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21 May 2020

This week in "Brussels"

Welcome to our Gold Friends weekly e-mail.

The Franco/German recovery "bazooka" may also herald major politcal change to re-enforce the "level playing field" - rather than allow Brexit to distort it. The headline was the €500 billion package but reading the full statement reveals that the scale of political change may be just as great  – the Conference on the Future of Europe next year may even lead to re-opening “the Treaty”. In the past, that has always been an opening of Pandora’s Box! Such a re-opening could be used to re-affirm the primacy of the ECJ and thus neutralise the German Constitutional Court’s manoeuvres to challenge the ECJ’s primacy.





Articles from 15 May 2020 - 21 May 2020

General Financial Policy

Chancellor Merkel and President Macron:Overcoming the crisis united and emerging from it stronger : Federal Chancellor Angela Merkel and French President Emmanuel Macron have presented a joint Franco-German initiative on Europe’s economic recovery after the coronavirus crisis. “We need to take action at the European level so that we emerge sound and stronger from this crisis,” the Chancellor said. View Article
Berlin buckles on bonds in €500B Franco-German recovery plan : New fund would borrow from financial markets to give grants to countries hit hard by coronavirus View Article
The POLITICO: Franco-German recovery deal meets resistance : EU’s frugal faction fights back but some signs point to compromise. View Article
Bruegel: Rebooting Europe: a framework for a post COVID-19 economic recovery : As the recession deepens, a comprehensive strategy is needed - be based on four principles: viability of supported entities, fairness, achieving societal goals, and giving society a share in future profits. The effort should be structured around equity and recovery funds with borrowing at EU level. View Article
Bruegel: The European Central Bank in the COVID-19 crisis: whatever it takes, within its mandate : The ECB's new measures and the resulting increase in the size of its balance sheet, even if it were to be permanent, should not restrict its ability to achieve its price-stability mandate, within its legal obligations. View Article
General Board of the European Systemic Risk Board takes first set of actions to address the coronavirus emergency at its extraordinary m : At its extraordinary meeting on 6 May 2020, the General Board of the European Systemic Risk Board (ESRB) discussed a first set of actions in five priority areas identified to address the impact of the coronavirus (COVID-19) emergency on the financial system from a macroprudential perspective. View Article

Banking Union

SRB publishes MREL Policy under the Banking Package : The Single Resolution Board (SRB) publishes its final ‘Minimum Requirements for Own Funds and Eligible Liabilities (MREL) Policy under the Banking Package’, along with an overview of the SRB responses to the industry consultation. The consultation took place between 17 February and 6 March 2020. View Article
EBA publishes Report on interlinkages between recovery and resolution planning : European Banking Authority (EBA) published a Report, which assesses interlinkages between recovery and resolution planning under the Bank Recovery and Resolution Directive (BRRD), with the aim of enhancing synergies between the two phases and ensuring consistency in their potential implementation. View Article
Jacques Delors Centtre: EU banks’ vulnerabilities: Capital conservation key to withstanding Corona crisis : COVID-19 will hit financial institutions with a substantial time lag, but the storm will be fierce. The tremendous pandemic fallout will further deteriorate EU banks’ profitability which remains their major vulnerability. View Article
Reuters: Lobby calls on EU for extra capital easing to help banks lend more : A banking lobby group called on Tuesday for the European Union to further soften a capital measure to ensure banks do not run out of headroom to help companies hit by the coronavirus crisis. View Article
AFME: The fight against money laundering and terrorism financing: What needs to change? : While the EU might be embroiled in the struggle against Covid-19, there is another fight ramping up: the fight against money laundering and terrorism financing (AML/CFT). View Article
POLITICO: Dirty money needs better policing in 11 EU countries, Brussels says : Denmark, Estonia and nine other EU countries still need to strengthen safeguards against money laundering despite recent scandals, the European Commission said today. View Article
ISDA Publishes Report Summarizing Final Results of Consultation on Pre-cessation Fallbacks for LIBOR : The consultation asked whether the 2006 ISDA Definitions should be amended to include fallbacks that would apply to all covered derivatives referencing LIBOR following a permanent cessation of the benchmark or a ‘non-representative’ pre-cessation event, whichever occurs first. View Article
SCT Inst scheme gaining further traction in Europe : Since its launch, the scheme has kept on growing, and the latest Register of Scheme Participants, published in May 2020, reveals that the scheme now includes 2,263 (fifty-six percent of the total) from 22 countries in Europe.  View Article
EBA consults on technical standards for contractual recognition of stay powers under the BRRD : The European Banking Authority (EBA) launched today a public consultation on its draft Regulatory Technical Standards (RTS) for contractual recognition of stay powers laid down in the Bank Recovery and Resolution Directive (BRRD).  View Article
IBOR: EFRAG draft comment letter on IASB ED/2020/1 : Interest rate benchmark reform - phase 2. Proposed amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16. View Article

Capital Markets Union

ICMA responds to European Commission MiFID II/R review consultation paper :  View Article
European Commission consultation on MiFID 2 Refit: EBF Key recommendations : The EBF welcomes the European Commission consultation on MiFID Refit. The EBF believes it is appropriate to take targeted amendments of the investor protection and market structure rules, in particular in the context of the Covid- 19 recovery where financial markets should work in an efficient way. View Article
EFAMA's Key Messages to the EU Commission's consultation on the review of MiFID II / MiFIR : EFAMA has always been supportive of the overarching objectives of the MiFID II/MiFIR framework. For the most part, the framework is working as intended with provisions being appropriately calibrated.  View ArticleEFAMA's response to the EU Commission's consultation on the review of the MiFID II / MiFIR Regulatory Framework : EFAMA provided a detailed, 56 page set of respsonse View Article
BETTER FINANCE response to the European Commission Public consultation on the review of the MiFID II/MiFIR regulatory framework : The review is timely and should be coordinated with the other ongoing actions and policy areas, i.e. PRIIPs and the work done in the Forum The Commission should also adopt a coordinated approach concerning the insurance market, in particular insurance-based investment products. View Article
European insurers face increased risk exposures due to Covid-19, but market perceptions and imbalances remained at medium level : The European Insurance and Occupational Pensions Authority (EIOPA) published its updated Risk Dashboard based on the fourth quarter 2019 Solvency II data. View Article

