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08 September 2022

This week in "Brussels"



Welcome to our Gold Friends weekly e-mail.

 Highlights of my week: As the Russian-inspired economic problems of the euro-area deepen, ideas for improved economic governance and stability funds emerged from the IMF and CEPR, whilst ESMA reported on the resultant heightened volatility and risk in EU financial markets. The BCBS published it latest iteration of the “large exposure” rules – carefully continuing to exempt the largest single source of risk at a time of rising inflation and interest rates: sovereign debt. ICMA and BDB responded to the EU’s Platform for Sustainable Finance report on minimum safeguards – the last missing bit of the Taxonomy. Amidst the turmoil in the crypto markets, The Economist reported on Ethereum’s impending switch to a `proof of stake’ system that will take a Netherlands-sized chunk out of crypto’s global power consumption. The new UK government held out a chink of hope that it might be less confrontational on Northern Ireland but the new Chancellor plans to push ahead with `Big Bang 2.0’ despite the qualms of the City.

Graham Bishop


 

Articles from 2-8 September 2022


 

Policy impacting Finance

IMF blog - Gaspar et al: European Fiscal Governance: A Proposal from the IMF : High debt and rising interest rates put a premium on improved governance to anchor fiscal policy in EU member states. Given the central role of fiscal policy in addressing both recent crises and future challenges, the call to reform fiscal governance in Europe resonates like never before. View Article
CEPR: A stability fund for the euro area : A greater likelihood of external, asymmetric shocks from conflicts, climate change, or future pandemics all press the urgency of establishing a euro area fiscal stabilisation capacity that has long been called for by academics as well as European and international institutions. View Article
Project Syndicate's Reichlin: The Italian Right Is Coming : The key to the success of Europe’s two big political families, Christian deocrats and democratic socialists, has been their well-developed political and ethical cultures.  View Article
ESMA: Russian war adds uncertainty and volatility to EU financial markets : The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, today publishes the second Trends, Risks and Vulnerabilities (TRV) Report of 2022. View Article
European Commission: Closing speech at Bruegel annual meeting : The current economic outlook; the ongoing policy response; and our priorities for the coming months. View Article
Keynote speech by Commissioner McGuinness on financial literacy at the Bruegel Annual Meetings : Why financial literacy is important, especially right now; What the European Commission is doing about it already; And what we are planning to do next. View Article

Banking Union

BIS: Large exposures standard – Executive Summary : Microprudential objective of serving as a backstop to the risk-based capital regime by protecting banks from incurring large losses from the default of a single counterparty or group of connected counterparties View Article
BIS: Liquidity bridges across central banks for cross-border payments : International banks and other payment service providers (PSPs) may incur the cost of holding liquidity and collateral in different currencies across multiple jurisdictions to facilitate intraday payments in large-value payment systems. View Article
EBA calls for more proactive engagement between supervisors in anti-money laundering and counter-terrorist financing colleges : EBA finds that ongoing cooperation and proactive information exchanges between supervisors has not been fully achieved yet in all AML/CFT colleges. View Article
ECB appoints five experts to re-evaluate annual supervisory review process : The European Central Bank (ECB) has tasked five high level experts on banking supervision with reviewing the effectiveness and efficiency of the Supervisory Review and Evaluation Process (SREP) and how it relates to other supervisory processes. View Article
Benchmark Regulation – EU Commission’s consultation on third-country benchmarks : With the introduction of the Benchmark Regulation (BMR), provisions for the use of benchmarks from third-country administrators (third-country benchmarks) have also been introduced. The transitional rules according to Art. 51 (4) BMR expire on 31.12.2023. View Article
IFAC Elevates Accountancy Profession’s Commitment to Fighting Corruption and Economic Crime : New Action Plan Supports Robust Anti-Corruption Ecosystem. The Action Plan for Fighting Corruption and Economic Crime sets out more than 30 specific actions for IFAC and the accountancy profession related to education, evidence-based policy, global standards, partnership, and thought leadership. View Article

Capital Markets Union

EIOPA tracks progress on Solvency II data quality : The report demonstrates that the automated data quality processing solutions and advanced analytic tools together with built-in validations in the XBRL taxonomy have been effective in raising the quality of data.  View Article

Environmental, Social, Governance (ESG)

ICMA’s response to the 'Call for feedback on the Platform for Sustainable Finance's report on minimum safeguards : ICMA welcomes the draft report which provides proposed advice on the last missing component of the EU Taxonomy Regulation, the functioning of the minimum safeguards (MS) View Article
BDB: Minimum Social Safeguards of the EU Taxonomy : The EU Platform on Sustainable Finance consulted its draft report on the Taxonomy’s minimum social safeguards. The German Banking Industry Committee provided comments to the consultation. View Article
IOSCO: Education on sustainable finance helps protect investors against fraud and greenwashing : The report on Retail Investor Education in the Context of Sustainable Finance Markets and Products indicates securities regulators have increasingly focused on whether sustainable finance claims are accurate and if investors have the information they need to evaluate sustainable finance products. View Article
IPE: Academics find ‘sweet spot’ for investors seeking to balance ESG scores and returns : University researchers have created a mathematical model to work out the most cost-efficient level of ESG for an investment portfolio. View Article
EURACTIV: EU Parliament fights over sustainability criteria for insurance sector : In attempts to reach a common position on the review of prudential regulation for the European insurance sector, MEPs expressed starkly diverging opinions on whether and how to account for climate risks in the regulation. View Article

Fin Tech Regulation

IMF blog: Reimagining Money in the Age of Crypto and Central Bank Digital Currency : The recent plunge in crypto assets has left investors numbed by losses and surely in doubt. But the future of money is undoubtedly digital. The question is, what will it look like?  View Article
The Economist: The future of crypto is at stake in Ethereum’s switch : Can decentralised networks reform themselves? View Article

Economic Policies Impacting EU Finance

POLITICO: Brussels considers cutting Hungary out of global tax rate bill : The plan would involve a so-called enhanced-cooperation deal to circumvent Budapest’s veto.  View Article

Brexit and the City

FT: New UK chancellor Kwasi Kwarteng promises ‘Big Bang 2.0’ for City of London : Pledge of post-Brexit overhaul of regulation comes as some executives worry about reform of EU laws going too far View Article
Treasury Committee publishes Government and regulator responses to ‘Future of Financial Services Regulation’ report : The Committee supported calls for regulators to be given a secondary objective to promote long-term economic growth, and recommended that the FCA should have regard for financial inclusion in its rule-making. View Article

Brexit

LSE: Why an independent Scotland might have second thoughts about joining the EU : An independent Scotland would be a net contributor to the EU budget, and economic modelling for the Scottish Government suggests that Scottish exports of goods to the EU are back to where they would have been if Brexit had not happened, writes Derrick Wyatt.  View Article
Chatham House's Maddox: Europe should become the top priority for Liz Truss : Liz Truss has the chance to be a better prime minister than Boris Johnson was, not least in the UK’s foreign policy  View Article
UkandEU's Curtice: Why has Brexit becomes less popular? :  View Article
EURACTIV: New UK minister rows back from NI protocol : UK Prime Minister Liz Truss’s new government has hinted at rowing back from a fight with the EU over Brexit, with the new Northern Ireland minister stating that the government is seeking a negotiated agreement with Brussels on the controversial Northern Ireland protocol.  View Article

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