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21 January 2021

This week in "Brussels"

Welcome to our Gold Friends weekly e-mail.

 President Biden was inaugurated – amidst high hopes for a new Trans-Atlantic relationship – but he did not even mention Europe in his address. The Commission announced its plan to strengthen the role of the euro and the EMU – re-affirming the course of the EU regulatory ship for the years ahead. AFME reported that up to €600 billion in new equity is needed to repair corporate balance sheets – nearly the same as the much-vaunted RRF for governments. The Commission has to postpone its detailed taxonomy rules after widespread veto threats from Member States. The IMF asked if digital money is really “money” around the world but the ECB and Commission are pushing ahead with investigations into how to make it happen in the EU.

 The realities of Brexit continue to intrude: BoE Governor Bailey warned against being a “rule-taker” and Chancellor Sunak talked excitedly of “Big Bang 2.0” so the British regulatory boat is surely going to row away from the clear course of the EU regulatory ship. How can there be equivalence? (This was the main topic of the 169th Brussels4Breakfast Zoom call yesterday. Please E-mail me if you have views on the subject!)

 Graham Bishop

Watch the video of 169th Brussels4Breakfast here


Articles from 15- 21January 2021


General Financial Policy



EP: MEPs hope for a new dawn in transatlantic ties with the new US President:  MEPs welcome the inauguration of Joe Biden as an opportunity for Europe to strengthen EU-US ties and tackle common challenges and threats to the democratic system. View Article
EURACTIV: EU calls on Biden to form ‘new transatlantic pact’ : Hours before Joe Biden was to be sworn in as the next US president on Wednesday (20 January), EU leaders extended the invitation to cooperate more closely but also warned that four years of the Trump administration had changed the nature of transatlantic ties. View Article
POLITICO: EU prepares euro plan in post-Trump, Brexit world : Commission aims Wednesday to champion its currency as a defense of its companies and values. Brussels is ramping up plans to take on the U.S. dollar’s global influence by boosting use of the euro through financial markets, trade and foreign policy. View Article
Remarks by Paschal Donohoe following the Eurogroup video conference of 18 January 2021 : The Commission presented an analysis showing how the COVID-19 crisis runs the risk of aggravating the pre-existing macroeconomic imbalances in the euro area. But, of course, while we acknowledged that risk, we also acknowledged in recent weeks that there have been very positive developments. View Article
ECOFIN: Informal video conference of economic and finance ministers, 19 January 2021 : Recovery and Resilience Facility; Non-performing loans; Relaunching the economy in Europe; Strengthening the Economic and Monetary Union; Addressing new challenges, including the green and digital transitions, View Article
Infographic - Recovery and Resilience Facility : All you need to know about the RRF - the central pillar of Next Generation EU. How much money? How will the money be used? How does it work? View Article
Bruegel's Veron: Memo to the European Commissioner for Financial Services Policy : The Commissioner for Financial Services Policy should define and promote a vision for a sustainable global financial regulatory and supervisory order...should lead in setting the international agenda and build global credibility by driving the corresponding “domestic” (ie EU) reforms at home.  View Article

Banking Union

BIS: Does regulation only bite the less profitable? Evidence from the too-big-to-fail reforms : Did the enhanced regulatory framework put in place following the Great Financial Crisis lead to a systemic footprint reduction among large global banks? Has the response to the new rules differed across banks?  View Article
SRB: The crisis management framework for banks in the EU: what can be done with small and medium-sized banks? : Banking resolution is not always easy. And this is particularly true for the topic of today’s conference, and that is ‘How can we deal with the crisis of small and medium-sized banks?’ View Article
EBA observes an increase in the asset encumbrance ratio amidst extensive use of central bank facilities : After decreasing by 80bp in 2019 to 25%, in the first half of 2020, the asset encumbrance ratio went up to 27.5%.In the first half of 2020, the volume of total assets and collateral received rose by almost 10% while encumbered assets and collateral increased by more than 20% View Article
SSM: Crisis management for medium-sized banks: the case for a European approach : Keynote speech by Andrea Enria, Chair of the Supervisory Board of the ECB, at the Banca d’Italia workshop on the crisis management framework for banks in the EU View Article
SSM's Fernandez-Bollo: Interview with Revue Banque : If a severe economic scenario were to materialise, several banks would need to take action to continue to comply with their minimum capital requirements but, according to our estimates, the overall shortfall would remain contained. View Article

Capital Markets Union

AFME: Equity and hybrid markets hold solution to European COVID-19 corporate recapitalisation : AFME/PwC report an equity shortfall of up to €600bn threatens Europe’s economic recovery despite the significant public support measures and private capital made available across Europe to support economies during the pandemic. AFME calls for measures to bolster Europe’s equity and hybrid markets..  View Article

Environmental, Social, Governance (ESG)

