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.
(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 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
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..
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.
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.
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
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.
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
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.
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.
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.
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?
FT: Internal Google document reveals campaign against EU lawmakers : Internal Google document reveals campaign against EU lawmakers
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.
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.
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.
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.
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