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09 September 2021

This week in "Brussels"

Welcome to our Gold Friends weekly e-mail.


Highlights of my summer - lots of them! German voters’ opinions seem to be swinging around but Europe is not the top priority for any party except the Greens. Ahead of today’s ECB meeting, the ESAs highlighted the financial risks of phasing out the crisis measures. The Commission launched its Anti-Money Laundering package just before the holidays, but POLITICO listed five reasons why this may still not be sufficient and EU banks appear not to have reduced their use of tax havens yet. The Commission’s strategy to enhance retail investment drew much comment – supportive of the principle but sometimes critical of the detail. (How will retail investors feel if their first venture into capital markets coincides with a crystallisation of the ESAs warnings about risk?) The ESG taxonomy has now broadened into a `social taxonomy’ – can the financial system really be a driver of social change on top of green? Digital money: the ECB is about to start a two-year investigation into implementing its own – just as the IMF warns that private cryptocurrencies should not be `national money’.


Brexit and the City: Even TheCityUK is warning that the City may lose its global financial crown within five years.

Graham Bishop


Articles from 16 July - 9 September


General Financial Policy

 EPC: Uninspired or indifferent? EU policy in the 2021 German election manifestos : With less than a month to go before the 2021 German federal election, the EPC scrutinised the election manifestos of the six political parties and compared their promises regarding EU policy. Which party has the most ambitious proposals for the EU? What are their perspectives on European integration and the future of Europe? Are there any changes from their promises in 2017? View Article

 EURACTIV: German far left courts SPD and Greens for three-way coalition : Germany’s far-left Linke pitched themselves on Monday (6 September) as would-be coalition partners for the Social Democrats and Greens after the 26 September election, arguing they offer the two larger parties the best chance of delivering their social policies. View Article

ESAs highlight risks in phasing out of crisis measures and call on financial institutions to adapt to increasing cyber risks : Vulnerabilities in the financial sector are increasing, not least because of side effects of the crisis measures, such as increasing debt levels and upward pressure on asset prices. Expectations of inflation- and yield growth, as well as increased investor risk-taking and financial interconnectedness issues, might put additional pressure on the financial system. View Article

 ESMA sees risk of market corrections in uneven recovery : The Report highlights the continued rise in valuations across asset classes in an environment of economicrecovery and low interest rates, the increased risk taking of investors and the materialisationof event risks such as GameStop, Archegos and Greensill.  View Article

CEPR/LBS: The ECB Strategy: the 2021 review and its future : The ECB recently completed an eighteen-month strategy review, published in July 2021, with the aim of innovating on both the design and the magnitude of its policy responses.  View Article

ECB: Stress test shows euro area banking system resilient under challenging macroeconomic scenario : Average final CET1 ratio for 89 ECB supervised banks under three-year adverse scenario is 9.9%, down 5.2 percentage points from starting point of 15.1% View Article

 BCBS Rodgers: “I don’t see Basel III as a burden – I see a compelling case to get it done” : The objective of marking this clear end – what is now referred to as the “hard stop” – was to bring stability to the framework so that member jurisdictions and banks could move forward with implementation.  View Article

Bloomberg: Banks lobby across the Berlaymont to water down capital reforms : Industry seeks support from top Commission officials to weaken Basel III reforms. View Article

 SUERF: Central banks as bank supervisors: how does this double role affect their inflation outcomes? : Once we appropriately control for relevant policy and institutional factors, we show that the institutional settings of prudential policy and monetary policy do not hav

CEPS: The future is today Why truly long-term sovereign ratings are needed now : The biggest risks on the horizon to sovereign solvency, such as climate and demographic change, are not cyclical.  View Article

 Banking Union

 Commisssion launches anti-money laundering package : Speeches by Vice-President Dombrovskis and Commissioner McGuiness, public consultation  View Article

 POLITICO: 5 reasons money launderers won’t worry about EU crackdown : Dirty money could still haunt the bloc even after the announcement of a new anti-money laundering watchdog. View Article

EU Tax Observatory: Have European banks left tax havens? Evidence from country-by-country data : Despite the growing salience of these issues in the public debate and in the policy world, European banks have not significantly curtailed their use of tax havens since 2014 View Article

