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18 February 2021

This week in "Brussels"

Welcome to our Gold Friends weekly e-mail.

 Weekly highlights: The €672 billion RRF is about to go live – finally! So the next Commission economic forecast in the spring should look a bit healthier. Several regulatory speeches about EU banks share a theme “We are not out of the woods yet”. The Sustainable Corporate Governance plan draws more warnings about unintended consequences.

 The fall-out from Brexit becomes ever more apparent. My new paper (see below) explains why a generalised regime of equivalence is very unlikely as the UK diverges. Right on cue, cross-party Parliamentarians advocate changing UK regulations to be more competitive and a new lobby group of “Leavers” is founded to promote “bold new initiatives” in regulation. Does the Commission read the UK press?

Graham Bishop

 Graham Bishop/Federal Trust: Brexit: Ending the City’s Dominance of European Finance?


Articles from 12-18 February 2021

General Financial Policy

Video conference of the Eurogroup, 15 February 2021 : "From a Eurogroup perspective, it is important that we approach national budgetary preparations in a coordinated manner to help shape our policy decisions, particularly as the process of vaccination gathers steam and our recovery begins to slowly start. "Paschal Donohoe, President of the Eurogroup View Article
Remarks by Commissioner Gentiloni at the Eurogroup press conference : Topics included: Winter forecast (Next Generation is not factored in), General Escape Clause operation in 2022, corporate insolvencies, international role of the euro View Article
Informal video conference of economic and finance ministers, 16 February 2021 : Topics included: economic situation, RRF, borrowing under SURE, borrowing strategy for Next Generation, legislative proposals in the field of financial services. View Article
Remarks by Executive Vice-President Dombrovskis at the informal ECOFIN press conference : Our discussions today focused on Europe's overall response to support the recovery and the implementation of the Recovery and Resilience Facility. As the Minister already said, it will enter into force in a few days' time.  View Article
EURACTIV: Investors ‘concerned’ about EU recovery fund rollout, warns ESM chief : Money from the EU’s €800 billion coronavirus recovery fund could start flowing to member states before summer. Still, investors are “concerned” about the speed of the implementation of the EU’s joint stimulus programme, the chief of the European Stability Mechanism said on Monday (15 February). View Article
Bloomberg: EU’s New Fiscal Weapon Is Operational, It’s a Lifeline for Italy : Recovery and Resilience fund comes into effect Thursday, EU governments have until end-April to submit recovery plans View Article
CEPS: 2020 ECMI Statistical Package: key findings : This report provides an overview of the key findings of the ECMI Statistical Package 2020, a comprehensive and annually updated database on the dynamics of European and global capital markets (covering China, Japan, the US and other relevant markets). View Article

Banking Union

SSM: “We are not out of the woods just yet” : Kerstin af Jochnick, Member of the ECB’s Supervisory Board, looks back at the road travelled by banks and supervisors during the pandemic – and is confident that the resoluteness shown so far will stand European banks in good stead for the challenges of the year ahead. View Article
Il Sole: Interview with Elizabeth McCaul, Member of the Supervisory Board of the ECB : When the pandemic crisis struck, European banks were in much better shape than at the start of the great financial crisis, boasting solid capital ratios and ample buffers. Non-performing loans (NPLs) have more than halved in the last five years.  View Article
Covid-19: the Italian Banking Association and the German Banking Industry Committee propose more flexible rules : Shaping the Banking Union, refocussing on a fair regulatory approach towards the implementation of Basel III in the EU and adapting the treatment of non-performing loans (NPLs) in light of the current economic scenario.. View Article
IIF: Elke König's speech on the priorities for the SRB and the outlook for the financial: The measures put in place since the financial crisis of 2007/08 were well warranted. They ensured that the banks, this time round, are and hopefully stay part of the solution. So far, I think we can say that banks have weathered the storm well. View Article
EBA consults on guidance to assess breaches of the large exposure limits : The European Banking Authority (EBA) launched today a consultation on the criteria that competent authorities should use to assess a breach of the large exposure limits. The consultation paper also details the criteria to determine the period of time and the measures for institutions to return to compliance with those limits. View Article
ECON Brief: Update on recent banking developments : This briefing gives an update on and summarises recent events and developments in the Banking Union, based on publicly available information. View Article

