Graham Bishop.com

This week in "Brussels"

27 October 2022

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Welcome to our Gold Friends weekly e-mail.

Highlights of my week: Italy has a new leader; China’s leader was renewed but faces serious challenges; Germany has to face up to its Russia/China delusions while the UK has a new leader but has yet to even recognise the Brexit illusions – review or `sunset’ 2417 pieces of EU legislation in just 14 months! Council and Parliament agreed a common position on ELTIFs, Insurance Europe welcomed the repeal of the DMD, but some parts need to be retained. ISDA continued its positive approach to Euro clearing, FSB analysed liquidity in key government bond markets while ICMA launched a semi-annual report of detailed bond trading data. The Commission launched its legislation to force instant payments in euro but the payments industry expressed concern on the timetable. The BIS demonstrated that `mBridge’ can work to use CBDC for cross-border financial connections. The Brexit illusions unravel with yet another Prime Minister – as POLITICO put it pithily “The Brexit cult that blew up Britain”

Graham Bishop

Articles from 21-27 October

Policy impacting Finance

LSE: The challenge facing Italy’s new coalition : On 22 October, Giorgia Meloni was officially sworn in as Italy’s first female prime minister. However, the new Italian government might soon come under pressure to address soaring energy prices and support struggling families and businesses. Corrado Macchiarelli and Mara Monti write that Meloni’s right-wing coalition will face a delicate balancing act between maintaining the support of its electorate and upholding commitments undertaken with Brussels. View Article

Carnegie's Dempsey: Germany’s Continued Illusions About China and Russia : Berlin’s pursuit of economic and political ties with Beijing and Moscow has created dangerous dependencies. A change in strategy would benefit both Germany and the EU. View Article

Project Syndicates's Jim O'Neill: China’s Coming Clash with Economic Reality : As expected, Chinese President Xi Jinping has been given an unprecedented third five-year term. More surprising was the absence of any sign that Xi intends to revise the policies that have done so much economic damage in recent years. View Article

SUERF's Carboni/Ellison: Are Liability Driven Investors (LDIs) a liability for policymakers? : Recent dysfunction in UK gilt markets has put the spotlight on the operations of Liability Driven Investors (LDIs). In this SUERF Policy Brief, we explain what LDIs are and ask whether their presence in markets is an advantage or liability for policymakers. View Article

FSB analyses liquidity in core government bond markets : This report, which forms part of the FSB’s work programme to enhance the resilience of non-bank financial intermediation (NBFI), analyses the liquidity, structure, and resilience of core government bond markets. View Articl

ESBG and EACB congratulate EU Commission’s Expert Group on its Open Finance report : The report provides an overview on the modalities for data sharing and reuse based on a specific number of illustrative use cases and describes the key components of an open finance ecosystem in the EU. View Article

Banking Union

The EBA sets examination programme priorities for resolution authorities for 2023 : The European Banking Authority (EBA) published today the European Resolution Examination Programme (EREP) for 2023, which identifies key topics for resolution attention across the European Union. The EREP is aimed at shaping resolution authorities` work priorities and respective practices. View Article

The EBA sets examination programme priorities for prudential supervisors for 2023 : The ESEP is part of an annual cycle and contributes to enhancing supervisory convergence in the EU by providing common directions and focus areas for supervisors, which helps them shape their prudential supervisory priorities and respective practices. View Article

Capital Markets Union

Council: European long-term investment funds: Provisional agreement reached :One of the key priorities for the Council is now reflected in the text: a redesign of the ELTIF framework which will allow us to channel more financing to SMEs and long-term projects which will help achieve the digital transition. View Article

MEPs struck a deal to revive European long-term investment funds : Parliament’s negotiators agreed with the Council on new rules to facilitate the flow of funds towards the real economy, including green and digital priority areas. View Article

EIOPA: Introductory statement of Petra Hielkema at hearing of the ECON Committee : Ms Hielkema also highlighted some of EIOPA’s key achievements from the past year including in the areas of sustainability, digitalisation and consumer protection, as well as touching on challenges and upcoming priorities. View Article

Insurance Europe: Insurers welcome repeal of DMD, but warn on unintended consequences of remaining provisions : Insurance Europe strongly welcomes the repeal of the DMD but recommends transferring its remaining provisions to more recent sector-specific EU legislation, such as the Insurance Distribution Directive. View Article

ISDAs O'Malia: Working for a Positive Outcome on Euro Clearing : The European Commission (EC) is determined to increase the allure of clearing in the EU as it looks to reduce what it sees as an over-reliance on systemically important third-country central counterparties (CCPs). View Article

ICMA publishes the first semi-annual report that provides detailed data on EU and UK bond market trading activity : The report captures more than 80% of all secondary bond market transactions (both corporate bonds and sovereign bonds) reported in the EU and UK over the period January through June 2022. It is therefore relatively representative of the aggregated bond market data as reported under the MiFID II/MiFIR obligation. View Article

ICMA writes to ECB raising concerns about Eurozone repo and money market conditions : The letter points to a number of observations related to pricing dislocations, largely as a result of an environment of excess reserves and collateral scarcity, particularly around quarter-end reporting dates when the capacity for bank intermediation is reduced. View Article

