Welcome to our Gold Friends weekly e-mail.
My highlights of the week: We are about to have a new financial services Commissioner as Mairead McGuinness survived her ECON Hearing and was then approved in the Parliament’s Plenary - leaving just the formality of the Council’s agreement. The Commission’s consultation on a Green Bond Standard (GBS) garnered widespread support from the industry – but some concerns remain. The ECB’s statement on its interest in issuing a digital euro has started some ripples – including the possibility of disintermediating banks. The ECJ’s “Schrems II” judgement triggered a joint letter to the Commission from the entire financial services industry of the risk to data transfer to third countries.
The Brexit knife-edge is nearly over, but Bloomberg pointed out that about half of London share trading is in EU stocks – a category that may move to the mainland.
Graham Bishop
Articles from 2 - 8 October
General Financial Policy
ECON: Hearing of Mairead McGuinness : The Economic and Monetary Affairs Committee questioned Mairead McGuinness, the Irish candidate for the financial services portfolio, View Article
POLITICO: EU lawmakers confirm McGuinness and Dombrovskis as finance, trade commissioners : Parliament’s vote clears the way for Commission reshuffle. View Article
Video conference of economics and finance ministers : Topics included: Recovery and Resilience Facility (RRF) - agreement reached; Digital Finance; CMU, European Semester View Article
Eurogroup Work programme until June 2021 : Priorities include: Strengthening the Banking Union, the euro as a digital currency, international role of the euro View Article
Remarks by Executive Vice-President Dombrovskis at the ECOFIN press conference : With today's backing by Ministers of the proposal for a Recovery and Resilience Facility, we are one step closer to adopting this very important piece of legislation... comments on digital finance and CMU. View Article
Remarks by Commissioner Gentiloni at the Eurogroup press conference : .. strengthening of the banking union and the capital markets union... We also look forward to engaging in the discussions on the international role of the euro and on a digital euro, on which the ECB has just presented an important report. Fiscal:The General Escape Clause will remain active in 2021 View Article
CEPS: A proposal for a public infrastructure leasing entity for Europe : Is it possible to accelerate public investment without increasing national taxes or public debt? The authors of this piece believe so, and present a mechanism to relieve member states’ public finances, which are already burdened by ballooning deficits and galloping deficit ratios. View Article
EPC: The end of the level playing field? The level playing field is under severe strain, both inside and outside the EU. But instead of abandoning the idea of an open and fair economy... the EU must go beyond the concept of the Single Market – its own version of a level playing field – and create a Single Economic Territory. View Article
Project Syndicate: Capitalists and Socialists of the World, Unite! It can be politically expedient to draw a thick line between capitalist decentralization and socialist central planning, .. these two systems have converged on many occasions. Moreover, each was conceived for the same purpose, and elements of both could be realized in today's digital economy. View Article
Banking Union
SSM Enria: An evolving supervisory response to the pandemic : I thank you for this opportunity to share some thoughts on the evolving supervisory response to the pandemic, as we brace for the impact of the shock and prepare for a “new normal”. View Article
EBA saw that NPL ratios remained stable in Q2-2020 although early signals of asset quality deterioration: The European Banking Authority (EBA) published today its quarterly Risk Dashboard covering Q2 2020 data and summarising the main risks and vulnerabilities in the EU banking sector. View Article
ECB takes steps to ensure pan-European reach of instant payments : The ECB has taken an important move towards the full reach of instant payments across the euro area. Its ultimate objective is to enable European citizens to make real-time electronic payments in euro from and to any country, including in physical shops and online. View Article
ECB consultation on banking sector consolidation: EBF response : The EBF fully supports the intention of the ECB to achieve clarification and transparency on its supervisory approach to notifications of proposed acquisitions and applications for permission for a business combination. View Article
ECB publishes summary of feedback on public consultation on compounded €STR rates : Consultation received 44 replies, Respondents supportive of publication of compounded €STR rates by the ECB View Article
Capital Markets Union
ICMA publishes preliminary thoughts on the new Capital Markets Union Action Plan : ICMA is pleased to share its preliminary thoughts on the European Commission’s new Capital Markets Union Action Plan highlighting the importance of Europe’s debt capital markets in funding the recovery from the COVID-19 pandemic. View Article
UK Finance: The Capital Markets Union Action Plan – September 2020 edition : Those of us involved in capital markets regulation in the European Union (EU) could be forgiven for asking if we are back in autumn 2015 rather than autumn 2020. The Commission has launched – with much fanfare – a Capital Markets Union (CMU) Action Plan. View Article
Who is automating the primary bond markets? ICMA publishes new edition of technology directory : In light of a rapidly expanding competitive marketplace, ICMA is publishing the third edition of its primary markets technology directory. It was initially launched in 2018 and seeks to compare the key features and capabilities of technology solutions available to automate all... View Article
ISDA: An Opportunity for Standardization : ISDA Chief Executive Officer Scott O'Malia offers informal comments on important OTC derivatives issues in derivatiViews, reflecting ISDA's long-held commitment to making the market safer and more efficient. View Article
