The LIBORs now have less than a year of remaining life so AFME issued a “call for action” on securitisations. Green finance passed another milestone as EFAMA reported that ESG-linked ETFs passed €1 trillion outstanding. The ECB glimpsed the future as it was flooded with a record 8000 responses to its digital euro survey – analysis will now follow in “the spring”.
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General Financial Policy
Vox: An early view on euro area risk-sharing during the COVID-19 crisis : The economic fallout from the COVID-19 crisis has been asymmetric across euro area countries, leaving room for risk-sharing channels to operate. This column studies income risk-sharing in the euro area and finds that while it has so far been low, it was resilient throughout the crisis.
Veron: An optimistic take on NextGenerationEU : The Paris-based think tank Groupe d'Etudes Géopolitiques kindly invited me to contribute to a collection of short takes on whether the EU improved its "strategic autonomy" in 2020.
Banking Union
EBA points to a further rise in capital and leverage ratios, whereas profitability remains strongly subdued : Capital and leverage ratios increased quarter-on-quarter (QoQ); Forborne loans were further on the rise while non-performing loans declined; Share of stage 2 exposures kept on growing for loans under moratoria.
ECB finalises guide on supervisory approach to consolidation : Final guide clarifies use of supervisory tools to facilitate sustainable consolidation projects; Credible integration plans will not be penalised with higher capital requirements; ECB expects profits from badwill to be used as capital of new bank
ECON: Review of the bank crisis management and deposit insurance frameworks Banking Union Working Group: This briefing summarises key elements of the intended initiative, based on the information that the Commission provided on 10 November 2020 in its related public consultation and additional public sources.
Capital Markets Union
EFAMA’s Response to the European Commission Roadmap on the review of EU rules on alternative investment fund managers : The AIFMD is one of the pillars of EU regulation for asset managers and investment funds, which have a crucial role to play in the development of the Capital Markets Union (CMU) and the post Covid-19 economic recovery in the EU.
Insurance Europe: Work to improve PRIIPs KID must prioritise insurance consumers, instead of self-imposed deadlines : It is frustrating that PRIIPs are treated as if they are only applicable to asset managers, when 75% of PRIIPs are in fact insurance-based investment products.
AFME “call to action” for active transition of LIBOR linked securitisations : Less than 12 months now remain before the continuation of panel-based LIBOR can no longer be guaranteed.
Environmental, Social, Governance (ESG)
Funds Europe: European ETFs surpass €1trn as ESG leads the way : European ETFs closed the fourth quarter of 2020 by passing the €1 trillion milestone, with ESG-focused funds drawing the lion’s share of net inflows.
ISDA: Overview of ESG-related Derivatives Products and Transactions : The transition to a sustainable economy will take a massive amount of long-term funding. The financial services sector will be an essential partner in providing this funding and managing the risks associated with sustainable investments, including project risk and interest rate and currency risks.
Insurance Europe: Supervisors should support insurers in helping to facilitate the transition towards sustainability : Insurance Europe has today published its response to a consultation by the International Association of Insurance Supervisors (IAIS) regarding the supervision of climate-related risks.
Protecting Customers
AFME: Governance of Market Abuse Surveillance Controls: An industry perspective : The introduction of the Market Abuse Regulation in 2016, saw financial institutions implement a series of systems and controls to mitigate the risk of insider dealing, market manipulation and unlawful disclosure of inside information.
Fin Tech Regulation
ECB digital euro consultation ends with record level of public feedback : Over 8,000 responses received in online survey; Privacy, security and pan-European reach ranked highest in European citizens’ preferences; Detailed analysis to be published in spring, ahead of decision on project launch
Digital euro: EBF presents its views to ECB : The European Banking Federation has submitted its views on the introduction of a digital euro as a central bank digital currency to the European Central Bank, which closed its public consultation on this topic last night.
Brexit: The realities are begining to appear
EURACTIV: Brexit ‘big bang’ to trigger tectonic trading rift in Europe : Europe will see its biggest transfer of share trading in more than two decades as stock exchanges opened for business in 2021, with Brexit shifting its centre of gravity away from London.
POLITICO: The next Brexit battle: Financial services : Hopes a promised post-Brexit memorandum of understanding will settle finance’s fate are misplaced, experts warn.
Bloomberg: London Finance Clings to Hope for Some Post-Brexit EU Access : EY polls finds bankers, money managers expect equivalence; Few executives say their firms plan to move more staff to EU
FT: Amsterdam vies for IPO spotlight as Brexit dents London’s allure : InPost’s plans for Dutch listing underscore mounting competition to UK as trading hub
CRE: BoE governor says UK should not ‘take’ EU financial services rules for access : BOE Governor Bailey said the UK’s financial services sector should not pay too high a price for access to the European Union’s markets now that the country has formally left the trading bloc without a deal that covered financial services. The bank said Solvency II rules need reforming in the UK.
FRC: UK-adoption of Amendments for IBOR Phase 2 and Amendments to IFRS 4 : The Secretary of State for BEIS, in exercise of the powers conferred by statutory instrument 2019/685*, adopted on 5 January 2021, the following amendments to international accounting standards for use within the United Kingdom:
Bruegel: The double irony of the new UK-EU trade relationship : The Trade and Cooperation Agreement signed between the European Union and the United Kingdom goes against six decades of UK efforts to avoid being economically disadvantaged in Europe. Tracking the evolution of the EU-UK relationship over the last 60 years can help in understanding this.