Accountancy Europe: How to proactively manage Money Laundering risks? : We look at AML as an ecosystem where obliged entities (OEs), supervisors and policy makers cooperate and take charge of their responsibilities to mitigate AML risks. View Article

AFME: EU banking system remains resilient in face of harshest ever stress test : AFME is pleased to note that the European banking system remains well capitalised even after taking account of the impact from extremely harsh assumptions which formed the basis of the test. View Article
ECB decides not to extend dividend recommendation beyond September 2021 : Current ECB recommendation on dividends to expire on 30 September 2021; Supervisors to return to pre-pandemic way of assessing banks’ capital and dividend plans; Banks to remain prudent, not underestimate credit risk when they decide on dividends View Article

 EBA’s study shows that EU banks’ funding plans are poised to gradually return to a pre-pandemic funding composition by 2023 : The plans point to a gradual ‘normalisation’ of banks’ sources of funding over the next three years. This implies in particular a partial replacement of central bank funding with market-based funding. View Article

 The EBA observes that the number of high earners in EU banks remained overall stable in 2019 : The analysis shows that in 2019, 4 963 individuals working for EU banks received a remuneration of more than EUR 1 million, which is mostly the same as in 2018. (71% in UK) The average ratio between the variable and fixed remuneration for high earners decreased from 139% in 2018 to 129% in 2019. View Article

 GBIC comments on EBA draft ITS on IRRBB disclosure (EBA/CP/2021/20) : Such requirements cannot be allowed to result in a process in which the individual situation of the banks and the resulting necessary individual adjustments to the regulatory risk measurement approaches can no longer be reflected. View Article

 Final study on the development of tools and mechanisms for the integration of ESG factors into the EU banking prudential framework and into : It provides a comprehensive overview of current practices and identifies a range of best practices for the integration of ESG risks within banks’ risk management processes and prudential supervision.  View Article

 Insurance Europe: IAIS paper must reflect generally very low risk of money laundering and terrorist financing in non-life insurance : The IAIS should make it clear in its final application paper that non-life insurance falls outside of the scope of the FATF recommendations View Article

 Capital Markets Union

Commission: Calls for advice to the European Supervisory Authorities on the protection of retail investors : The strategy will cover a range of initiatives designed to provide the necessary level of confidence and assurance for retail investors. View Article

European Commission consultation on retail investment strategy: EBF Response : While the EBF and its members support a high level of investor protection, the EBF also highlights the need for a flexible approach in order not to disincentivize investors from investing in corporates via financial markets.  View Article

Insurance Europe: EU Retail Investment Strategy chance to address disclosure flaws, information overload and facilitate more retail investme : The consultation on the RIS therefore provides an excellent opportunity to learn lessons from the successes and failures of previous EU legislative initiatives. View Article

EFAMA: EU retail investments: comprehensive strategy to increase retail investor participation required : EFAMA wholeheartedly supports a retail investment strategy that gives EU citizens the necessary tools and the confidence to put their savings to work by investing in capital markets.  View Article

Insurance Europe: EIOPA’s unit-linked proposals would needlessly limit consumer’s retail investment opportunities : EIOPA should focus on ensuring that the current rules are properly applied by national supervisors View Article

BETTER FINANCE response to the European Commission’s Public Consultation on the EU Strategy for Retail Investors : In BETTER FINANCE’s view, the current retail investor protection framework falls short of achieving its purpose View Article

BEUC: PUBLIC CONSULTATION ON A RETAIL INVESTMENT STRATEGY FOR EUROPE : Consumers often rely on financial advice when investing into investment funds, lifeinsurance policies or pension products. Unfortunately, the current legal frameworkgoverning financial advice in the EU does not adequately protect them View Article

ALFI RESPONDS TO THE EUROPEAN COMMISSION’S CONSULTATION ON A RETAIL INVESTMENT STRATEGY FOR EUROPE : ALFI’s strongly held view is that financial education serves as the foundation for life-long financial well-being, entrepreneurship, retirement, social mobility and inclusive growth. View Article

Insurance Europe: Concerns raised about EIOPA draft opinions on supervision of IORPs : EIOPA's proposals for IORPs should better consider the minimum requirements laid down in the IORP II Directive, existing rules applicable to IORPs at national level and the diversity of pensions across Europe.  View Article

