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Welcome to our Gold Friends weekly e-mail.
Highlights since Christmas: France has taken over the EU’s rotating Presidency with a plan for a more sovereign Europe with strategic autonomy – probably not music to the ears of Brexiteers! With Italy’s Draghi, President Macron also wants to reform the EU’s fiscal rules. The EBA closed the year with good news about Europe’s banks: asset quality has improved and NPLs are now done to 2.1% (but nearly a quarter of the €378 billion of publicly guaranteed loans are in question.) IOSCO produced its first statistical report on both hedge and open-ended funds – at $50 trillion, it covered 67% of funds globally. ICMA reported on 45 automated debt issuance platforms – up 10 in Q4 alone. The Commission launched - on New Year’s Day – its consultation on the Taxonomy treatment of gas and nuclear while AFME commented on the Green Bond Standard – to enhance credibility for both issuers and investors. A senior ECB staffer published a SUERF report on Bitcoin – questioning its efficiency as a means of payment while highlighting its role in illicit activities.
Reflecting the first year of Brexit, the FT used the analogy of a `slow puncture’ for the City’s role while City AM reported there was little appetite amongst EU firms for maintaining their UK presence and Bloomberg argued that Paris may be winning some players, but the City’s crown is being divided up amongst several centres. Graham Bishop
Articles from 17 Dec 2021 - 13 Jan 2022
 General Financial Policy Schuman Fondation: The Challenges of the French Presidency of the Council :In its presidency programme, France identifies three main objectives: a more sovereign Europe, a new European model for growth, a humane Europe. View Article Remarks by President Michel following his meeting with President Macron : I really want to praise the leadership of the French Presidency, and of President Macron in particular, for being the driving force, for quite some time now, behind the debate on the idea of European sovereignty or strategic autonomy as it is sometimes called... View Article
POLITICO: New Bundesbank boss warns high inflation could last longer than expected : ‘Monetary policy must be on guard,’ Joachim Nagel warns. View ArticleBruegel: A role for the Recovery and Resilience Facility in a new fiscal framework : Discussions on reforming European Union fiscal rules must consider a more permanent but targeted role for the Recovery and Resilience fund to meet climate ambitions. View Article
Bruegel: Policy coordination failures in the euro area: not just an outcome, but by design : Discussions on the fiscal framework should aim to correct its procyclical nature with a view to promoting more cooperative outcomes. View Article
ECB's Enria: Exchange of views with the European Affairs Committee and Finance State of play in the banking sector As we recently marked the start of a new year, I think this is an opportune moment to take stock of the current situation and consider the outlook for the European banking sector. Committee of the French Senate : View Article Banking Union Priorities for 2022 – the SRB’s view :In these uncertain times, our focus remains constant: building resolvability in all banks under our remit, as set out in our 2022 work programme and our multi-annual programme for 2021-23 and reflected in the Expectations for Banks. View Article EBA: Asset quality has further improved, but cyber risk remains a source of concern for EU banks : The NPL ratio declined to 2.1% and the stage 2 ratio contracted to 8.7%. Return on equity (RoE) was reported higher than pre-pandemic levels at 7.7%. View Article
EBA alerts on the detrimental impact of unwarranted de-risking and ineffective management of money laundering and terrorist financing risks : Providing access to at least basic financial products and services is a prerequisite for the participation in modern economic and social life and de-risking, when unwarranted, can cause the financial exclusion of legitimate customers. View Article
EBF feedback to the European Commission’s proposed AML Package : The European Banking Federation (EBF) is fully supportive of the Commission’s overarching objective to address the ineffectiveness of the current EU AML framework. Bearing in mind the necessary lead-time and efforts to get the AML Package adopted and implemented, this momentum is a unique opportunity to improve the framework. View Article
WSBI/ESBG:Daisy chain of internal MREL : The “daisy chain” deduction framework increases the necessity of legal certainty,predictability, and proportionality in the internal MREL (iMREL) regulation. Resolution groupswith entities in only one member state should be exempted from the “daisy chain” deductionframework. View Article
CEPS: Consumer Credit Directive review - Change needed : The existing CCD has introduced a number of benefits for consumers, however, it is now somewhat outdated due to various technological and market developments since its adoption. View Article
Capital Markets Union ALFI responds to ESMA’s call for evidence on retail investor protection aspects : ALFI responded to ESMA’s call for evidence on retail investor protection aspects. View Article
ALFI responds to ESA call for evidence on PRIIPs : Their call for evidence was aimed at gathering feedback from industry players on those issues, which may result in a broader review of the PRIIPs Regulation. View Article
