Dear [[firstName]],
Welcome to our Gold Friends weekly e-mail.
My highlights of the week: Eurogroup’s proposal to apply the `general escape clause’ to the fiscal rules for another year triggered mixed reactions. The ECB said that Russia’s invasion of Ukraine has increased risks to financial stability while the SSM wants to increase cooperation of information sharing in the AML fight. The EBA published it final draft RTS on identifying shadow banking entities for reporting large exposures. Investor and risk manager groups responded to the Commission on the Corporate Sustainability Due Diligence Directive (CSDD) requesting more refinements while the IFRS drafts on sustainability disclosures were welcomed by global investors and the G7. ECB President Lagarde did not mince her words about crypto assets – they are “worth nothing”.
Brexit is going to cast a longer shadow over the City as the SSM’s `desk-mapping’ exercise showed that major banks had not built up their genuine management capacity in the euro area sufficiently. The popularity of the Protocol in Northern Ireland itself has doubled in the past year and the UK Government’s announced intention to breach it triggered a wave of adverse commentary. `Russian hackers’ publish Leaver’s emails about a “Coop d’Etat” – fake news??
Graham Bishop
Articles from 20-26 May 2022
General Financial Policy
Remarks by Commissioner Gentiloni at the Eurogroup press conference : Our economy is still far from normality. And this is why we concluded in favour of extending the general escape clause of the Stability and Growth Pact through 2023. View Article
EURACTIV: Mixed reactions to suspension of EU fiscal rules : While EU finance ministers meeting in Brussels on Monday (23 May) discussed the pros and cons of the EU Commission’s proposal to keep the EU’s fiscal rules suspended for another year, civil society organisations used the opportunity to question the fiscal rules more fundamentally. View Article
Remarks by Executive Vice-President Dombrovskis at the ECOFIN press conference : Our economic growth forecast is revised downwards, and the inflation forecast upwards...Still, the EU economy is showing resilience. Growth will continue both this year and next, but more slowly than previously envisaged. View ArticleRemarks by Paschal Donohoe following the Eurogroup meeting of 23 May 2022 : The Eurogroup has consistently emphasised that our fiscal strategy should be agile and responsive to unfolding events. This approach remains all the more relevant as heightened uncertainty needs sufficient flexibility. View Article
Russia-Ukraine war increases financial stability risks, ECB Financial Stability Review finds : Impact of war on energy prices, inflation and growth amplifies existing vulnerabilities; Market reaction to invasion largely orderly, but risk of further correction remains; Banks face weaker profitability after strong recovery in 2021 View Article
Banking Union
SSM: Enhancing cooperation in the fight against money laundering : Money laundering and terrorist financing issues pose a serious challenge to banks’ sound management and can even threaten a bank’s very survival. View Article
NVB: EU AML package: Information sharing is essential in the fight against money laundering and terrorist financing : The NVB is fully supportive of the European Commission’s overarching objective to enhance the effectiveness of the current EU AML/CTF framework. Information-sharing is paramount to an effective AML/CFT regime, and laws and regulations should not disproportionately hamper such cooperation View Article
Commission: Targeted consultation on the regime applicable to the use of benchmarks administered in a third country : The outcome of this public consultation will help the Commission prepare a proposal to review the rules for financial benchmarks administered outside the EU, to be published in Q4 of 2022 View Article
Capital Markets Union
European long-term investment funds: Council adopts its position : The updated regulation will make these investment funds more attractive to asset managers and investors, and develop the number of such investment funds in Europe. ELTIFs are important funds to help finance the green and digital transitions, and they can help finance small and medium-sized enterprises (SMEs). View Article
ESMA publishes report on highly liquid instruments : The Report concludes that further work is to be done regarding the extension of the list of eligible financial instruments to certain public entities and potentially to covered bonds pending further research. ESMA will also pursue further work within the CCP Supervisory Committee to ensure a common supervisory approach regarding CCP investment practices. View Article
EBA publishes final technical standards to identify shadow banking entities : EBA published its final draft Regulatory Technical Standards (RTS) specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures. View Article
ESMA: Other bodies and agencies Review of the MiFID II framework on best execution reports by investment firms : In the application of the MiFID II framework, ESMA has become aware, also through contacts with stakeholders, of potential issues related to these best execution reporting requirements. The issues are primarily related to reporting by venues and to a lesser extent to firms’ reports. View Article
AIMA: ACC comments on regulation of EU loan funds : The ACC stresses the importance of ensuring interventions are strictly necessary, targeted, and proportionate, as well as support for raising the leverage limit, and a considered approach towards loan origination activity. View Article
Environmental, Social, Governance (ESG)
PensionsEurope comments on the EC proposal for Corporate Sustainability Due Dilligence Directive : We believe that the European Commission's proposal could indeed create a level playing field in the EU but still requires greater clarifications on several aspects detailed in our feedback. View Article
InsuranceEurope: Insurers welcome EC proposals for a Corporate Sustainability Due Diligence Directive; call for refinements : The EC proposal for a CSDD Directive is intended to accelerate and deepen corporate sustainability actions and transition planning already being undertaken by many companies, and the insurance industry supports this objective. View Article
IPE: Dutch query EC due diligence proposal pension fund scope, fit : The Dutch pension fund association is calling for the European Commission’s proposal for a corporate sustainability due diligence directive (CSDDD) to be clarified, querying the clarity and appropriateness of its applicability to pension funds. View Article
