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14 May 2020

This week in "Brussels"

Welcome to our Gold Friends weekly e-mail.

This week marked the 70th anniversary of the Schumann Declaration on 9 May 1950 that launched the process that has evolved into the European Union of today. Yet the week also marked a furious reaction across the EU to the judgment by the German Constitutional Court that was nominally about the ECB’s bond-buying powers but actually challenged the entire legal foundations of the Union. Apparently more prosaically, the Commission announced its Action Plan against money laundering but its success hinges on a further notch towards greater integration of the EU.

(On this 70th anniversaty of the founding impulse for the EU, I thought I would send you the Schuman Declaration that I published in this week's Gold Newsletter)

Graham Bishop


Articles from 8 May 2020 - 14 May 2020

 General Financial Policy

Robert Schuman: The Declaration of 9 May 1950 : This declaration proposed the creation of a European organisation responsible for pooling French and German coal and steel production and gave rise to the first European Community (ECSC). 9 May was established in 1985 as "Europe Day". The full text of this declaration is below. View Article
EPC Duff: The Schuman Declaration turns 70: The Conference on the Future of Europe is the chance to relaunch the process of European unification along the federal lines first envisaged by its author.  View Article
German judges take ECB fight to court of public opinion : German judges take ECB fight to court of public opinion. Court decision puts the EU in a difficult situation, the last thing the bloc can afford at the moment. View Article
Bloomberg: ECB Officials Defend Bond-Buying Program After German Court Blow : Two European Central Bank officials spoke out in defense of their bond-buying strategy a week after Germany’s top judges sparked fears of a political and financial crisis in the region by unexpectedly questioning its legality. View Article
FT's Wolf: German court decides to take back control with ECB ruling : Future historians may mark this as the decisive turning point in Europe’s history towards disintegration View Article
POLITICO: German ECB board member rebukes national court over verdict : European Central Bank is ‘undeterred’ despite ruling from Germany, Isabel Schnabel says.  View Article
Commissioner Gentiloni at the Eurogroup press conference : ESM loans: eligibility, conditonality. Commission on German Constitutional Court View Article
Reuters: European rescue fund head implores Italy, others to use its credit, dpa reports : ESM's Regling sees no sign of a new debt crisis in the euro zone and wants countries to use its credit lines to help deal with the impact of the coronavirus outbreak,  View Article
EURACTIV: ESM corona-loans expected to be available from 15 May : The €240 billion in ‘cheap’ loans for countries affected by the coronavirus COVID-19 will be available as from 15 May, 15 days ahead of the expected date, European Stability Mechanism (ESM) chief, Klaus Regling, said on Friday (8 May). View Article
Perpetual bonds are not the best way to finance the European Recovery Fund : A wide-ranging review of all the issues around perpetual bonds (Consols).  View Article
BIS: US dollar funding markets during the Covid-19 crisis - the money market fund turmoil : Short-term dollar funding markets experienced severe dislocations in mid-March 2020, with funding diverted from unsecured funding markets as investors withdrew and switched to secured funding markets and government MMFs. View Article
ISDA: Seismic Shift – IQ May 2020 : The coronavirus pandemic has forced firms to switch their focus to critical priorities like maintaining their operations, managing volatility and servicing customers, all in an environment of social distancing and home working.  View Article
POLITICO: Europe’s financial regulators prepare for life after lockdown : Europe’s financial regulators, like the rest of society, are bracing for the prospect that social distancing may prevail until a coronavirus vaccine or effective treatment is found. View Article

Banking Union

European Commission: Action Plan on Anti-Money Laundering - Consultation: The European Commission adopted an action plan for a comprehensive Union policy on preventing money laundering and terrorism financing. (Consultation open to 29 July 2020.) View Article
FT: Brussels plans new anti-money laundering authority : Brussels has set out plans to assume new pan-European powers to crack down on money laundering after a series of scandals rocked the region’s banking sector and exposed patchy enforcement across the bloc.  View Article
EBF supports new EU plans to fight money laundering : The European Banking Federation, committed to an effective fight against money-laundering in Europe, is greatly encouraged by the Communication presented today by the European Commission to move towards a stronger EU-wide approach to fight dirty money. View Article
AFME welcomes European Commission Action Plan on Preventing Money Laundering and Terrorist Financing : AFME believes that a comprehensive, harmonised and robust anti-money laundering and counter terrorist financing framework is indispensable in the fight against financial crime in the EU. View Article
EU Observer: Why the EU anti-money laundering list is so short : The EU, last week, told a black-and-white tale of 20 sinful states who posed a money-laundering threat to Europe's law-abiding single market. But the real story of the EU and money laundering is more complicated.  View Article
Politico: Wanted: A watchdog, with teeth, to sniff out dirty money : European Commission’s proposals to tackle money laundering run into resistance from national capitals.  View Article
BIS: The CCP-bank nexus in the time of Covid-19 : During the Covid-19-induced financial turbulence, central counterparties (CCPs) issued large margin calls, weighing on the liquidity of clearing member banks. View Article
Request for delay of TARGET2 and TARGET2 Securities consolidation project: EBF,EACB, ESBG and EAPB Joint Letter : The European Banking Federation, together with the EACB, ESBG and EAPB has written to the European Central Bank to request a one-year delay to be considered for the ongoing consolidation project TARGET2 and TARGET2 Securities.  View Article
SRB: Resolution planning cycle 2020: setting a course for financial stability : Good planning, the basis of all crisis preparation, helps us to navigate the way forward. And, despite the current uncertainty, the 2020 resolution planning cycle is well on track. View Article
SSM blog: A pragmatic SREP delivers appropriate supervision for the crisis : ECB Banking Supervision’s flexibility is reflected in a number of actions taken over the last few weeks and has several objectives.  View Article
Breugel's Veron: Banking regulation in the euro area: Germany is different : Much progress towartss banking union but much of the German banking system has remained partly sheltered from uniform rules and disciplines that now apply to nearly all the area’s other banks. View Article

