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14 October 2021

This week in "Brussels"

Welcome to our Gold Friends weekly e-mail.

 Highlights of my week: Brexit has exploded back into the headlines – though superficially with little financial services impact. However, the string of extraordinary claims that Prime Minister Johnson negotiated the Irish Protocol in bad faith may become the turning point in whether the EU can trust the solemn word of a British Government. If it cannot, then the EU would be naïve and foolish to trust any “binding agreement” negotiated by a government led by Boris Johnson about financial regulation such as that relating to crisis support for UK-based CCPs or banks. Why put the levers of destruction of your financial stability into the hands of a man you now believe you cannot trust?

 In an otherwise light week, a weakened agreement on global corporate tax rates was signed at the OECD. Several more regulators took aim at the potential impact on global financial stability of stablecoins, etc.

Graham Bishop


Articles from 8-14 October

General Financial Policy

FSB Chair updates the G20 on enhancing resilience in non-bank financial intermediation and addressing challenges in cross-border payments : The letter focuses on two key areas of the FSB’s work on which the FSB has submitted reports to the upcoming G20 meeting. View Article
Vox's Buti: The search for a congruent euro area policy mix: Vertical coordination matters : How European policymakers solve the policy mix trilemma of asymmetric fiscal rules, no central fiscal capacity and constrained monetary policy in the post-pandemic economy will define the resilience of the euro area in the face of future shocks and the transition to a more sustainable growth model.  View Article

Banking Union

FSB publishes targets for enhancing cross-border payments and progress under its Roadmap : The Financial Stability Board (FSB) today published a progress report on the first year of the G20 Roadmap for Enhancing Cross-Border Payments, bringing together in one place the work under the wide-ranging, but interconnected, set of initiatives. View Article

Capital Markets Union

EBF paper on the review of the EU securitisation framework : EBF has elaborated four priority topics that should be given particular attention: 1. capital non-neutrality, 2. the significant risk transfer process (SRT), 3. The liquidity treatment of securitisations, and 4. the disclosure requirements for securitisation.  View Article
FSB publishes final report with policy proposals to enhance money market fund resilience : MMFs are subject to two broad types of vulnerabilities that can be mutually reinforcing: they are susceptible to sudden and disruptive redemptions, and they may face challenges in selling assets, particularly under stressed conditions.  View Article
Bloomberg: EU in Talks to Delay Reforms for $61 Trillion Securities Market : ESMA has urged Brussels to push back reforms from February... Changes could raise costs and threaten liquidity, critics say View Article
ICMA Quarterly Report Fourth Quarter 2021 : ICMA’s Quarterly Report for the Fourth Quarter of 2021 begins with a Foreword from ICMA’s new Chief Executive, Bryan Pascoe, and from Martin Scheck, now ICMA’s President.  View Article
AFME says Consolidated Tape must strike right balance : From AFME’s members’ perspective the use case is clear: in equities markets, we need a real-time consolidated tape in Europe that provides access for all investors to help build deeper and more open capital markets in Europe. View Article
Reuters: Better data needed for reform of EU trading rules-official : Poor trading data is hampering the European Union's capital market, ruling out any radical reform to securities rules before statistics have been improved, a senior official from the bloc said on Friday. View Article
EIOPA: Failures and near misses in insurance : Overview of recovery and resolution actions and cross-border issues View Article
EIOPA: Improved supervision of pension costs and charges, and of defined contribution risk management: EIOPA issues two supervisory opinions : National supervisors are expected to assess the cost efficiency of IORPs, the affordability for sponsors and the value for money offered to members and beneficiaries... The supervisory approach to DC products needs to ensure that risks borne by DC IORPs are appropriately monitored and managed. View Article
CRE: Commission open to discussion on systemic risk partnerships : Ferma has received a positive response from the European Commission today on its proposals for a public private partnership (PPP) to help business and wider society cope more effectively with future systemic crises. View Article

Environmental, Social, Governance (ESG)

