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20 October 2022

Standard Weekly Newsletter




 

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Highlights of my week: Eurogroup met US Treasury Secretary Yellen and confirmed their shared values at such a difficult time, while the inaugural meeting of the European Political Community continues to reverberate. CEPS pointed out that – despite market turbulence – a financial crisis is not necessarily imminent. AI may be blamed for many ills, but the Dutch on-line bank Bunq won a court case against its regulator to be allowed greater AI use in its AML work. The CFA gave guidance on how AI can be used ethically in investment management. The BDB gave strong support to completing CMU while ISDA supplied the EU with a roadmap on how to succeed in attracting - rather than forcing - clearing into the EU. A major investor vigorously defended LDI – UK pension funds have never been better funded despite the short-run difficulties of the margin calls. The crypto world is losing the trust of investors and the Bank of England highlighted the “serious deficiencies in governance”. The Bank of England also has “serious concern” about the UK government’s proposal for post-Brexit financial regulation.

 Graham Bishop

(This e-mail provides the headers of a selection of the articles published this week. If you would like to upgrade to our Gold service and  access all articles - with live links to the underlying news - please click on the button) 
 

 

Articles from 14 - 20 October, 2022

Policy impacting Finance

Remarks by Paschal Donohoe following the informal meeting of Eurogroup ministers in inclusive format with the US Treasury Secretary, : This meeting, the dialogue, the discussion that we had symbolises everything that we stand for in these moments of great challenge dealing with risks through coming together, dialogue, cooperation, and anchoring our cooperation in values that are shared and values that .. are very, very precious.
Carnegie Europe's Pierini: Five Takeaways from t European Political Community Summit: Getting forty-four leaders from across Europe to meet in Prague was an achievement in itself. But it involved substituting values and principles for realpolitik and left fundamental questions open.
CEPS: Flexible ‘EU-centricness’ is the key ingredient to ensure the European Political Community’s success : The European Political Community (EPC) – the new platform that unites all 27 EU Member States and 17 non-EU European countries – met for the first time on 6 October in Prague. The initiative is a response to the desire to create a united front against Russian aggression.
CEPS; Gros and Shamsfakhr: Yes, this market turbulence is different but a new financial crisis is not inevitable : Financial markets have reacted to these central bank actions as one would expect, with stock markets and long-term-bond prices both tumbling. But none of this means that a financial crisis is imminent.
CEPR: Identifying foreign exchange interventions via news reports: New data : Marcel Fratzscher Tobias Heidland Lukas Menkhoff Lucio Sarno Maik Schmeling: This column argues that changes in foreign exchange reserves, a popular proxy in the literature, are a crude measure of interventions because reserves change for many reasons unrelated to interventions. 
ECA: EU spending: auditors find increased errors : While the auditors conclude in their annual report that the EU’s accounts for the 2021 financial year give a true and fair view, and that revenue can be considered error-free, payments are still affected by too many errors.
Eurobarometer survey highlights how Europeans interact with the financial services world : Overall, 86% of Europeans say that they feel confident in managing their personal finances, and 73% feel confident with banking online.

Banking Union

Finextra:Bunq wins AML case against Dutch Central Bank : Dutch challenger bank Bunq has hailed a "landmark" verdict in the Dutch courts over the use of artificial intelligence (AI) for anti-money laundering processes. 

Capital Markets Union

ISDA: A Roadmap to Make European Clearing More Attractive : ISDA supports the principle of increasing the attractiveness of clearing in Europe. Key to this is ensuring these services are efficient, properly supervised and well regulated. 
BDB: Capital markets union – the story so far : To master these structural challenges, Europe faces a decade of investment, which it can only organise with closer political cooperation within the EU. Against this background, capital markets union becomes even more urgent and an essential foundation
ICMA: The European Parliament’s ECON draft report on the review of the Central Securities Depository Regulation: In line with the ECB’s opinion on CSDR Refit, Rapporteur Johan Van Overtveldt considers regulation-driven mandatory buy-ins (MBIs) as a significant interference in the execution of securities transactions and the functioning of securities markets and suggests discarding the CSDR MBI regime it in its entirety.
FT: A different perspective on LDI : UK defined benefit pension schemes have never been in better shape thanks in large part to the investment strategy by Abdallah Nauphal - The writer is chief executive of Insight Investment

Environmental, Social, Governance (ESG)

IFRS: G20 looks forward to ISSB’s finalised standards : he G20 Finance Ministers and Central Bank Governors met in Washington. Members noted the need for globally consistent data to effectively address climate risk and welcomed the efforts of the International Sustainability Standards Board (ISSB) to achieve an interoperable global baseline:
UNEP FI: The London Stock Exchange Group analyses decarbonisation trends in the investment universe : This global benchmark covers over 4000 companies, capturing both large and mid-cap corporates in developed and emerging markets. 
 

Fin Tech Regulation

FSB makes proposals to achieve greater convergence in cyber incident reporting : Timely and accurate information on cyber incidents is crucial for effective incident response and recovery and promoting financial stability.
City A.M: Crypto has ‘serious deficiencies in governance’, warns Bank of England official : A Bank of England official warned there are “serious deficiencies in governance” in the crypto ecosystem today as she laid out a vision for the industry to win back trust from investors.
CFA: Introducing an Ethical Decision Framework to Guide Responsible AI in Investment Management : CFA Institute, the global association of investment professionals, has released new research and an accompanying ethical decision framework to motivate the evolution of ethical practices in the development of artificial intelligence (AI) technologies in investment management.  View Article
 

Economic Policies Impacting EU Finance

AccountancyEurope: EC’s consultation on tax evasion and aggressive tax planning in the EU : The impact of aggressive tax planning and evasion are matters of crucial importance to governments, especially in view of the potential impact that recent and current global crises will have on tax yields andgovernment spending.

Brexit and the City

Federal Trust video: The End of Singapore-on-Thames : In this Federal Trust video our Chairman John Stevens and Brendan Donnelly discuss the implications for Brexit of the past turbulent ten days in British politics.
FT: Government veto on City rules would be ‘serious concern’, says Bank of England deputy : Jon Cunliffe warns MPs that planned reforms of financial regulation risk damaging UK competitiveness

Brexit

HM Treasury Chancellor brings forward further Medium-Term Fiscal Plan measures : The Chancellor of The Exchequer Jeremy Hunt has today, Monday 17 October, brought forward a number of measures from 31 October’s Medium-Term Fiscal Plan.
Treasury Committee: Economists questioned on impact of mini-budget : The Treasury Committee are likely to use the session to explore the impact of the Chancellor’s Growth Plan, which has widely been labelled as a ‘mini-budget’, on the cost of borrowing, the value of the pound, and the current state of the markets.
UKandEU: UK-EU regulatory divergence tracker: fifth edition : It identifies and analyses the most significant cases of divergence between the UK and EU which have taken place since Brexit. It explains what the changes are, what impact they are having, and likely further consequences.
Accountability after Brexit - Parliament and the UK–EU relationship : Liz Truss should reset parliament’s lacklustre arrangements for post-Brexit scrutiny – and if she won’t then senior parliamentarians should pressurise government into making vital changes.
Bloomberg: Brexit Cut Trade Between UK and EU by Close to 20%, ESRI Says : ‘Si gnificant’ drop in trade seen between UK and most EU states; Ireland had large drop in imports from UK, no export impact

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