Capital Markets Union

ESMA highlights Challenges for rating Collateralized Loan Obligations : ESMA identifies the main supervisory concerns, and medium-term risks, in this asset class which include credit rating agencies’ (CRAs) internal organisation, their interactions with CLO issuers, operational risks, commercial influence on the rating process and the need for proper analysis of CLOs. View Article
The Economist: Credit-rating agencies are back under the spotlight : Ratings oligopoly faces another potential backlash, now that an even bigger pile of debt threatens to go sour, thanks to covid-19. Eyebrows have been raised as the agencies have rushed to mark down bonds and loans of all types. View Article
Bruegel: The European Union’s post-Brexit reckoning with financial markets : In the negotiations between the European Union and the United Kingdom over their future relationship, we see a high probability of a weak contractual outcome, given the dominance of politics over considerations of market efficiency. View Article
Commercial Risk Europe: Retroactive attack on BI policies for pandemic risks would pose material threat to insurance sector: IAIS : The International Association of Insurance Supervisors (IAIS) has warned legislators across the world that any efforts to retroactively open up business interruption (BI) policies to excluded Covid-19 losses would create “material” solvency risks for insurers and undermine paying other claims. View Article
IAIS facilitates global coordination on financial stability and policyholder protection during Covid-19 crisis : The Covid-19 pandemic has created a global public health emergency with severe human and economic consequences. Insurance is an essential service at this time of distress, providing protection against the heightened uncertainties created by the pandemic. View Article

Environmental, Social, Governance (ESG)

ICMA issues high-level definitions for sustainable finance : Sustainability has become a mainstream consideration for the financial sector. There is however a need for convergence on terminology among market participants and wider stakeholders. View Article
Helping organizations show SDGs progress in their sustainability reporting: An updated resource is now available to assist companies to report on progress in support of the UN Sustainable Development Goals (SDGs) through the GRI Standards. View Article
CDP and CDSB team up to provide the building blocks for successful TCFD disclosure: Connecting CDP disclosures with the CDSB Framework to satisfy the TCFD recommendations  View Article
Deloitte: Collections of COVID-19 resources : Global responses to the coronavirus disease 2019 (COVID-19) outbreak continue to rapidly evolve - a collection of useful resources.  View Article
ALFI and lead digital transformation : Benefitting from the Grand Ducal regulation of 20 March 2020 on how organisations can hold statutory meetings, ALFI is leading the way in digital transformation and organising its upcoming general meetings entirely in virtual form, with the help of’s meetings solution.  View Article

Fin Tech Regulation

CEPS: How to Fully Reap the Benefits of the Internal Market for E-Commerce? : New economic opportunities and challenges for digital services 20 years after the adoption of the e-Commerce Directive Policy View Article

Economic Policies Impacting EU Finance

The European Investment Advisory Hub: yet to achieve its full investment-boosting potential : European Court of Auditors report that beneficiaries are satisfied with the Hub’s advisory services. However, it has not yet achieved its full potential to boost investment in the EU, mainly due to an insufficiently clear strategy for targeting support where it could add most value.  View Article


Federal Trust's Donnelly: Brexit, Transition and Ireland : Eight months before the end of the transition period the British government seems intent upon two courses of action which will exacerbate the inevitable political and economic damage to the United Kingdom when it finally withdraws from the European treaties. View Article
FT: EU increases pressure on Britain over Irish Sea customs border : Brussels sets out tariffs proposals aimed at reducing risk of smuggling into bloc View Article
FT: Balls - The UK is on the horns of a dilemma in US trade talks : They show Brussels that London has trade options but risk killing ‘Global Britain’ agenda View Article

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© Copyright 2020 Graham Bishop

© Graham Bishop

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