AFME calls for action on mandatory buy-in rules : “It is helpful that the Commission has stated its intention to consider amendments to the mandatory buy-in regime, subject to an impact assessment. Given that amendments may now be made at a later date, it does not make sense for the current rules to be implemented and enforced on 1 February 2022... View Article

ALFI RESPONSE TO FSB CONSULTATION ON MMF RESILIENCE : The crisis was rather an evidence of the resilience of the MMFs... View Article

IPE: European pensions sector bemoans overreach in EIOPA costs, DC opinions : ...warning that the Frankfurt-based authority is taking a level of EU harmonisation too far, that it involved a confusing re-definition of defined contribution (DC) schemes, and that its ideas could be too costly. View Article

IOSCO publishes results of examination of ETF behavior during COVID-19 induced market stresses : Overall, available evidence has not indicated any significant risks or fragilities in the ETF structure, although a subset of ETFs temporarily experienced unusual trading behaviors.  View Article

European Commission: Targeted consultation on the functioning of the EU securitisation framework : The consultaion helps prepare the report mandated by Article 46 of the Securitisation Regulation.  View Article

Environmental, Social, Governance (ESG)


 Call for feedback by the Platform on Sustainable Finance on preliminary recommendations for technical screening criteria for the EU taxonomy : The Platform’s main mandate under the Taxonomy Regulation is to advise the Commission on the development of the EU taxonomy, and in particular on the development of technical screening criteria (TSC) for the 6 environmental objectives as set out in the Taxonomy Regulation. View Article

IPE: EC advisors release draft criteria for non-climate taxonomy objectives : The four “non-climate” environmental objectives under the EU’s sustainability taxonomy framework: sustainable use and protection of water and marine resources; the transition to a circular economy; pollution prevention and control; and the protection and restoration of biodiversity and ecosystems. View Article

ICMA submitted its feedback on the draft Report of the EU Platform on Sustainable Finance on a Social Taxonomy : The focus on environmental issues, and especially climate change, through the work on the EUTaxonomy to date in effect tackles issues that can also be defined as social issues, given theexistential threat they create for society.  View Article

ALFI RESPONDS TO THE EUROPEAN COMMISSION’S CONSULTATIONS ON SOCIAL TAXONOMY AND AN EXTENDED TAXONOMY : ALFI responded to the Call for feedback on the Platform on Sustainable Finance’s Draft report on social taxonomy as well as the Call for feedback on the Platform on Sustainable Finance’s draft proposal for an extended taxonomy to support economic transition.  View Article

EFAMA: Brown taxonomy: An opportunity to transition away from significantly harmful activities : "The proposal to extend the taxonomy and include significantly harmful activities in urgent need of transition, would allow asset managers to bring to market financial products that help the "hard-to-decarbonise" sectors confront climate change and accelerate their necessary transformation".  View Article

IOSCO consults on ESG Ratings and Data Providers : it proposes a set of recommendations to mitigate these risks and address some of the challenges faced by users of products and services from ESG ratings and data providers, and the companies that are thesubject of these ESG ratings and data products.  View Article

ISDA Publishes Papers to Further Develop ESG Standards and Accounting Practices : ISDA has launched two new whitepapers examining key aspects of the fast-growing market for environmental, social and governance (ESG) transactions, with the aim of establishing robust standards and best practices for this sector. View Article

Accountancy Europe: Sustainable tax system: taxes and the environment : Our current tax systems are struggling to keep up with new business models, ageing demographics, and mobile taxpayers. The coronavirus crisis, climate urgency and social stresses have exacerbated these difficulties. View Article

Insurance Europe: EC proposals for Corporate Sustainability Reporting Directive welcomed : Insurance Europe is very supportive of the CSRD initiative View Article

AFME: The challenge of defining climate finance : Defining green investments is not an exact science. A lack of clarity around what should be classed as a climate-friendly investment has long been an obstacle preventing funding from flowing to green projects. View Article

GRI: True transparency requires in-depth reporting : Key questions are explored in the recently launched joint guide from GRI and SASB, which is built around interviews with four global companies that use both sets of standards together to meet their disclosure needs. View Article

Insurance Europe: TCFD disclosure proposals can help foster global approach to sustainability and tackling climate change : Insurance Europe welcomed the changes to the proposed climate-related metrics, targets, and transition plan guidance. View Article