ESMA faces new set of challenges in 2021 : ESMA, the EU’s securities markets regulator, has published its 2021 Work Programme (WP), setting out its priorities and areas of focus for the next 12 months in support of its mission to enhance investor protection and promote stable and orderly financial markets. View Article
EIOPA: Start of a European-wide comparative study on diversification in internal models : Diversification effects depend on a variety of factors, such as the level of correlations, tail dependencies, number of risk factors, shape of underlying distributions and the dependency structures. These factors may operate at different levels which increases the complexity. View Article
Insurance Europe: EU Insurance Distribution Directive shows effectiveness of well drafted, sector-specific rules: Insurance Europe has today published an insight briefing on the Insurance Distribution Directive (IDD). View Article
Benchmark Regulation: Council adopts position on amendments addressing LIBOR cessation : Member states' EU ambassadors today agreed the Council's mandate for negotiations with the European Parliament on the proposed amendments to the regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds View Article
Environmental, Social, Governance (ESG)
EFAMA’s REPLY TO THE EUROPEAN COMMISSION’s TARGETED CONSULTATION ON THE ESTABLISHMENT OF AN EU GREEN BOND STANDARD : EFAMA strongly supports the initiative to establish an EU Green Bond Standard (GBS). We believe that, thanks to the recommendations made by the TEG, the GBS has a great potential to effectively play its important role in financing assets needed for the low-carbon transition. View Article
ESBG: EU green bond standard : ESBG says in consultation that standards proposed by EU Commission technical expert group could create economic benefits View Article
ICMA responds to the EC consultation on the EU Green Bond Standard (EU GBS) : While we agree that the proposed EU GBS will address some of the barriers mentioned in Q1, we do have additional concerns around the newly introduced principles of DNSH and minimum safeguards. View Article
Insurance Europe:EU Green Bond Standard can help boost investment in transition to a more sustainable economy : Insurance Europe has today published its response to a consultation by the European Commission on its EU Green Bond Standard (GBS). View Article
Accountancy Europe: EC’s consultation on the establishment of an EU Green Bond Standard : There is lack of clarity of definitions (what constitutes ‘green’) and not all investors and issuers are comfortable with investments/bonds that may not be green. View Article
EIOPA consults on the supervision of the use of climate change scenarios in ORSA : In EIOPA’s view, it is essential to foster a forward-looking management of climate change-related risks by insurers, also in the long term, and to enhance supervisory convergence across Europe. View Article
ISDA: The Role of Derivatives in ESG : ISDA hosted a virtual conference on ESG and derivatives, which highlighted the very important role the derivatives market has to play in the transition to a sustainable economy. View Article
IPE: EC grants more time for investor sustainable disclosure rules : The European Commission intends to push back the applicability date for new sustainability-related disclosure rules following requests for more time for implementation from parts of the investment industry. View Article
ACCA: Findings of “The CFO of the Future” report show that the global pandemic is changing the role of the CFO : A report by ACCA (the Association of Chartered Certified Accountants) and IMA® (Institute of Management Accountants) finds the COVID-19 pandemic is accelerating the shifting of the CFO role. View Article
Protecting Customers
Insurance Europe: Financial sector concerned about ability of EU companies to transfer personal data to US following EU Court of Justice ruling : Insurance Europe – together with a group of other financial sector associations – has written to the European Commission and the European Data Protection Board (EDPB) to raise concerns about the impact of a 16 July 2020 ruling by the Court of Justice of the European Union (CJEU). View Article
JOINT INDUSTRY LETTER: Impact of CJEU Schrems II ruling on the framework for international data transfers : The European Banking Federation, together with five other financial industry associations, has co-signed a letter calling attention to the impact of the Court of Justice of the European Union (CJEU) “Schrems II” ruling on the framework for international data transfers. View Article
Fin Tech Regulation
ECB: A digital euro : In this new era, a digital euro would guarantee that citizens in the euro area can maintain free access to a simple, universally accepted, safe and trusted means of payment. View Article
ECB's Panetta: We must be prepared to issue a digital euro : Digitalisation is spreading to all areas of our lives, satisfying an increasing demand for immediacy in how we consume, work and interact with each other. In many ways, it is disrupting our cultural, social and economic fabric. The way we pay is no exception. View Article
VOX: Central bank digital currency remuneration in a world with low or negative nominal interest rates : The prospect of central bank digital currency has raised concerns over its potential to cause structural (i.e. permanent) or cyclical (i.e. crisis-related, temporary) bank disintermediation. View Article
Brexit
Bloomberg: London’s Days as Europe’s Stock Trading Hub Are Numbered : EU may require dealing in its companies to remain in the bloc, more than half of daily volume in London is in EU shares View Article
FT: Barnier and Frost hint at space for compromises in Brexit trade talks : The UK and EU’s chief Brexit negotiators have spoken of the need to explore compromises on the most difficult issues remaining in the two sides’ trade talks, as Britain’s cabinet office minister Michael Gove said there was “cause for steady optimism”. View Article
ESMA updates statements on the impact of Brexit on MiFID II/MiFIR and the Benchmarks Regulation : Updates to: The Impact of Brexit on MiFID II/MiFIR, The Impact of Brexit on the BMR View Article
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