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Welcome to our Gold Friends weekly e-mail.Reactions continue to the Commission’s “Next Generation” recovery plan and the MFF budget plan. IF it all comes to pass, then as CEPS put it, a “fundamental taboo” will have been broken. EURACTIV reports that the Commission will surely follow a very different set of economic policies than the old “troika” days. So it may be a defining moment for economic policies. We could be at a corresponding moment for monetary policy. Bruegel published a critique of the German Constitutional Court “ECB decision” by a group of leading German economists that picks many holes in the Court’s economic understanding. A Treaty revision may yet put an end to national judiciaries effectively undermining the economics of the euro – the heart of the European project. Meanwhile, Commission/Council/Parliament are rushing to finalise the “CRR quick fix” so it can be formal law by end-June so that it is applied to 2 Q bank reporting. 210 days to go to the end of the Brexit transition and the door to further discussions remains open – just. The House of Lords pithily pointed out the Northern Irish contradiction agreed by Prime Minister Johnson – and time is running out. Graham Bishop
Articles from 29 May 2020 - 4 June 2020 General Financial Policy
Commission Vice-President Dombrovskis remarks on the Recovery and Resilience Facility : Our recovery strategy is based on 3 fundamental concepts: solidarity, cohesion and resilience. No one should be left behind. View Article
Commissioner Gentiloni - on the Recovery and Resilience Facility : "I think that yesterday was a defining moment for the Commission, and I hope for Europe. We often repeat that crises also provide opportunities....Those who support the European project, and it is the large majority of our citizens, are asking now to seize the opportunity of Next Generation EU." View Article
Reuters: We're still a long way off concluding EU recovery fund talks: Germany : There is still a long way to go until talks on a European coronavirus recovery fund are concluded, Germany’s foreign minister said on Friday, adding that Berlin aims to act as an “honest broker” during its EU presidency this year. View Article
EURACTIV: Austria opposes current EU rescue, wants changes : Austria opposes Europe’s current €750 billion plan to help economies recover from the coronavirus pandemic and wants to negotiate changes to the proposal, the country’s finance minister said on Saturday (30 May). View Article
Business Europe: Determined financial and non-financial European response essential to overcome corona crisis : Besides the strong focus on green and digital transitions, we welcome the strengthening of key industrial value chains and ecosystems. View Article
EU’s public health and economic response to COVID-19 to be reviewed by European Court of Auditors : The review of the economic response will focus on measures and challenges in the context of EU economic coordination, providing a comprehensive stocktake of the EU’s and Member States’ economic policy actions to combat the pandemic. View Article
Bruegel: The Independence of the Central Bank at Risk : The ruling of the German Federal Constitutional Court (GFCC) of May 5 on the ECB’s monetary policy affects not only the relation of Germany to the European Central Bank (ECB) and the Court of Justice of the European Union (ECJ) but also the constitutional foundations of monetary policy. View Article
CEPS: The MFF recovery plan breaks with a fundamental taboo : Much is in line with the ‘Next Generation EU’. For the first time the EU is taking a much-needed next step towards monetary union: the ability to raise funds from the financial markets to manage asymmetric negative economic impacts in member states, backed by the Union as a whole. View Article
EURACTIV: Commission vows to break with troika-type conditions in recovery phase : It is increasingly evident that the Commission has no intention to return to the tight cash-for-reforms system to manage the post-COVID-19 recovery and that ‘hawkish’ member states could find it difficult to turn the proposed procedure into Troika-type oversight. View Article
Banking Union
EBA issues Guidelines to address gaps in reporting data and public information in the context of COVID-19 : They are associated with the measures to deal with the COVID-19 crisis. The Guidelines are needed to ensure that the minimum necessary information is available to monitor and assess risks associated with institutions’ activities, and to strengthen transparency and market discipline. View Article
SRB Board Member Laviola:The future of European Banking regulation in the aftermath of Covid-19 : The sharp increase in the cost of debt has been a driving factor in the reduction of issuances of euro area banks. In 1Q 2020, banks under the SRB remit issued about €36.4 bn of MREL instruments, all in January and February. By comparison, in the 1Q 2019 SRB banks had issued €112 bn. View Article
EBA announces timing for publication of its 2020 Spring EU-wide transparency exercise : The European Banking Authority (EBA) announced today that its 2020 Spring EU-wide transparency exercise with bank by bank data will be released on Monday 8 June at 18:00 CEST. View Article
EBA seeks to future proof loan origination standards taking into consideration significant transition periods to facilitate implementation : The EBA’s Guidelines are vital to strengthening lending standards and asset quality in the future. The Guidelines bring together prudential standards and consumer protection obligations along with AML and ESG considerations. View Article