Accountancy Europe: IFRS Foundation’s Exposure Draft: Proposed targeted amendments to the IFRS Foundation constitution to accommodate an ISS : Accountancy Europe welcomes the IFRS Foundation’s progress in addressingsustainability reporting. We support creating the International Sustainability Reporting StandardsBoard to set sustainability reporting standards material to enterprise value, within the structures of theIFRS Foundation.  View Article

Insurance Europe: Insurers support IFRS Foundation proposals for ISSB, call for refinements in approach : Insurance Europe said it supports initiatives in Europe aimed at embedding environmental, social and governance (ESG) criteria into all aspects of business and individual behaviour View Article

 ACCA: As Artificial Intelligence (AI) becomes more mainstream, environmental, social and governance (ESG) considerations are a key part of e : While potentially offering tremendous benefit, the broad applicability of AI across society must be handled carefully and professional accountants have a key role to play.  View Article

 CRE: ESG to impact coverage, price and future renewals : Environmental, social and governance (ESG) disclosure and commitments on net-zero emissions by insurers are increasingly likely to affect the coverage available and its price for some corporates, on top of requiring buyers to disclose more information at future renewals.  View Article

Protecting Customers


CPA Canada, ICAS and IFAC explores ethics in an era of complexity and digital change : “Ethical leadership is crucial to the future success of the accountancy profession, and the global financial system as a whole,” said Kevin Dancey, CEO of IFAC. View Article

Fin Tech Regulation


EPC: The investigation phase of the digital euro project is about to start : "We have launched the Eurosystem retail payment strategy and started a two-year investigation phase of a digital euro." View Article 

IMF: Cryptoassets as National Currency? A Step Too Far : Some countries may be tempted by a shortcut: adopting cryptoassets as national currencies. Many are indeed secure, easy to access, and cheap to transact. We believe, however, that in most cases risks and costs outweigh potential benefits. View Article
WSBI/ESBG : On the European Commission's Artificial Intelligence Act : The Commission aims to turn Europe into the global hub for trustworthy Artificial Intelligence. If we share this idea on the principle, it should be recognised that this is a risky bet.  View Article

Banking sector calls for participation in development of EU e-ID Toolbox : The European Credit Sector Associations (ECSAs) look forward to a Toolbox that is a common, openly available standard that enables the development of multiple, interoperable e-ID solutions and which incentivises private sector schemes to participate. View Article

FCA Charles Randell: The risks of token regulation : Considerations: how to make it harder for digital tokens to be used for financial crime; how to support useful innovation; the extent to which consumers should be free to buy unregulated, purely speculative tokens and to take the responsibility for their decisions to do so. View Article

BETTER FINANCE feedback to ESMA's call for evidence on Digital Finance : The existing regulatory and supervisory framework may not fully capture and address these new developments. View Article

Insurance Europe: Blockchain can offer benefits to policyholders, but legal certainty needed to enable maximum innovation : Insurers across the EU and beyond are currently developing blockchain initiatives to explore its potential to streamline business operations and to better serve their customers.  View Article

Brexit and the City

 City AM: TheCityUK: London at risk of losing global financial crown in next five years : In a new report, TheCityUK worked with 60 financial services groups to set out international strategy proposals to return the UK’s financial capital to being the “world’s leading financial centre” within the next five years.  View Article

BBC: Gnodde of Goldman Sachs: London 'will remain a leading financial centre' : The boss of Goldman Sachs International Richard Gnodde tells the BBC that the company remains as committed to its London head office as ever. View Article
FT: City of London grapples with wave of post-Brexit regulation : A wave of UK government reforms designed to make the City of London more attractive after Brexit has already had one unintended consequence:Finance industry executives cancel summer holidays to deal with workload View Article
CRE: Resolving Brexit issues for global insurance programmes : It appears that insurers, certainly the big players in the global programme market, were quick to ensure that they had operations in each camp and were able to make arrangements to ensure multinational customers weren’t unduly affected.  View Article



EPC: After Brexit: Could bilateral agreements facilitate the free movement of persons? : Some of the millions of EU nationals in the UK and British nationals in the EU are already suffering from Brexit’s drastic curtailment of the right to free movement. How can migration now be governed and facilitated between the two parties? View Article


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© Copyright 2021 Graham Bishop

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