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Highlights of my week: The consequences of the Ukraine war remain the dominant topic. The Versailles Declaration by EUCO made strong statements on defence and security but had little to say on financial matters – beyond a ritual call to complete banking union and CMU. However, the think tank industry is swinging into action, underlining that the scale of sanctions on Russia has no parallel since 1914. The liquidation of Sberbank went smoothly for the SRB but they re-stated this was just one bank and not a systemic problem where EU deposit insurance – EDIS – could be vital. By coincidence, the Conference on the Future of Europe (CoFE) is moving towards its scheduled conclusion in May. Could it suddenly become the vehicle for more profound change??
AFME held a conference on the wholesale markets post-Brexit but the changes under discussion are a long way from wholesale – more like the tinkering that one expects from the EU’s regular reviews. The City of London Corporation produced another of its economic fact books on the City’s massive contribution to the UK economy - now at risk to empower tweaks like changes to pre- and post-trade transparency in the bond markets.
Graham Bishop
(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 11-17 March 2022
General Financial Policy
Informal meeting of the Heads of State or Government: Versailles Declaration : The European Council acknowledged the European aspirations and the European choiceof Ukraine, as stated in the Association Agreement... we addressed today three key dimensions:a) Bolstering our defence capabilities;b) Reducing our energy dependencies; andc) Building a more robust economic base
EURACTIV: Macron cautious about joint EU debt plan : French President Emmanuel Macron said the war in Ukraine will require joint EU investments which may lead to a new bout of joint debt, but added he would prefer to talk about the goals first rather than what is needed to get there.
Economic and Financial Affairs Council : Sanctions on Russia; Carbon border adjustment mechanism; Corporate taxation: Fair and effective taxation for multinational groups; Economic governance review & fiscal guidance; Council priorities for the EU budget 2023; VAT e-commerce package
Bruegel: The economic policy consequences of the war : The Ukraine war will have significant economic policy consequences for the European Union and its members, arising from the adverse supply shock triggered by the rise in oil and gas prices, energy independence measures, the inflow of refugees and boosted defence spending.
ESMA coordinates regulatory response to the war in Ukraine and its impact on EU financial markets : ESMA, in coordination with National Competent Authorities (NCAs), is closely monitoring the impact of the Ukraine crisis on financial markets and is prepared to use its relevant tools to ensure the orderly functioning of markets, financial stability and investor protection.
LSE: Russia’s invasion of Ukraine signals new beginnings and new conflicts for the European Union : The EU’s response to Russia’s invasion of Ukraine was unprecedented both in its speed and its scope. Floris de Witte writes that by acting decisively, EU leaders have set a new course for the integration process.
Vox: Sanctions, war, and systemic risk in 1914 and 2022 : The Western countries have sanctioned Russia in a way not applied to any globally integrated major power since 1914. There are lessons to be learned from the 1914 systemic crisis and that high inflation and government debt will make it difficult to contain a crisis today if one emerges.
European Parliament: Conference on the Future of Europe: MEPs start preparing Parliament’s positions : MEPs to discuss a joint statement with national parliamentarians expected to be endorsed in the coming weeks, and assess the status of the Conference.
Banking Union
SRB Chair, Elke König at the ECON Committee March 2022 : The war in Ukraine and the unfolding tragedy there, is now not only the backdrop to our work at the SRB, but in some respects, it is centre-stage, not least because of the recent Sberbank case.
SSM: Invasion of Ukraine: euro area banks so far resilient to a second exogenous shock : The invasion of Ukraine reversed a steady improvement in investors’ stance on EU banks
Capital Markets Union
Capital Markets Union: Commission proposes simpler rules to make settlement in EU financial markets safer and more efficient : Central Securities Depositories operate the infrastructure that enables the settlement of securities (such as shares or bonds) in financial markets. Settlement refers to the delivery of securities to a buyer in exchange for the delivery of cash to a seller.
ESMA published its assessment and recommendations on the EC’s MiFIR review proposal : The letter focuses on the establishment of the consolidated tape provider (CTP) but also includes elements such as equity and non-equity transparency, reporting and payment for order flow.
FSB, CPMI and IOSCO analysis highlights need to continue work on CCP financial resources : A first part of the analysis assessed the current use, composition and amount of financialresources and tools available to cover CCP losses in a sample of CCPs that are consideredsystemically important in more than one jurisdiction.
AFME welcomes changes to CSDR, but cautions that Mandatory Buy-Ins could undermine European capital markets’ competitiveness : AFME welcomes today’s decision from the Commission to avoid immediately introducing mandatory buy-ins.
Environmental, Social, Governance (ESG)
Banks must get better at disclosing climate risks, ECB assessment shows : Banks do not fully meet ECB expectations on disclosure of climate and environmental risks; Significant gaps remain despite progress since first assessment in 2020; Supervisors informed banks of shortcomings and publish examples of good practice
EBF Response: ESMA Call for Evidence on Market Characteristics for ESG Rating Providers in the EU : While
EURACTIV: EU countries agree world’s first carbon tariff, but leave out controversial issue : The EU’s 27 economy ministers reached an agreement to introduce a carbon levy on imports of highly-polluting goods like steel, cement and fertilisers, but kicked the can down the road on controversial aspects like the use of revenues coming from the scheme.
Fin Tech Regulation
Finextra: European Parliament votes down bitcoin mining ban : European Parliament members have voted against a proposed rule that would have effectively banned bitcoin in the EU because of the energy consumption involved in mining the cryptocurrency.
European Parliament: Cryptocurrencies in the EU: new rules to boost benefits and curb threats : Uniform legal framework for crypto-assets in the EU; Consumer protection and safeguards against market manipulation and financial crime; Include crypto-assets mining in EU taxonomy for sustainable activities by 2025 to reduce carbon footprint
Brexit and the City
City statistics briefing : The City Statistics briefing looks at the City of London's role as a global business hub for financial and related professional services. It provides facts and figures about employment and firms located within the City, as well as highlighting some recent changes to the City as a workplac
AFME: Future of wholesale financial markets conference - Summary : Discussions centred around a speech from John Glen, Economic Secretary to the UK Treasury and City Minister, announcing reforms to capital markets regulation and listing rules changes in the UK.
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