Several more "impossible things" happened this week: The European Commission baldly downgraded its economic forecast for 2020 GDP by around 9 percentage points - to an almost unbelievable decline of more than 7% . Against this backdrop, the German Constitutional Court appeared to declare war on both the ECB and ECJ. But economic observers were left bewildered by the Court's grasp of the economic realities facing the ECB so the bond market vigilantes barely blinked – raising the German/Italian 10-year government bond spread by hardly 10 basis points. However, the political foundations of the European Union may need to be shored up in the fullness of time.
(This e-mail provides the headers of a selection of the articles published this week. If you would like to upgrade to our Gold service and access all arrticles - with liive links to the underlying news - please click on the button)
Articles 30 April 2020 - 7 May 2020
General Financial Policy
ECB takes note of German Federal Constitutional Court ruling and remains fully committed to its mandate : The Governing Council received a preliminary briefing by the governor of the Bundesbank and by the legal department of the European Central Bank (ECB). The ECB takes note of today’s judgment by the German Federal Constitutional Court regarding the Public Sector Purchase Programme (PSPP)
Bundesverfassungsgericht: official translation of decision of 5th May re ECB : 1. Where an ultra vires review or an identity review raises questions regarding the validity or the interpretation of a measure taken by institutions, bodies, offices and agencies of the European Union, the Federal Constitutional Court, in principle...
EBA launches additional EU-wide transparency exercise : This will provide market participants with updated information on the financial conditions of EU banks as of 31 December 2019, prior to the start of the COVID-19 pandemic. The EBA expects to publish the results of this exercise at the beginning of June.
SSM's Enria: Public hearing at the European Parliament’s Economic and Monetary Affairs Committee : Our first decisions were announced on 12 March, only three days after the first nationwide lockdown in Europe.This morning, I would like to further explain the reasoning behind those decisions and the additional ones that have been announced since then.
CSFI Fuller: Bankers in Wonderland : “Why, sometimes I've believed as many as six impossible things before breakfast” - Alice in WonderlandHow would Alice do as a commentator on the banking sector as it tries to fit the impact of Covid-19 into accounting models?
Financial Market Structure
Mifid II influence spreads beyond EU borders : Mifid II, European market rules introduced two years ago, are having a significant impact on fund managers’ use of investment research around the world
Capital Markets Union
EBA proposes framework for STS synthetic securitisation : This proposal, which is limited to balance-sheet securitisation, includes a list of criteria to be considered when labelling the synthetic securitisation as ‘STS' and provides the pros and cons of a potential differentiated capital treatment for this type of securitisation.
ICMA publishes an in-depth report on consolidated tape for greater post-trade transparency in the EU bond markets : Establishing an EU consolidated tape (CT) for bond markets: This report was produced in response to a request from the European Commission’s DG-FISMA for a bespoke study assessing the feasibility of implementing a consolidated tape for EU post-trade raw bond data.
Better Finance: The EU Supervisor falls short of advising a complete ban on commissions for “retail” investment advisors : ESMA published its advice on “inducements” under “MiFID II”, one of the main EU investor protection directives up for review this year, pushing the issue off into the future by encouraging the European Commission (EC) to further deepen its assessment of the “inducements”.
CFA Institute: Earning Investors Trust : Trust in financial services industry dips compared to 2018 levels. What will it take to boost confidence?
Environmental, Social, Governance (ESG)
ICMA: UPDATE ON THE EU’S SUSTAINABILITY DISCLOSURE REGIME : New and amended EU legislation is introducing significant sustainability and ESG related disclosure requirements that will impact all participants in the European capital markets. This is arguably leading to what we are referring to as an “EU sustainability disclosure regime”.
IPE: Germany pursues sustainable finance plan for EU presidency : As it gears up to assume the EU presidency in July, the German government is getting input from a hard-working committee of experts that was assembled to help it develop and implement a sustainable finance strategy.
European Climate Law proposal: EU insurers ready to continue playing pivotal role in addressing climate change challenge : Europe’s insurers are ready to continue contributing to the EU’s political commitment to be climate neutral by 2050 and to play a pivotal role in financing the transition to carbon-neutrality, resource-efficiency and greater sustainability.
Fin Tech Regulation
Politico: Deal on global digital tax plan may be delayed until 2021 : Parts of a global deal on how to tax the digital world may be delayed until next year, according to a senior official overseeing the talks.
Economic Policies Impacting EU Finance
European Commission: Spring 2020 Economic Forecast: A deep and uneven recession, an uncertain recovery : The coronavirus pandemic represents a major shock for the global and EU economies, with very severe socio-economic consequences. Despite the swift and comprehensive policy response at both EU and national level, the EU economy will experience a recession of historic proportions this year.
FT Trade secrets: Brexit’s back, and this time it’s terminal : The first of three negotiating rounds on final trade arrangements concluded last week with predictably little progress being made. The big deadline is the end of June.
Federal Trust/Blick: Moving beyond the Brexit divide? Options for the new Labour leadership : The most obvious dramatic change that is not a consequence of the global emergency is the election of Sir Keir Starmer as leader of the Labour Party. In any circumstances, Starmer was surely the candidate that the Conservative Party least wanted to see win the contest.
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