure on bank capital.

 (Our Gold service supplies the complete list of weekly articles, together with live links to the undelying article - details)


Articles 24 April 2020 - 30 April 2020

General Financial Policy

Coronavirus Response: Commission adopts banking package to facilitate lending to households and businesses in the EU : This package ensures that banks can continue to lend to support the economy and help mitigate the significant economic impact of the Coronavirus - including an Interpretative Communication on the EU's accounting and prudential frameworks and a targeted “quick fix” amendments to EU banking rules.

ECON: MEPs call for concrete details and novel tools to address the economic crisis : MEPs quizzed Commissioners Dombrovskis and Gentiloni on planned measures to tackle the looming economic crisis due to COVID-19. 


Banking Union

AFME welcomes European Commission legislative proposal on Capital Requirements Regulation but more is needed : We strongly support the measures contained in today’s fast-track proposal, which should help towards achieving this goal and should be concluded as rapidly as possible. However, more needs to be done to mitigate the impact of Covid-19 on businesses and the economy

 EBF supports Covid-19 update on EU banking package : The European Banking Federation welcomes the EU legislative initiatives for regulatory flexibility to boost bank lending announced today by the European Commission and hopes that the measures proposed will be implemented within the short timeframe laid out 

 BIS: Buffering Covid-19 losses - the role of prudential policy : To avoid a reduction in credit to the real economy, authorities need to ensure that banks have the capacity and willingness to make use of the flexibility afforded by the buffer release. Payout restrictions on banks and risk-sharing between banks and the public sector will be key.


Capital Markets Union

 ISDA: A Pro-cyclical Problem : Regulators have typically tried to avoid putting in place measures that are explicitly pro-cyclical, but the recent bout of coronavirus-related volatility is resulting in a significant increase in trading book capital requirements that could impede the ability of banks to deploy capital.


Environmental, Social, Governance (ESG)

 EU Technical Expert Group on Sustainable Finance: Sustainable recovery from the Covid-19 pandemic requires the right tools : Clear policy priorities: The Members of the European Council identified the central role of the Green Deal in its Roadmap for Recovery from the Covid-19 pandemic

 OECD: An Inclusive, Green Recovery is Possible: The Time to Act is Now : Governments have a unique chance for a green and inclusive recovery that they must seize – a recovery that not only provides income and jobs, but also has broader goals, integrates strong climate and biodiversity action, and builds resilience.

ICGN: Social factors ‘now key to good corporate governance’: The Covid-19 pandemic has highlighted social failures and “deep” inequality which must be addressed by business, warns the global governance body.

Fin Tech Regulation

 Vox: Embedded supervision: How to regulate Libra 2.0 and the token economy : This column uses the revised proposal for the Libra global stablecoin as an example to illustrate possibilities for supervisors to harness information in distributed ledger based-finance via ‘embedded supervision’.


Economic Policies Impacting EU Finance

Conclusions of the President of the European Council 23 April 2020 : We welcomed the Joint Roadmap for Recovery setting out some important principles: solidarity, cohesion and convergence. It further defines four key areas for action: a fully functioning Single Market, an unprecedented investment effort, acting globally, and a functioning system of governance.

Reuters Explainer: What we know of EU Commission's post-coronavirus economic recovery plan : A huge stimulus package to kick-start the EU economy once the coronavirus pandemic ends is likely to feature a mix of loans and grants and be underpinned by private sector investments.It is being drafted by the European Commission for review by the bloc’s leaders by around mid-May.

MEPs Garicano and Verhofstadt: Toward a European Reconstruction Fund : Following a recent agreement by the Eurogroup of eurozone finance ministers on a COVID-19 rescue package, Europe is well positioned to maintain liquidity for the time being. But if it wants to avoid political infighting and set the stage for a post-pandemic recovery, it will need to go further.

Vox: Maturity, seniority and size: Make sure the ESM’s pandemic crisis support is fit for purpose! : A discussion is playing out in European capitals, most intensely in Rome and Madrid, regarding the usefulness of tapping these credit lines.


Press statement by Michel Barnier following the second round of future relationship negotiations with the United Kingdom : In recent days, the UK government has made clear that it would refuse any extension of the transition period. We take note of this choice. My recommendation is to think carefully about this question of extension, taking into account the economic situation and the consequences of our decisions. 

FT: Boris Johnson tells EU to shift Brexit stance : Boris Johnson has warned EU leaders they will have to change tack if there is to be a post-Brexit trade deal, with just two months to go until both sides take stock of whether an agreement is possible.

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© Copyright 2020 Graham Bishop


© Graham Bishop

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