Articles from 19-25 November 2021
General Financial Policy
FT: Pragmatist Scholz bridges political differences to become Germany’s heir to Merkel : Social Democrat strikes coalition deal to raise climate investment along with commitments on wages and pensions
POLITICO: What’s in the German coalition deal for Europe (and the UK) : Incoming government vows to push Brussels to be tough on rule of law and Brexit.
Project Syndicate: The New Franco-Italian Alliance in Europe : Behind a new bilateral cooperation agreement between France and Italy is a burgeoning political alliance that could reshape the European Union and its global role. With German Chancellor Angela Merkel departing, all eyes are now on Italian Prime Minister Mario Draghi and French President Emmanuel Macron.
Banking Union
Elke König, SRB Chair speaks to Boersen Zeitung on weak spots of bank resolution in the EU, the prospects for EDIS and the FDIC as a role mo : I firmly believe in a European deposit guarantee scheme – but with uniform rules of the game for all. What it cannot be is a European pot that is used according to national rules. I would say: The ones who pay are the ones who set the rules of the game.
Capital Markets Union
European Parliament votes on ‘quick fixes’ for PRIIPs and UCITS - EFAMA statement : We welcome yesterday's vote by the European Parliament plenary formally adopting two ‘quick fixes’ for PRIIPs (Packaged retail investments and insurance-based products) and UCITS (Undertakings for Collective Investment in Transferable Securities).
Bloomberg: Europe Pushes Ahead on Long-Awaited Capital Markets Union : Commission to propose rules on market data, investor access; Project to build cross-EU system was first announced in 2015
ESMA consults on CCP investment practices for highly liquid financial instruments : The consultation paper (CP) explores the benefits and disadvantages of the potential inclusion of financial instruments that are considered highly liquid with minimal market and credit risk.
ESMA: Consultation Paper on draft Guidelines on the application of the circumstances under which a CCP is deemed to be failing or likely to : These Guidelines list a set of objective elements that should support the determination that a CCP is failing or likely to fail, in accordance with the circumstances laid down in Article 22(3) of CCPRRR.
ESMA publishes draft commodity derivative technical standards under MiFID II Recovery Package : The draft RTS include proposals on the application procedure for position limit exemptions, a methodology to determine position limits and position management tools for trading venues, which will contribute to stable and orderly commodity derivative markets at a time of heightened scrutiny. View Article
SUERF: Did liquidity limits amplify money market fund redemptions during the COVID crisis? : Regulation of Money Market Funds (MMFs) in the EU requires some categories of MMFs to consider applying liquidity management tools if they breach a minimum “weekly” liquidity requirement. Anticipation of the application of such tools is a plausible amplifier of run risks. View Article
EBA publishes its final revised Guidelines on internal governance for investment firms under the Investment Firms Directive : The IFD contains specific governance requirements for investment firms in parallel to and consistently with the ones already applicable under the Capital Requirements Directive (CRD). View Article
EIOPA publishes annual report on the use of capital add-ons during 2020 under Solvency II : The objective of the capital add-on measure is to ensure that the regulatory capital requirements reflect the risk profile of the solo undertaking or of the insurance group. View Article
Environmental, Social, Governance (ESG)
SSM's Elderson: How well are European banks managing their climate-related and environmental risks? : Covering 112 banks directly supervised by the ECB with €24 trillion of combined assets, the report is an unprecedented stocktake of European banks’ preparedness to adequately manage and disclose their exposure to C&E risks
EBA notes significant efforts in IFRS 9 implementation by EU institutions but cautions on some of the observed accounting practices, especia : The aim of this Report is to assist supervisors evaluate the quality and adequacy of IFRS 9 Expected Credit Loss (ECL) models, in order to contribute to a high-quality and consistent application of the IFRS 9 standard in the EU
FT: EU seeks more independence for bank regulators after Wirecard scandal : German supervisor BaFin set to have to cut ties with industry representatives
CDSB: Leading international organisations launch Platform to address calls for clarity on how to improve sustainability impacts : The ‘Platform’, whose steering committee brings together a set of multilateral organisations, has launched a web tool that outlines the core actions of impact management and links to the resources to help organisations and investors implement them
ESMA publishes its Preliminary Report on the EU carbon market : The Report presents an overview of the financial regulatory environment for the carbon market under MAR, MiFID II and EMIR and the tools available to securities supervisors to fulfil their responsibilities.
IOSCO calls for oversight of ESG Ratings and Data Product Providers : The market for ESG ratings and data has grown over the past few years, in part due to a lack ofconsistent information disclosures at the entity level.
ESMA's Ross: ESG – Next Level Reporting, Risk Management, Strategy and Responsibility : We are incorporating ESG factors across the full range of our activities. ESMA, in particular, has a key role in helping investors better understand the impact of environmental, social and governance (ESG) factors on their investments
Fin Tech Regulation
Digital finance package: Council reaches agreement on MiCA and DORA : The Council today adopted its position on two proposals that are part of the digital finance package: the ‘Regulation on Markets in Crypto Assets' (MiCA) and the ‘Digital Operational Resilience Act' (DORA).
SSM's Hakkarainen: Digitalisation in European banking: no time like the present : I will argue that the impact of these changes will generally be positive for banks’ customers, who will benefit from better and more convenient services, and for the economy at large.
Vox: Central bank digital currency: Considerations, projects, outlook : Central bank digital currency has become a major preoccupation of central bankers. .. academics and policymakers review the economic, legal, and political implications, discuss current projects, and look ahead. While consensus on the ‘right’ CBDC choices remains elusive, common perspectives emerge.
Friends' Standard Services
Federal Trust video: Brexit is dimming the lights of the City of London : In his new Federal Trust video, Graham Bishop argues that the current controversy over central counterparties (CCPs) is symbolic of the difficulties facing the City after Brexit. View Article
Economic Policies Impacting EU Finance
Bruegel: Fiscal arithmetic and risk of sovereign insolvency : The record-high debt levels in advanced economies increase the risk of sovereign insolvency. Governments should start fiscal consolidation soon in an environment of low nominal and real interest rates and post-COVID growth.
EPC: Rethinking EU economic governance: The Stability and Growth Pact : It is time to reimagine the EU’s economic governance. In early 2021, the EPC set out to do just that in its Rethinking EU Economic Governance Task Force.
Brexit and the City
FT Brexit is a slow bleed for the City of London : After a pandemic pause, the movement of jobs and business towards the continent is set to resume