Environmental, Social, Governance (ESG)

SSM: Public consultation on the draft ECB Guide on climate-related and environmental risks : This consultation gives interested parties the opportunity to comment on the ECB Guide on climate-related and environmental risks. View Article
IPE: Study: ‘Social responsibility’ top driver of fixed income ESG integration : Social responsibility is the most popular factor motivating fixed income investors to integrate environmental, social and governance (ESG) considerations, according to a survey by Invesco. View Article
CDSB: 78% of Europe’s largest companies falling short of adequately reporting environmental and climate-related risks despite EU guidelines : Current corporate reporting practices could fall short on delivering on the objectives of the European Green Deal and the 2050 climate neutrality target. View Article
Sustainable Stock Exchanges (SSE) Initiative: ESG metrics: Nasdaq ESG Footprint and S&P Global ESG Scores : When SSE started its campaign for ESG disclosure in September 2015 only 14 stock exchanges had guidance on reporting environmental, social and governance (ESG) information for their market. Now expanded to 54 exchanges.  View Article
WBCSD: New framework accelerates circular transition : The recently launched methodology allows companies to measure the impact of their circular activities; on a company level, business unit or product group. This new calculation method helps companies to take the next step in their circularity journey.  View Article
EPC: Doing business the right way: Pushing for green and social corporate governance : Reforms to corporate governance and EU company law could support the Union’s recovery efforts and promote a sustainable economy at the same time.  View Article

Fin Tech Regulation

China’s New Crypto-Currency – First Step to Full Dedollarization? : ‘We’ll cut off the whole relationship’ – Trump threatened China in a recent Fox-Business interview, suggesting he may cut diplomatic relations with China and thereby saving US$ 500 billion. He didn’t say how, though. View Article

Economic Policies Impacting EU Finance

European Semester Spring Package: Recommendations for a coordinated response to the coronavirus pandemic : The Commission has proposed today country-specific recommendations (CSRs) providing economic policy guidance to all EU Member States in the context of the coronavirus pandemic, focused on the most urgent challenges brought about by the pandemic and on relaunching sustainable growth. View Article
European Commission abandons fiscal rulebook for health, climate policies : EU countries urged to protect jobs, invest in green and digital business. View Article
Invest Europe: New EU mandatory disclosure rules: what you need to know and do : Last week, the European Commission proposed deferring certain deadlines for mandatory reporting and the exchange of information under the EU Directive on Administrative Cooperation (DAC).  View Article
EURACTIV: Commission defends gradual return to fiscal discipline to avoid ‘mistakes’ of austerity : The European Commission could start controlling deficit and debt levels from next year, once the recession is over. But the road to balancing public accounts again will avoid the “mistakes” of the last crisis, the institution said.  View Article


Friends of Services

CSFI video of the 162nd Brussels 4 Breakfast



Notes on 162nd Brussels 4 Breakfast: the Merkel/Macron package; German Constitutional Court; Brexit, and CRR quick fix : The Franco/German recovery "bazooka" may also herald major politcal change to re-enforce the "level playing field" - rather than allow Brexit to distort it. View Article



Remarks by Michel Barnier following Round 3 of negotiations for a new partnership between the European Union and the United Kingdom : We were also, at last, able to initiate the beginnings of a dialogue on fisheries, even if our positions remain very far apart. That said, with the exception of some modest overtures, we failed to make any progress on any of the other more difficult topics. View Article
UK negotiator Frost: : I regret that we have made very little progress towards agreement on the most significant outstanding issues between us. View Article
HM Government: Our approach to the Future Relationship with the EU : Texts of Frost letter to Barnier, 36 page HMG statement and 292 page UK draft Trade Agreement View Article
BBC: Michel Barnier: 'Dynamism needed to avoid UK-EU talks stalemate : A "new dynamism" is needed in the next round of post-Brexit UK-EU trade talks if they are to avoid a "stalemate", EU chief negotiator Michael Barnier says. View Article
Institute for Government: The UK must get better at selling its deal to the EU : Rather than appealing to precedent, the UK should show more clearly how its proposed deal would benefit EU member states too, says Georgina Wright  View Article
FT: EU expected to balk at proposals for ‘absolute minimum’ checks on trade across Irish Sea : EU expected to balk at proposals for ‘absolute minimum’ checks on trade across Irish Sea View Article
Bloomberg: Europe’s Next Big Gamble: That Boris Johnson Will Blink First : The European Union is betting that British Prime Minister Boris Johnson wants a trade deal so much he will compromise to get one. View Article
The UK’s approach to the Northern Ireland Protocol : This command paper sets out the UK’s approach to the Northern Ireland Protocol.with links to Press commentary View Article

Why Brexit divorce deal still hangs over EU-UK future-relationship talks : Brussels and London must settle how to implement border checks in Irish Sea or risk souring trade negotiations View Article
Federal Trust's Blick: Weaponising the Exit Agreement: the ongoing Irish dimension of Brexit : Prior to the referendum of 23 June 2016, little attention was given at UK level to its possible implications for Northern Ireland. But in the wake of the ‘leave’ result of 23 June 2016, many issues that – though knowable in advance – were neglected, now became impossible to ignore. View Article

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