FERMA’s comments on the EU Corporate Sustainability Due Diligence Directive proposal and its practical shortcomings: the good, the bad, and : European risk managers welcome the Commission’s CSDD proposal to achieve more sustainable governance for big companies but warn about its possible practical challenges regarding implementation and call for a more risk-based and proportionate approach. View Article
Insurance Europe: EIOPA sustainability preferences approach should put consumers first and not be unnecessarily prescriptive : Insurance Europe appreciates the fact that EIOPA acknowledges many of the challenges insurers face in adapting to the new regime. In particular, insurers face significant difficulties regarding access to data and incoherent timelines in the overarching legislation. View Article
ESMA study looks at reasons for lower costs in ESG funds : ESMA, the EU’s securities markets regulator, has published a study looking at the potential reasons behind the relatively lower ongoing costs, and better performance, of environmental, social and governance (ESG) funds compared to other funds, between April 2019 and September 2021. View Article
POLITICO: EU lawmakers move to block green investment label for gas and nuclear : "The European Commission has violated the spirit and letter of the law by labelling highly controversial and polluting energy sources as 'sustainable'," Green lawmaker Bas Eickhout, one of the signatories to a resolution to veto the rules, said. View Article
IFRS: G7 welcomes ISSB's work to deliver global baseline of sustainability disclosures : The G7 Finance Ministers and Central Bank Governors have today issued a Communique in which they refer to the work of the IFRS Foundation’s International Sustainability Standards Board (ISSB). View Article
SSEI: ICE Launches its First Nature-Based Solutions Carbon Credit Futures Contract : The Intercontinental Exchange (ICE), a leading global provider of data, technology, and market infrastructure, has announced that it has launched a Nature-Based Solutions carbon credit futures contract (“NBS future”). View Article
SASB: Leading global investors commend direction of IFRS Sustainability Exposure Drafts : Investors representing over US$53 trillion in assets, hailing from Asia, the European Union, North America and the UK, have commended the direction of the IFRS Sustainability Disclosure Standards Exposure Drafts. View Article
Fin Tech Regulation
POLITICO: Crypto assets are ‘worth nothing,’ says ECB’s Christine Lagarde : European Central Bank President Christine Lagarde is making no bones about her feelings toward the value of crypto assets — namely, there isn't any. View Article
FSB Europe Group discusses regional vulnerabilities, crypto-assets and climate change : It discussed regulatory and supervisory issues related to crypto-assets, and the associated challenges for policymakers. Members were briefed on the FSB’s workstream to examine supervisory and regulatory issues raised by “unbacked” crypto-assets complementing work on issues raised by stablecoins. View Article
SUERF: Who comes after us? The correct mindset for designing a Central Bank Digital Currency : While the ECB authors of "Central Bank Digital Currency: functional scope, pricing and controls" peripherally acknowledge the existence of token-based payment systems, the notion that a Digital Euro will somehow require citizens to have some kind of central bank account is pervasive in the paper. View Article
Economic Policies Impacting EU Finance
POLITICO: France eyes minimum tax deal in June : French hopes are bolstered by the Commission’s impending approval of the Polish recovery plan under the EU’s pandemic rescue fund, set for next week. View Article
Brexit and the City
SSM's Enria: The desks mapping review – integrating Brexit banks into European banking supervision : The desks-mapping review is part of the supervisory work... that third-country subsidiaries have adequate governance and risk management capabilities and do not operate as empty shells. View Article
Bloomberg: ECB Says Global Banks Too Slow on Post-Brexit Staff Moves : Some firms lack sufficient EU-based capabilities, review says; Fewer roles than needed have moved to the bloc after Brexit View Article
FCA: UK authorities look to strengthen resilience of Money Market Funds : The FCA, jointly with the Bank of England, and with the endorsement of the Treasury, has today published a Discussion Paper on Money Market Fund (MMFs) reform. This seeks views to inform the development of MMF reform proposals. The FCA has also published guidance on the UK MMF Regulation. View Article
Brexit
Bloomberg: Protocol Gains Favor in Northern Ireland as Support for Unity Grows : Support for Protocol more than doubles over year, survey shows; Growing majority think Brexit makes united Ireland more likely View Article
EU-UKForum: Where next with the Protocol on Ireland/Northern Ireland? : What intrigues many is not just the detail of the proposals but how the UK government thinks it can legislate to introduce changes to the Protocol unilaterally without breaching its obligations under the Withdrawal Agreement. View Article
EPC: The Northern Ireland Protocol: Should the EU take a different approach? : The UK has called on EU member states to broaden Commission Vice-President Šefcovic’s mandate, in order to reach a compromise on the contentious Northern Ireland Protocol. Given the current impasse, how should the EU respond to this request? View Article
UK and EU: the Northern Ireland Protocol: Is there a better way? : The EU has affirmed that it should be implemented robustly, and that it went to great length to gain confirmation from the UK side that it understood what it was signing up to. View Article
UK TPO: What we can do to fix Brexit and the Irish Border crisis : ...it’s not a case of leave or remain, rather a case of ‘tweak the Brexit agreement to something that better suits us’. View Article
EURACTIV: Russian hackers are linked to new Brexit leak website, Google says : The website – titled “Very English Coop d’Etat” – says it has published private emails from former British spymaster Richard Dearlove, leading Brexit campaigner Gisela Stuart, pro-Brexit historian Robert Tombs, and other supporters of Britain’s divorce from the EU, which was finalized in January 2020. View Article
House of Lords: Government questioned on fourth delay to import controls : The Committee has asked the Minister to clarify the implications of this decision for UK biosecurity, as well as the impact on GB exporters of ongoing asymmetry at the border. View Article
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