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Welcome to our Gold Friends weekly e-mail.Highlights of the week: The Brexit end-game grinds slowly towards us and the political commentators are gloomier about the long-term effects on relations. But the technical preparations are accelerating as the end of the transition is close and the prospects for a significant deal for financial services are minimal. Last week capped a bad month for European bank shares – now within a whisker of the depths in the spring panic. SSM’s Enria has called for a `bad bank’ as banks brace for a rise in bad loans – and rein back lending. But good news from the capital markets – AFME reports a record year so far and capped by last week’s huge demand for the EU’s SURE bonds. However, the most staggering statistic of the week is the Geneva Association’s calculation that at current premium rates for Business Interruption insurance, it would take 150 years to pay for the Covid losses - so far. Graham Bishop
Articles from 23-29 October
General Financial Policy EP 2021 EU budget must focus on supporting a sustainable recovery from the pandemic : First annual budget of the next seven-year multiannual financial framework (MFF), More than €14 billion added to strengthen EU flagship programmes, Cuts by Council restored to the level of the Commission’s draft budget proposal View Article
Vox: Reforming the EU fiscal framework: Now is the time : This year’s annual report of the European Fiscal Board provides new evidence that the EU fiscal framework does not deliver the goods. This column argues that it should be reformed without delay. View Article
Bruegel: European Union recovery funds: strings attached, but not tied up in knots : Ensuring effective recovery spending is a high-stakes challenge for the EU, with the potential for derailment because of fuzzy objectives and overloaded procedures...should work with member countries to identify limited policies that will maximise the impact of EU investment... View Article
IPE: Pension funds and the EU’s inaugural SURE bonds : The European Commission on Tuesday drew record orders in excess of €233bn from more than 500 investors for the inaugural bonds issued under SURE, the EU’s programme for safeguarding jobs during the coronavirus crisis. IPE contacted European pension investors to find out about their involvement – or otherwise – in the landmark transaction. View Article
Bank of Italy Visco:conference on "Financial Stability and Regulation" Banca d'Italia and the Baffi Centre for Applied Research : The keynote lectures will address forward-looking issues on the implications of Fintech competition on payment systems, the determinants of the low price-to-book ratios observed in the banking sector, and the challenges to central banking and financial stability created by climate change. View Article
SUERF Villeroy de Galhau: Central banks’ response to the “tragedy on the horizon” : Faced with an unpredictable shock, the past eight months have driven the global economy into uncharted territory. However, one danger is certainly looming larger at the moment: our lasting addiction to public debt. View ArticleCity of London/Oliver Wyman: London Recharged: Our Vision For London In 2025 : This report, produced in partnership with The City of London Corporation and Arup, sets out detailed recommendations to aid the capital’s recovery from COVID-19 and enhance its long-term competitiveness by focusing on innovation, collaboration, inclusivity and sustainability. View Article
SRB: Speech by Elke König to European Parliament ECON Committee : First: our Multi-annual Programme, a three year work programme due to be published in the next fortnight; Second: Covid, its impact on the banks and potential challenges for banks and for us at the SRB; Third: Some broader issues in resolution of which we should not lose sight. View Article
EP briefing ahead of public hearing with Elke König, Chair of the Single Resolution Board : The central aim of the meeting is to discuss the SRB 2019 annual report. View Article
SSM Enria: Hearing at the European Parliament’s Economic and Monetary Affairs Committee : Today, seven months on from the first nationwide lockdowns in Europe, we are going through another difficult phase of this crisis, with both infections and related public interventions increasing. View Article
FT: Eurozone banks rein in lending due to pandemic worries finish : Lenders braced for rise in bad loans as Covid resurgence threatens fresh economic damage View Article
FT: ECB's Enria: the EU needs a regional ‘bad bank’ : The pandemic is a chance to clean-up and strengthen Europe’s crisis-weakened banks - Andrea Enria View Article
European Payments Council: The new Retail Payments Strategy for the EU : The Single Euro Payments Area initiative has been a key enabler for the integration of the retail payments market in the European Union : the development of Credit Transfer and Direct Debit were crucial steps in this regard. View Article
EURACTIV: Member states want an EU authority against money launderers : EU finance ministers are expected to call for an EU authority against money laundering and urge the bloc to harmonise rules and close the door to illicit money, according to draft conclusions seen by EURACTIV. View Article
Capital Markets Union AFME report tracks European capital markets performance in 2020 : European capital markets provided record amounts of funding to support businesses and economies in 2020, but lack of progress on the Capital Markets Union could hold back Europe’s economic recovery, according to a report published today (28th October) by the Association of Financial Markets in Europe in collaboration with 10 other European and international organisations. View Article
CEPS: Strengthening the EU policy framework for retail investors : Retail investors need coherent and reliable narratives around capital markets. This requires moving away from reductive debates about products and providers View Article
ESMA:ESMA consults on CCP supervisory reviews and evaluation processes : Consultation on guidelines addressing the consistency of supervisory reviews and evaluation processes of CCPs under Article 21 of EMIR. View Article