EURACTIV: Brussels postponed green finance rules after 10 EU states wielded veto : The European Commission was forced to delay publication of detailed implementing rules on the EU’s sustainable finance taxonomy because of the sheer number of comments received and a threat of blockage from eastern and southern EU member states, EURACTIV can reveal. View Article
GRI backs EU proposal for separate pillar on non-financial reporting : Plans for EFRAG to broaden role requires establishment of a professional sustainability standard setting function. As part of the European Commission review of the Non-financial Reporting Directive (NFRD), it is exploring how new European sustainability standards could be created and managed.  View Article
IIRC publishes revisions to International Framework to enable enhanced reporting : The International Integrated Reporting Council (IIRC) today, 19 January 2021, publishes revisions to the International Framework to enable more decision-useful reporting. View Article
Insurance Europe: European Single Access Point for company information must ensure improved availability of ESG data : Insurance Europe has today published its comments on an inception impact assessment conducted by the European Commission on its plans to establish a European Single Access Point (ESAP) for financial and non-financial information disclosed by companies. View Article
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. View Article

Fin Tech Regulation

GFIA highlights insurance industry cyber-awareness initiatives : The collection of initiatives outlines their goals, communication methods, target audiences and partnerships, and observations on similarities between them. View Article
CRE: European firms name cyber as top risk for 2021 in AGCS poll : Cyber incidents have retained their position as the number one risk facing businesses in Europe during 2021, with business interruption (BI) in second place and pandemic outbreak third, finds a poll of risk experts and business leaders by Allianz Global Corporate & Specialty (AGCS). View Article
IMF: Legally Speaking, is Digital Money Really Money? : Countries are moving fast toward creating digital currencies. Or, so we hear from various surveys showing an increasing number of central banks making substantial progress towards having an official digital currency. View Article
Joint statement by the European Commission and the European Central Bank on their cooperation on a digital euro : The European Commission and the European Central Bank (ECB) are pursuing their efforts towards ensuring a strong and vibrant European digital finance sector and a well-integrated payments sector to respond to new payment needs in Europe. View Article

Economic Policies Impacting EU Finance

ECB: Euro area bank lending survey : Credit standards tightened for loans to enterprises and households; Firms’ demand for loans continued to decline, while demand for housing loans increased; Government guarantees on loans to firms supported bank lending conditions View Article

Broadening the International Role of the Euro

Commission takes further steps to foster the openness, strength and resilience of Europe's economic and financial system : The European Commission today presented a new strategy to stimulate the openness, strength and resilience of the EU's economic and financial system for the years to come. This strategy aims to better enable Europe to play a leading role in global economic governance, while protecting the EU from unfair and abusive practices.  View Article
EURACTIV: Brussels launches new offensive against US dollar supremacy : On the eve of Joe Biden’s inauguration as US president, the European Commission will launch a new offensive to promote the use of the EU’s single currency on a global level, aiming to address the vulnerabilities of financial markets, which are seen as “too reliant” on the US dollar. View Article


EP: New EU-UK agreement is welcome but thorough scrutiny remains, insist lead MEPs : Foreign Affairs and Trade MEPs welcome the new EU-UK agreement as a good deal but demand proper parliamentary scrutiny powers and thorough access to information.  View Article
Institute for Government: UK–EU future relationship: the deal - Services : What does the agreement say? What does it mean? View Article
UKTPO:Taking Stock of the UK-EU Trade and Cooperation Agreement: Trade in Services and Digital Trade : The TCA is a major setback to services sectors that have relied on UK regulation being recognised in other EU economies... particularly the case for financial services with the loss of passporting rights...  View Article
FT: Sunak says Brexit will ‘reinforce’ City as world leading financial centre : Despite chancellor’s confidence, UK officials fear lengthy stand-off with EU over crucial equivalence decisions View Article
FT: Sadiq Khan: Financial services have been badly let down by Brexit : The needs of a sector central to the UK’s competitiveness have been overlooked by the government View Article
FT: City of London bosses warn against post-Brexit deregulation : Business chiefs say there is little need for wholesale rule changes in the UK View Article
Treasury Select Committee: UK’s economic and trading relationship with the EU : Witness(es): George Peretz, QC, Monckton Chambers; Elizabeth De Jong, Director of Policy, Logistics UK; Barney Reynolds, Global Head of the Financial Services Industry Group, Shearman and Sterling; Conor Lawlor, Director for Brexit; Capital Markets and Wholesale, UK Finance View Article
FT: EU ‘not punishing’ UK financial services sector, London envoy insists : Bloc’s ambassador says Brussels still waiting for more information before making key regulatory decisions View Article
BoE Governor at Treasury Select Committee: "do not become a rule-taker" : Will the UK become a rule taker in financial services? In our session with the Bank of England yesterday, Andrew Bailey told us: “I would strongly recommend that we do not become a rule-taker. […] If the price of that is no equivalence then I am afraid that will follow.” View Article

Bloomberg: London Finance Vacancies Fell 49% in 2020 on Brexit, Covid Angst :  View Article

Bloomberg: Brexit Driving Top Dealmakers Out of London and Into the EU : Goldman Sachs moving bankers to the continent amid new rules; EU-based chaperones are now required for London pitches View Article
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 View Article

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