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01 April 2021

This week in "Brussels"

Welcome to our Gold Friends weekly e-mail.

 Highlights of the week: The onset of Easter has lightened the news flow but some serious issues have surfaced: the German Constitutional Court has put a probably-temporary road-block in the way of the RRF; the ESAs have warned of the risks ahead to both banks’ asset quality and the liquidity of investment funds; the Commission is consulting on its plans to remove blockages to instant payments.

However, the extraordinary speed and magnitude of Archegos’ collapse underline the risks that the financial system must be able to withstand. That may typify the moment when `regulatory co-operation’ may have to be tested in earnest: whose judgement call? Who will pay if it turns out to be the wrong call? Can they be trusted to pay? These are the deeply-buried issues at the heart of the Brexit debate on derivatives regulation and the agreed (but unpublished) MoU probably does not allay all such fears.

Graham Bishop

(We will now take a short break over Easter and publish the next Newsletter on 14th April)


Articles from 26 March - 1 April 2021


General Financial Policy

 Work begins on the Conference on the Future of Europe : The work on the Conference on the Future of Europe has officially started with the constitutive meeting of the Executive Board held on 24 March. View Article

ESAs: EU financial regulators warn of an expected deterioration of asset quality : They highlights a number of vulnerabilities in the financial markets and warn of possible further market corrections.  View Article
FT: Germany’s highest court blocks ratification of EU recovery fund : Law challenged by Eurosceptic group over fears of European fiscal union  View Article

Opinion article by Eurogroup President, Paschal Donohoe - To compare the EU and US pandemic packages misses the point : Comparisons diminish the significant and historic efforts taken to boost our economies, and to develop and rollout vaccines at unprecedented speed.  View Article

EURACTIV: Europe looks for investment to spur its ailing recovery : Difficulties never come alone in the EU. The German Constitutional court’s decision to halt the ratification of the EU’s recovery fund on 26 March is the latest challenge faced by the EU in the battle against the Covid-19 pandemic. View Article
EPC's Duff: Europe after the Brits : Brexit leaves the EU weaker, smaller and poorer — but it can and should also spur reform. View Article
Basel Committee issues principles for operational resilience and risk : Principles for operational resilience aim to increase banks' capacity to withstand disruptions due to potentially severe events; Revised principles on operational risk focus on change management and ICT; Covid-19 has made operational resilience and mitigating operational risk even more important. View Article
IMF: How European Banks Can Support the Recovery : A robust post-COVID-19 recovery will depend on banks having sufficient capital to provide credit. While most European banks entered the pandemic with strong capital levels, they are highly exposed to economic sectors hit hard by the pandemic. View Article
EU-US Financial Regulatory Forum – Joint statement – 29 March 2021 : U.S. and EU participants in the U.S.-EU Joint Financial Regulatory Forum (“the Forum”) met virtually to exchange views on topics of mutual interest as part of their ongoing financial regulatory dialogue. View Article

Banking Union


 European Commission: Targeted consultation on instant payments : This targeted consultation will inform the Commission on remaining obstacles as well as possible enabling actions that it could take to ensure a wide availability and use of instant payments in the EU.  View Article 

BIS: An empirical foundation for calibrating the G-SIB surcharge : The expected impact framework provides a theoretical foundation for these capital requirements based on systemic importance, which are often referred to as G-SIB surcharges.  View Article
SRB: The state of the policy debate on the EU crisis management and deposit insurance framework by Jan Reinder De Carpentier, SRB Vice-Chair : "I will deal with some of the more current issues, including of course the Commission’s review of the Crisis Management and Deposit Insurance framework." View Article