ESMA: has updated the list of third-country (TCTV) in the context of the opinions on post-trade transparency and position limits under : Following the publication of a Statement on the impact of Brexit on the application of MiFID II/MiFIR on 1 October 2020, ESMA proceeded with the assessment of UK venues against the criteria of the opinions related to the transparency and the position limits provisions. View Article
Insurance Europe: Fixing flaws in Solvency II vital to unlock long-term investment and boost EU economic growth and recovery : Insurance Europe has today published its response to a consultation by the European Commission on the review of Solvency II, the framework that governs the European insurance industry. View Article
CRE: SII review could reduce capital burden for UK insurers in 2021, says Fitch : The UK could reform “burdensome aspects” of Solvency II (SII) as early as next year, said Fitch in response to a government review of Europe’s capital adequacy regime. View Article
CRE: Geneva report says insurers would need 150 years of premium to cover Covid-19 BI losses : A new report by The Geneva Association concludes that there is “nowhere near” enough capacity in the P&C insurance industry to cover business interruption (BI) losses from a pandemic such as Covid-19, and found that it would take 150 years for the industry to build up enough BI premium to cover the expected global loss. View Article
Environmental, Social, Governance (ESG) IPE: UK standards body delivers second sustainable finance ‘specification’ : BSI, the UK national standards body, has published the second output of a sustainable finance standardisation programme sponsored by the government and financial services industry. View Article
French Banking Federation: CLIMATE: French banks step up transformation to meet Paris Agreement targets, in keeping with their commitments : This time last year, the French banks published a manifesto reiterating their commitments and shared determination to speed up their transition whilst remaining committed to their clients to contribute to the development of an environmentally-friendly, low-carbon and inclusive economy. View Article
IASB: IASB: Applying IFRS Standards in 2020—impact of covid-19 : International Accounting Standards Board member Mary Tokar and Technical Staff member Sid Kumar provide an overview of some financial reporting considerations for preparers, auditors, investors and regulators as they tackle the complexities associated with covid-19 induced disruptions. View Article
Fin Tech Regulation Vox: CBDC architectures, the financial system, and the central bank of the future : Major central banks are increasingly considering a digital currency available to general public. But what are the advantages of doing so in the light of generally well working private sector payment solutions? View Article
Vox: Central bank digital currencies: Drivers, approaches, and technologies : Central bank digital currencies are in the limelight. Yet the motives for issuance and, relatedly, the policy approaches and designs differ View Article
FT: Internal Google document reveals campaign against EU lawmakers : Internal Google document reveals campaign against EU lawmakers View Article
Broadening the International Role of the Euro VOX: Internationalising the euro in the age of COVID-19 : Seeking to internationalise the euro is now an official policy of EU institutions. But a constraint on wider use of the euro, by central bank reserve managers in particular, is the shortage of safe euro assets – a problem that is being made worse by the ECB’s asset purchase program. This column proposes a solution to this problem: issuance by the ECB of its own certificates of deposit. View Article
Brexit
EPC: The implications of a no-deal Brexit for the EU : As the end of the transition period nears, the EU must prepare for a fundamentally different and more conflictual relationship with the UK. View Article
Federal Trust: A Difficult Choice for Johnson: A Brexit deal or no deal : News that the Brexit talks were to be resumed sent the external value of the pound back up again. Political commentators, especially in the UK, began to predict the relatively rapid conclusion of an agreement on future trade relations between the UK and the EU. View Article
UK Finance: UK and Japan trade deal lays foundation : The text of the new Japan UK free trade agreement (or “comprehensive economic partnership”) is now available and lays the foundations for future assistance to financial services firms active in both markets. View Article
Bloomberg: EU Rolls Brexit Tanks Onto U.K. Hedge Fund Lawn : Britain’s fund-management industry remains vulnerable to shifts in the country’s regulatory relationship with the bloc. View Article
FT: EU explores tougher curbs on City hedge fund managers : European Commission consults on restricting overseas management of firms View Article
PCS: Chances of new synthetic STS and NPL rules applying to the United Kingdom recede : ECON committee pushed back to November 9th a key meeting to agree their version of the proposed amendments to the STS Regulation. This delay further reduces the already slim chances of the proposed changes beating the Brexit deadline for incorporation into the UK’s securitisation regime. View Article
ESMA: Brexit: Impact of the end of the transition period on 31 December 2020 on the trading obligation for shares (Article 23 of MiFIR) : In the context of the UK leaving the EU, ESMA is issuing this public statement to remind market participants of the application of the EU trading obligation for shares (STO) as of 1 January 2021, i.e. after the end of the transition period provided for in the WTA between the EU and the UK. View ArticleESMA: Endorsement of credit ratings elaborated in the United Kingdom after end of transition period : The European Securities and Markets Authority (ESMA) is issuing this public statement to set out the implications of Brexit for credit rating agencies (CRAs) based in the United Kingdom (UK). View Article
CRE: EU clients face Brexit disruption, warn UK regulators : European clients of UK financial services firms could still face disruption when the Brexit transition period expires on 31 December, the Financial Conduct Authority (FCA) and Bank of England warn, in a joint letter to insurers. View Article
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