EPC: Public consultation on the SEPA Request-to-Pay Scheme Rulebook : The European Payments Council (EPC ) launches today a 90-day public consultation on the draft rulebook it developed for its new Request-to-Pay (SRTP) scheme. View Article
Capital Markets Union
IOSCO encourages issuers’ fair disclosure about COVID-19 related impacts : The Board of IOSCO issued a public statement highlighting the importance to investors and other stakeholders of having timely and high-quality information about the impact of COVID-19 on issuers´ operating performance, financial position and prospects. View Article
ICMA issues report on performance of the European investment grade corporate bond markets during the COVID-19 crisis : Report documents the performance of the investment grade secondary bond market in Europe during the last weeks of February through March and April 2020, as the COVID-19 pandemic caused levels of market volatility and dislocation surpassing those seen during the global financial crisis of 2007-2008. View Article
ISDA: Key Trends in the Size and Composition of OTC Derivatives Markets in the Second Half of 2019 : The latest data from the Bank for International Settlements over-the-counter (OTC) derivatives statistics shows that OTC derivatives notional outstanding at year-end 2019 increased by 2.6% compared with year-end 2018 and decreased by 12.8% compared with mid-year 2019. View Article
ESMA: Draft Guidelines on Outsourcing to Cloud Service Providers - consultation : Firms are increasingly outsourcing to cloud service providers. Although cloud outsourcing can offer a number of benefits, including reduced costs and enhanced operational efficiency and flexibility, it raises challenges in terms of data protection and information security. View Article
ESMA publishes final report on FRANDT commercial terms for clearing services : ESMA - the EU’s securities markets regulator - has published its final report with technical advice to the European Commission (EC) on the fair, reasonable, non-discriminatory and transparent (FRANDT) commercial terms for the provision of clearing services. View Article
Insurance Europe: Rushing an agreement on EC collective redress proposal will not get it right : Representatives of Europe’s business community – including Insurance Europe – have warned the Council of the EU and the European Parliament against rushing to conclude trilogue discussions on the European Commission’s collective redress proposal while many complex issues remain unresolved. View Article
Insurance Europe: Statement on EC roundtable on COVID-19 relief measures : Our key priority remains, as always, honouring our promises to customers, so that claims due now are paid and claims due in the future will be paid. This requires prudent management of our capital, particularly during times of economic turbulence. View Article
BIBA: FCA gives update on validity of Business Interruption claims test case : The Financial Conduct Authority (FCA) has issued an update on the progress made on its court action aimed at providing clarity and certainty around disputed business interruption (BI) insurance policies claims arising from the Coronavirus (Covid-19) pandemic. View Article
Commercial Risk Europe: European insurers and reinsurers stand up to pandemic test, say ratings agencies : The Covid-19 pandemic has tested European insurers’ capitalisation but the sector has weathered the biggest shock since Solvency II was introduced in January 2016, said Standard & Poor’s (S&P). Fitch, meanwhile, said Europe’s reinsurance sector has also proved resilient to its pandemic stress test, and results will only be negatively affected in the short term. View Article
Economic Policies Impacting EU Finance
Accountancy Europe: Commission considers new taxes in the Covid Recovery plan : Commission launches COVID recovery package, considers new taxes France and Germany call for CCTB and minimum taxation as part of COVID recovery Pascal Saint-Amans hints at bumpy road ahead for OECD digital tax agreement Upcoming Council Presidencies to hold tax high on the agenda View Article
Brexit
FT: Michel Barnier says EU remains ‘open’ to transition period extension : Talks between London and Brussels stall with sides far apart on fisheries and regulatory alignment View Article
House of Lords: Time running out to provide certainty for Northern Ireland, Ireland/Northern Ireland Protocol report finds : The House of Lords EU Select Committee has published its report on the Protocol on Ireland/Northern Ireland. View Article
The Times: We’ll compromise if you do too, Britain tells EU : Britain is expected to signal compromise on fisheries and “level playing field” trade rules if the European Union backs off from its “maximalist” demands on regulatory alignment and fishing access, according to senior Brussels sources. View Article
Brexit: EBF view on the use of equivalence regimes : The ongoing Brexit negotiations on the future relationship will have a major impact on customers, businesses and citizens on both sides of the Channel. Irrespective of the outcome, the impact will not mean business as usual as the current situation where the UK is still part of the Single Market. View Article
UK in a Changing Europe: Worrying services sector is so absent in UK-EU negotiations, new academic report finds : The services sector, which accounts for around 80% of the UK economy, has been largely missing from UK-EU trade negotiations; however, reduced access to the EU market will profoundly impact businesses across the country, a new report by academic think tank UK in a Changing Europe finds. View Article
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