Insurance Europe: Major changes to EU product liability rules could undermine insurers’ ability to cover certain risks : New rules should only be considered in the case of a clear protection gap, which currently does not exist. View Article
EIOPA publishes report on the application of the Insurance Distribution Directive : EIOPA has identified some difficulties in applying the demands-and-needs test, and continues to raise concerns related to the sale of unit-linked life insurance products and mortgage and consumer credit protection policies. View Article
IOSCO Investment Funds Statistics Report : It covers hedge funds and open-ended and closed-ended funds, is the first of its kind by IOSCO and is underpinned by a broad data survey to which 50 IOSCO members have contributed; representing almost $ US50 trillion, or 67% of total asset under management of the global investment funds universe. View Article
FSB publishes papers on funding and interconnectedness practices to aid resolution planning for insurers : The practices paper on Resolution Funding for Insurers discusses the different sources of resolution funding, including privately funded policyholder protection schemes and standalone resolution funds..The practices paper on Internal Interconnectedness in Resolution Planning for Insurers... View Article
AFME: Industry Approach to CSDR Settlement Discipline Regime : We support the political agreement by the EU legislators on changes to Regulation (EU) No 909/2014 (“CSDR”) that allow for a delay to the implementation of mandatory buy-ins. View Article
ICMA Quarterly Report First Quarter 2022 : The Quarterly Assessment is on EU/UK capital market fragmentation in a global context View Article
Automation of debt issuance: ICMA references over 45 solutions : Digitisation of debt issuance continued apace in 2021. ICMA’s latest review of its primary markets technology directory, conducted in Q4 of last year, saw the addition of more than 10 platforms or applications for the issuance of debt instruments. View Article
Better Finance: Shareholder Rights Directive II fails to deliver for European cross-border shareholders : Some of the main obstacles to shareholder engagement derive from the complex chains of intermediaries and the use of omnibus accounts – with intermediaries or nominees who hold shares for individual investors ... View Article
Environmental, Social, Governance (ESG) EU Taxonomy: Commission begins expert consultations on Complementary Delegated Act covering certain nuclear and gas activities : To ensure transparency, the Commission will amend the Taxonomy Disclosure Delegated Act so that investors can identify if activities include gas or nuclear activities, and to what extent, so they can make an informed choice. View Article
PE comments on IFRS consultation on developing disclosure requirements and proposed amendments to IFRS 13 and IAS 19 : PensionsEurope believes that the note disclosures with regards to pension plans are already very comprehensive in current annual financial statements. Most of the information disclosed in the notes covers already the proposed disclosure objectives. View Article
EFRAG seeks comments on its Draft Endorsement Advice on Initial Application of IFRS 17 and IFRS 9 – Comparative Information (Amendment to IF : EFRAG is consulting on both its assessment of Initial Application of IFRS 17 and IFRS 9 – Comparative Information (Amendment to IFRS 17) (‘the Amendment’) against the technical criteria in the EU and on its assessment of whether the Amendments are conducive to the European public good. Comments are requested by 19 January 2022. View Article
GRI looks forward to working with new ISSB chair : Financial and sustainability standard setters need to work together...The announcement by the IFRS Foundation that Emmanuel Faber is to be the first chair of their newly established International Sustainability Standards Board (ISSB) has been welcomed by GRI. View Article
AFME publishes recommendations for a successful EU Green Bond Standard : AFME supports the proposals to provide investors with transparency, comparability and confidence in the credibility of the bond’s environmental credentials. ... it is important that the new EU GBS label is seen as a credible standard and also attractive to issuers and investors. View Article
Protecting Customers EBF response to ESMAs Call for Evidence on certain aspects relating to retail investor protection : In the context of the CMU action plan, it is essential to ease retail investors’ access to financial markets while ensuring a high level of investor protection. View Article
BETTER FINANCE response to ESMA's Call for Evidence on Retail Investor Protection Topics : BETTER FINANCE welcomes this call for evidence from ESMA on retail investor protection topics but regrets that it is confined to securities markets (MiFID II) topics only as these financial instruments make up for only a third of the financial balance sheets of EU27 households View Article
Fin Tech Regulation SUERF: The encrypted threat: Bitcoin’s social cost and regulatory responses : While Bitcoin raised the attention for the potential of distributed ledger technology (DLT), it fails to deliver on its promises but comes at high costs. It is unfitted and inefficient as a means of payment but used extensively for illicit activities. It is unsuitable as an investment asset and neither empowers, nor relieves the sovereign individual from the state. View Article