BETTER FINANCE’s answers to DG FISMA’s Discussion Note on Value for Money : BETTER FINANCE firmly suggests providing clear definitions for key concepts, as is the present case for value for money. On it hinges the qualification of “evidence”, i.e. whether products deliver or not value for money to the customer. View Article

BETTER FINANCE Applauds and Supports Proposed Ban on Sales Commissions Paid to Retail Distributors of Investment Products : BETTER FINANCE considers the recent proposal to ban “inducements” (commissions) in “retail” investment services to be a very significant milestone in investor protection and firmly urges EU Member States to also support it. View Article

BETTER FINANCE Position Paper on the EU Retail Investment Strategy : The European Federation of investors and Financial Services Users fully supports the clear stated objectives of the European Union’s very welcome “Retail Investor Strategy”. View Article

Environmental, Social, Governance (ESG)

EBA publishes Report on the integration of ESG risks in the supervision of investment firms : The Report provides an initial assessment of environmental, social and governance (ESG) factors and risks for the purposes of the prudential supervision of investment firms under the Investment Firms Directive (IFD). View Article

IASB adds narrow-scope project to work plan on possible amendments to financial instruments Accounting Standard : The International Accounting Standards Board (IASB) has expanded the scope of its maintenance project on the work plan for proposed narrow-scope amendments to IFRS 9 Financial Instruments. View Article

AccountancyEurope: Sustainable tax systems – environment : This paper highlights key points from tax leaders’ contributions to our Sustainable tax systems project on the environment. View Article

GRI's Coronacion: An evolving sustainability role for investor relations : Amid growing demands for companies to provide robust and verifiable information on their sustainability performance, investor relations (IR) professionals fulfil a crucial role in delivering feedback to management and taking action to address communication gaps. View Article

IPE: Hundreds of climate targets submitted ahead of COP27, says Mark Carney : “We’ve already received over 250 science-based interim targets and there’s an additional 90 targets under review and on track to be confirmed by the start of Sharm El Sheikh,” referring to the climate summit which will be held in Egypt next month. View Article

GFIA welcomes draft changes to OECD-G20 corporate governance principles, but calls for clarifications : There are specific provisions within the draft revisions that lack necessary definition or that seem to favor a much more prescriptive approach. View Article

2021 ECA sustainability report : Sustainability reporting is the practice of measuring, disclosing and being accountable to internal and external stakeholders for organisational performance in pursuit of sustainable development. View Article

Fin Tech Regulation

European Commission: Legislative proposal on instant payments : The Commission adopted today a legislative proposal to make instant payments in euro, available to all citizens and businesses holding a bank account in the EU and in EEA countries. View Article

Remarks by Commissioner McGuinness on the Commission's proposal for a regulation on instant payments : "...this is a very simple idea: with a click, money should change hands quickly...." View Article

Finextra: Industry association pushes back on EC instant payments timeline : Industry association Payments Europe has raised concerns about the EC's plan for the mandatory provision of instant credit transfers in euros, arguing that the tight timeframe could "endanger the safety and security" of transactions. View Article

Payments: Commission proposes to accelerate the rollout of instant payments in euro : View Article

FCA launches discussion on competition impacts of Big Tech on financial services industry : The FCA is seeking views on the potential competition benefits and harms from Big Tech firms’ entry into a range of retail financial services sectors. View Article

EBF: Open Finance must be approached as part of the European data economy to drive innovation and new consumer experiences : Trust, a level playing field, incentives for all actors, lessons learned from PSD2 and cross-sectoral data-sharing must all be considered for Open Finance, so as to create real opportunities for consumers and businesses. View Article

BIS: Project mBridge: Connecting economies through CBDC : The payment system underpinning cross-border financial flows has not kept pace with rapid growth in global economic integration. View Article

Economic Policies Impacting EU Finance

IMF blog: Latest Global Growth Forecasts Show Challenges Facing Economies : The global deceleration will be broad-based, with many economies poised to contract, and the outlook remains uncertain View Article

Brexit

FT: UK’s Rishi Sunak eases off on taking Brexit axe to EU laws : Plan for ‘delivery unit’ shelved in wake of warning EU legislation review would tie up hundreds of officials View Article

UKandEU's Portes: Trade, Migration and Brexit : Jonathan Portes assesses the extent to which predictions about trade and migration before the Brexit vote have materialised, highlighting that trade has been reduced by additional barriers but the extent to which liberalisation would increase migration flows in the short term was underestimated. View Article

POLITICO: The Brexit cult that blew up Britain : For a small band of libertarians, Liz Truss’ resignation is the final act in an 11-year project to remake Britain. View Article

POLITICO's Fitzroy: Britain’s Tory Party may be on the road to ruin : Broad political consensus is something the Conservatives appear to have lost. Recent trends for other center-right parties across Europe suggest they aren’t alone. View Article

NIESR's Kellner: The Value of Opinion Polls and Economic Forecasts : There is a danger that political polls, like economic forecasts, are taken as fact. In this blog, Peter Kellner, former president of YouGov explores their limitations and goes on to explain why these are precisely what makes them so valuable. View Article

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