Capital Markets Union

FT: Archegos debacle reveals hidden risk of banks’ lucrative swaps business : Derivatives that blew up Hwang family office were growing source of revenue for Wall Street View Article
EIOPA brings about important changes with regard to published national general good rules : The European Insurance and Occupational Pensions Authority (EIOPA) has completed its analysis of all published general good rules on registration and professional and organisational requirements that could potentially be non-compliant with the Insurance Distribution Directive (IDD). View Article
PCS: European Parliament votes the new securitisation rules : Yesterday, in their plenary session, the European Parliament passed long anticipated amendments to the existing STS Regulation and concomitant changes to the Capital Requirement Regulation (CRR). View Article
ICMA updates repo best practices to support post-trade efficiency : The targeted updates published today were prepared jointly by the ERCC Operations Group and the ERCC’s Guide Working Group and specifically aim at improving processes related to intraday liquidity management and settlement efficiency.  View Article
ESMA advises on framework for data reporting service providers : The advice focuses on the fees, fines and penalties applicable to DRSPs subject to EU supervision as well as the criteria determining whether certain DRSPs may be exempted from ESMA supervision (derogation criteria). View Article

Environmental, Social, Governance (ESG)

IOSCO Technical Expert Group to undertake an assessment of the technical recommendations to be developed as part of the IFRS Foundation’s su : IOSCO welcomes the press release issued by the Trustees of the IFRS Foundationannouncing the formation of a working group chaired by the IFRS Foundation to undertake technical preparation for a potential international Sustainability Standards Board (SSB) under the governance of the IFRS Foundation. View Article
Insurance Europe: Insurers call for improvements to IAIS corporate governance paper : Insurance Europe has published its response to a consultation by the International Association of Insurance Supervisors (IAIS) on its draft application paper on the supervision of control functions, which are a part of an insurer’s corporate governance framework that help it to identify and manage risks. View Article

Protecting Customers

European Supervisory Authorities issue a report on the application of their Guidelines on complaints-handling : The Report concludes that the Guidelines have contributed to a consistent approach to complaints-handling across the banking, insurance and securities sectors and have resulted in better outcomes for consumers. View Article
EURACTIV: German legal dispute over Facebook data use sent to European Court of Justice : Germany's Federal Cartel Office had imposed restrictions on the US tech giant's sharing of data between its own platforms Facebook, Instagram and WhatsApp as well as third-party apps in early 2019. View Article

Fin Tech Regulation

Project Syndicate: All Eyes on Digital Payments : There is justifiable excitement surrounding digital payments, given the potential of the technology to support a wide range of financial services for businesses and consumers alike. But the rise of powerful new platforms and means of exchange raises public policy concerns that cannot be ignored. View Article
BIS: Central bank digital currencies: putting a big idea into practice : Central bank digital currencies (CBDCs) are an opportunity for central banks to offer a technologically advanced representation of central bank money for the digital economy.  View Article
Bloomberg: EU’s Fastest Growing Fintech Hub Sees ‘Evolutionary’ Shift Away From Banks : Lithuanian central bank sees surging trasactions amid pandemic; Supervision creates challenge after dirty-cash scandals nearby View Article


Bloomberg: Seven Charts Show How Brexit Has Already Changed the City of London : Here’s how Europe’s financial capital is holding up after the U.K.’s departure from the EU. View Article
FT: UK and EU begin diverging on financial regulation after Brexit : Prospects for supervisory ‘equivalence’ fade as each side pursues differing rules View Article

Reuters: Britain and EU strike financial services cooperation pact : Britain and the European Union agreed a new post-Brexit financial services pact on Friday that will allow them to co-operate on regulation but does little to improve the City of London’s access to the bloc. View Article

FT: Brussels squares up to UK in fight over euro swaps clearing : EU is increasingly worried about London’s dominance over the €81tn industry View Article
House of Lords: Complex institutional framework of the UK-EU future relationship examined by EU Committee : The House of Lords EU Committee published the first in a series of reports looking beyond Brexit to the future relationship between the UK and EU. This report focuses on the institutional framework contained in the post-Brexit EU-UK TCA, including governance structures and dispute settlement. View Article
CER: Post-Brexit data transfers are not a done deal : Data transfers are essential for both trade and security co-operation. The EU and the UK should not let minor differences obscure the fact that they have more in common than divides them.  View Article
IRSG: Response to HM Treasury Financial Services Future Regulatory Framework Review Phase II Consultation : The International Regulatory Strategy Group submitted a response to the HM Treasury Financial Services Future Regulatory Framework Review: Phase II Consultation. View Article


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