CER: No pain, no gain? The Digital Markets Act : The Digital Markets Act (DMA) is a single set of rules for the largest digital platforms, intended to help improve competition in the EU. The rules will force big tech firms to change the way they operate, to promote more open markets. View Article
Economic Policies Impacting EU Finance OECD: Global Anti-Base Erosion Model Rules (Pillar Two) : The Pillar Two Model Rules are part of the Two-Pillar Solution to address the tax challenges of the digitalisationof the economy that was agreed by 137 member jurisdictions of the OECD/G20 Inclusive Framework onBEPS and endorsed by the G20 Finance Ministers and Leaders in October. View Article
EURACTIV:Macron, Draghi call for reform of EU fiscal rules : French President Emmanuel Macron and Italian Prime Minister Mario Draghi called on Brussels to reform its fiscal rules to allow greater investment spending while acknowledging the necessity to reduce debt. View Article
Brexit and the City FT: The EU vs the City of London: a slow puncture : Brexit hurt the financial centre but lack of political will is holding back Europe’s efforts to reduce its dependence on the UK View Article
City AM: Brexit passporting: Little appetite among EU finance firms to stay in London as FCA applications disappoint : It appears that many European financial services firms are not interested in continuing to be authorised in the City, as only half of EU firms that were given a temporary license to operate in the UK – immediately after Brexit – have applied for full authorisation, a Freedom of Information request has revealed. View Article
LSE blog: Inside Britain’s financial revolution : Since the 1970s, the world economy has been characterised by a process of financialisation. Britain has played a key role in this trend by helping to create a financialised global order and establishing the City of London as a central hub. But why did the UK choose to propel this process? View Article
FESE: Exchanges raise concerns over ESMA’s Annual Statistical Report on 2020 data : In 2020, the UK was still part of the EU single market, accounting for 70% of turnover in EEA equity. By excluding the majority of trading in EEA instruments, the report portrays a misinterpreted picture of markets, says the Federation of European Securities Exchanges (FESE). View Article
EY Financial Services Brexit Tracker: Brexit activity muted over 2021, with total relocations revised down and few major operational announc : EU regulators show ongoing pragmatism in managing stability and other risks as they build greater financial strength, but maintain pressure on firms to complete headcount and operational moves that have been delayed by the pandemic View Article
Bloomberg: Morgan Stanley Boosts Paris as Trading Hub With Research Center : Bank could hire, relocate 50 staff, person familiar says; Paris becoming EU trading hub as banks, funds seek talent View Article
Bloomberg: JPMorgan's Paris Traders Are Only Part of the Threat to London : A year after Brexit, the EU’s finance hubs are taking shape. Bloomberg reporters look at the merits of Paris, Frankfurt, Dublin, Amsterdam and Milan. View Article
BrexitUKandEU's Faull: This England? Blessed plot? Conspiracy of cartographers? : The governance of the United Kingdom is complex (and even more so if one adds the Isle of Man and Channel Islands). Scotland has a devolved Parliament and government; so does Wales, albeit with fewer powers. View Article CER:One year on, it’s clear that Brexit has failed on its advocates’ own terms : Now that the Brexit deal has been in force for a year, it’s worth looking at initial claims from the politicians who forced through an exit from theEU’s single market.David Davissaidthetrade dealwould deliver “the exact same benefits” as membership of the EU. View Article Briefingsfor Britain: Brexiteers beware – David Frost’s departure is disastrous : Lord Frost was not only an effective negotiator but also one of the few UK ministers to fully grasp the intellectual case for Brexit. His resignation looks to have resulted, at least in part, from the UK government backsliding on the Northern Ireland protocol and failing to take bold moves View Article POLITICO: EU’s Šefcovic warns of Brexit deal ‘collapse’ if UK exits Northern Ireland Protocol : Continuous British threats to exit post-Brexit trade rules for Northern Ireland are "enormously disruptive," European Commission Vice President Maroš Šefcovic said, warning the entire deal with the U.K. would collapse if such rules were canceled. View Article FT: Brexit deadlock: Will the UK and EU agree a deal on Northern Ireland? : All sides face tough decisions as talks between Liz Truss and Maros Sefcovic get under way this week View Article
EPC's Duff: Dealing with the Neighbours: The case for an affiliate membership of the European Union and a new Security Council : Brexit is proving to be even more troublesome than expected, giving rise to a gradual softening of British public opinion towards the EU. Any future UK government is likely to want to renegotiate parts of the separation deal that Boris Johnson struck with the EU. View Article Follow us on
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