Capital Markets Union

Capital Market Union Action Plan: EBF High-Level Position : The EBF welcomes the five-year Capital Market Union (CMU) action plan published by the European Commission (EC) in September 2020. The EBF agrees with the EC that the development of the European Union’s (EU) financial markets is key to finance the green recovery and the digital transformation of the EU.  View Article
Targeted consultation on the review of the Directive on settlement finality in payment and securities settlement systems : the Commission is interested in the views of a wide range of stakeholders, in particular those participating directly or indirectly in SFD designated systems (e.g. credit institutions, investment firms, public authorities, CCPs, system operators)... View Article
Targeted consultation on the review of the Directive on financial collateral arrangements : the Commission is interested in the views of stakeholders, in particular those participating in financial collateral arrangements, organisations representing the interests of stakeholders participating in financial collateral arrangements, payment institutions, e-money institutions, CSDs...  View Article
ESMA highlights risks to retail investors of social media driven share trading : The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has released a statement to highlight to retail investors the risks connected with trading decisions based exclusively on exchanges of views, informal recommendations and sharing of trading intentions through social networks and unregulated online platforms. View Article
EIOPA addresses measures to improve the insurability of business interruption risk in light of pandemics : The European Insurance and Occupational Pensions Authority (EIOPA) published today its staff paper on measures to improve the insurability of business interruption in light of pandemics. View Article
EIOPA defines its supervisory convergence priorities for 2021 : The European Insurance and Occupational Pensions Authority (EIOPA) published today its 2021 Supervisory Convergence Plan. In 2021 EIOPA intends to complete the priorities stemming from the previous plan, while allowing for flexibility to continue monitoring and mitigating the impact from the Covid-19 pandemic.  View Article
EIOPA's Bernardino: Strengthening society’s resilience against global risks : How can the insurance and pensions sectors contribute to a strong and sustainable recovery... that not only makes us better placed to deal with the threat of pandemics, but also better placed to deal with the other pressing risks that we are facing, be they environmental, societal and technological. View Article
ISDA's O`Malia: Time to Digitize Trade Reporting : Using the Common Domain Model (CDM), we are working on a digital regulatory reporting (DRR) initiative that will enable all firms to interpret and implement regulatory reporting rules consistently via a common, machine-readable code. View Article

Environmental, Social, Governance (ESG)

ICMA: Sustainability-linked bonds – new Q&As and other resources published by the Green & Social Bond Principles : The Executive Committee of the Green and Social Bond Principles has published new Q&As for sustainability-linked bonds (SLBs). View Article
GRI: Corporate reporting on the SDGs: what are the challenges and opportunities? : Since the launch of the Sustainable Development Goals (SDGs) in 2016, the role of the private sector in fulfilling the 2030 Agenda has been widely acknowledged, as set out under SDG 12. Yet to assess how companies are actually contributing towards these Global Goals, we need greater transparency on their impacts. View Article
UNEP- FI: Critical financial tools and recommendations for managing the climate transition now available to the banking industry : Transition risk poses a significant near-term threat to the economy. This is one of the findings released today in the latest set of three UNEP Finance Initiative reports on climate risk management tools for financial institutions. View Article
UNEP - FI: Net-Zero Asset Owner Alliance calls on asset managers to support blended finance : The UN-convened Net-Zero Asset Owner Alliance has issued a call to asset managers to collaborate in driving the development of blended finance vehicles, with the aim of drastically ramping up investment in climate solutions. View Article
IPE: ?EC’s sustainable governance play: Asset owners wary of potential snags : The idea of drawing up EU rules to ensure companies embed sustainability into the way they operate has met with steady applause from pensions and asset management industry representatives – as well as warnings of potential unintended consequences. View Article
EuropeanIssuers favours a recommendation and denies the need of an EU legislation for a Sustainable Corporate Governance Framework : EuropeanIssuers favours a recommendation and denies the need of an EU legislation for a Sustainable Corporate Governance Framework View Article

Protecting Customers

Bruegel: Regulating big tech: the Digital Markets Act : The European Union’s proposed Digital Markets Act will attempt to control online gatekeepers by subjecting them to a wider range of upfront constraints View Article

Economic Policies Impacting EU Finance

European Commission: Winter 2021 Forecast: A CHALLENGING WINTER, BUT LIGHT AT THE END OF THE TUNNEL : The near-term outlook for the European economy looks weaker than expected last autumn, as the pandemic has tightened its grip on the continent.  View Article
EURACTIV: EU sets end of May deadline for Turkey to avoid blacklist : The European Union decided not to include Turkey in its blacklist on Monday (15 February) after the Turkish authorities made some commitments to facilitate the exchange of information on tax matters. View Article


Federal Trust: Brexit: Ending the City’s Dominance of European Finance? : The future of the financial services industry – centred in the City of London – matters enormously to the health of the United Kingdom’s economy. The Trade and Co-operation Agreement (TCA) has few provisions on financial services... View Article
CITY AM: Brexit is 'remarkable opportunity' to change City regulations, say MPs : Brexit will provide the UK with a “remarkable opportunity” to change its financial services regulation in a bid to make the City more competitive globally, according to a cross-party group of MPs.  View Article
City AM: Bim Afolami MP: Brexit gives us the chance to refit our financial regulation for the 21st century : With Brexit complete – and many regulatory powers returning to the UK for the first time in decades – it is crucial that we now get the new framework for financial services regulation right.  View Article
FT: ‘Slash and burn’ of EU rules ruled out post-Brexit : Duncan Smith says reform group advising PM would seek ‘fast and sensible’ regulatory changes View Article
 EPC: The EU–UK relationship: It is what it is : The EU–UK Trade and Cooperation Agreement might have pulled both sides back from the brink of a no-deal cliff edge, but it remains a shaky foundation for the next stage of EU–UK relations. Both sides must invest in the relationship and rebuild trust to prevent any conflict from escalating into a tit-for-tat. Or else, they risk the collapse of the deal and the return to a no-deal-like state. View Article
FT: Brussels is fighting to make the EU more competitive in financial services: Brussels is fighting to make the EU more competitive in financial services View Article
FN: Politicians and ex-trading bosses launch new City lobby group to tackle Brexit : Initiative aims to promote ‘bold new initiatives to exploit the UK’s expertise in financial services’. A new lobby group has been formed to tackle Brexit on the back of complaints from the Prime Ministers office about the EUs unwillingness so far to grant the UK equivalence  View Article

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