FT EU launches largest-ever green bond : Brussels’ €12bn sale narrowly exceeds UK’s £10bn debut in September View Article
Irish Funds: Ireland to establish international centre for sustainable finance : A new international Sustainable Finance Centre of Excellence is to be established in Ireland next year and financial workforce skills and training in sustainable finance are to be prioritised, as two key actions identified in a new Sustainable Finance Roadmap.  View Article
CDSB: IFRS Technical Readiness Working Group: purpose and progress : The IFRS Foundation has today published a webcast explaining the role of the Technical Readiness Working Group (TRWG), which was created by the Foundation’s Trustees in March 2021 to do preparatory work for the proposed International Sustainability Standards Board (ISSB). View Article
ECGI: Will the EU Taxonomy Regulation Foster a Sustainable Corporate Governance? : EU securities regulation has established a taxonomy of environmentally sustainable activities. This article discusses, from a law and economics standpoint, the potential of this taxonomy to support a sustainable corporate governance. View Article
BIS: A taxonomy of sustainable finance taxonomies : Sustainable finance taxonomies can play an important role in scaling up sustainable finance and, in turn, in supporting the achievement of high-level goals such as the Paris Accord and the UN sustainable development goals. This paper develops a framework to classify and compare existing taxonomies. View Article

Fin Tech Regulation

ECB's Panetta:Stay safe at the intersection: the confluence of big techs and global stablecoins : Speech at the panel on “Cross-border dimensions of non-bank financial intermediation: what are the priorities for building resilience globally?”, as part of the UK G7 Presidency Conference on “Safe Openness in Global Trade and Finance” hosted by the Bank of England  View Article
BIS Couere: Finance disrupted : New technologies can foster greater efficiency, financial stability and inclusion. But they can also do the opposite, spawning financial instability, loss of privacy, and financial exclusion. View Article
Bank of England's Cunliffe: Is ‘crypto’ a financial stability risk? : He looks at the impact of ‘crypto’ on the stability of the UK’s financial system. ...unbacked crypto-assets (eg Bitcoin) and backed crypto-assets for payments (stablecoins) have begun to connect to the financial system. ...and talks about how regulators are responding to their rapid growth. View Article
Coindesk: Big Tech-Issued Stablecoins Could ‘Amplify Shocks’ to Financial System, Says ECB Exec : CBDCs could therefore represent “an anchor of stability,” according to a member of the ECB’s executive board. View Article

Economic Policies Impacting EU Finance

OECD: International community strikes a ground-breaking tax deal for the digital age : Major reform of the international tax system finalised today at the OECD will ensure that Multinational Enterprises (MNEs) will be subject to a minimum 15% tax rate from 2023. View Article

Brexit and the City

FT: Brussels eyes new rules to tighten grip on branches of non-EU banks : Move by commission could push up costs for the industry View Article
FT: Clearing will determine if Brexit self-harm goes both ways : A negotiation that largely ignored financial services has given way to an unhappy stalemate View Article
FT: Ministers plan to overhaul capital raising rules to boost London market : Review will seek to include more retail investors in secondary placings View Article


Lord Frost speech: Observations on the present state of the nation, 12 October 2021 : ...I want to make five points.... View Article
UK in a Changing Europe: A reflection (or four) on Lord Frost's speech : Process matters, but ultimately outcomes will matter more, so it is important, once the Commission has produced its proposals, that the two sides sit down and try to thrash out a compromise acceptable to both. View Article
CITY AM: Brexit: Boris Johnson never understood what leaving Customs Union meant, says Cummings : Dominic Cummings said in a provocative series of tweets that he had always intended to get “the trolley” – his derogatory nickname for the Prime Minister – to “ditch the bits we didn’t like” after beating Labour in the 2019 general election. View Article
BBC Newsnight: Boris Johnson and the Northern Irish Protocol: tearing it up : Boris Johnson did tell me personally... after agreeing to the protocol, he would sign up to changing that protocol and indeed tearing it up” DUP MP Ian Paisley Jr tells #Newsnight that before the 2019 election the PM wanted to change the NI protocol  View Article
Irish Times: Pat Leahy: Pessimism grows in Dublin over protocol : Acute concern over British intentions and impact on political stability in North  View Article

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