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For 2023, we are offering a new service that gives you all the articles in my weekly e-mail - with live links to the underlying articles - for just €5 per month. It will include the Grid that you were receiving last year. We will send this new service to you - on a complementary basis during January - and then cease the current "grid" service.
Happy New Year to all our readers
My highlights of the Christmas break: Sweden has taken over the rotating EU Presidency until June and its priorities will include green and energy transitions. Croatia became the 20th member of the euro area. The FSB highlighted the increasing importance of the non-bank financial intermediaries (NBFI). The Commission reviewed its high-AML risk list of countries and included the quintessentially British Gibraltar. The Czech Presidency pushed agreement on some aspects of MiFIR/MiFID over the line, but AFME sounded a note of caution on bond transparency. Council also agreed its position on the insurance equivalent of BRRD. Parliament also reached a deal on a more ambitious Emissions Trading System (ETS) and ISSB agreed the key definition of “sustainability” for the new reporting framework. BCBS set standards for banks’ crypto exposures and the ECB came clean and said unbacked cryptoassets should be regulated as gambling. The BIS Triennial survey showed London retained its FX trading role but slipped in other areas. The Brexit hit to the UK economy is ever clearer but the public is not interested: EU/UK relations had dropped out of its `top 10’ issues by the end of last year.
Graham Bishop
Articles from 16 December 2022 - 5 January 2023
Policy impacting Finance
Swedish Presidency of the Council of the European Union - Priorities : Security, competitiveness, green and energy transitions, democratic values and the rule of law. These are the priorities of the Swedish Presidency of the Council of the European Union in the first half of 2023. View Article
Commission: Euro and Schengen: Croatia joins the Euro and Schengen areas : On 1 January 2023 Croatia will adopt the euro as its currency and will fully join the Schengen area. This marks an important milestone in the history of Croatia, of the euro and Schengen areas and of the EU as a whole. View Article
ECB: Croatia introduces the euro : Euro banknotes and coins start circulating in Croatia; Hrvatska narodna banka joins Eurosystem; Croatia becomes 20th euro area member; Hrvatska narodna banka now also full member of Single Supervisory Mechanism following period of close cooperation View Article
FSB: Global Monitoring Report on Non-Bank Financial Intermediation 2022 : The NBFI sector exhibited strong growth in 2021, in large part because of higher valuations and inflows into investment funds, which benefited from the economic recovery. View Article
FSB reports on global trends and risks in non-bank financial intermediation : It describes broad trends in financial intermediation across 29 jurisdictions that account for approximately 80% of global GDP, before narrowing its focus to the subset of NBFI activities that may be more likely to give rise to vulnerabilities. View Article
FT's Noonan: Global regulators to step up scrutiny of risks outside banking system : Watchdogs home in on clearing houses, hedge funds and pension schemes View Article
CEPR's New EU fiscal rules and governance challenges : This column argues that while the Commission is right to look at NextGenerationEU as a positive model for economic cooperation, a new system of fiscal rules that goes in this direction requires us to think boldly about further steps in the direction of a political and fiscal union. View Article
Bruegel's Papadia/Aroyo:Don’t look only to Brussels to increase the supply of safe assets in the European Union : A sufficient supply of safe assets denominated in euros is critical if the European Union is to achieve a full banking and capital markets union. View Article
Federal Trust`s Stevens and Donnelly -video: Has Ukraine Made Europe More United? : In this video, the Federal Trust’s Chairman John Stevens and and its Director Brendan Donnelly discuss the impact of the war in Ukraine on the European Union. View Article
Banking Union
ECB's Enria and de Guindos: Are banks ready to weather rising interest rates? : The ECB has gauged bank resilience to interest rate shocks under different macroeconomic scenarios. ECB Vice-President Luis de Guindos and Chair of the ECB’s Supervisory Board Andrea Enria walk us through the findings. View Article
EBA publishes final technical standards on the identification of a group of connected clients : The European Banking Authority (EBA) published today its final draft Regulatory Technical Standards (RTS) on the identification of a group of connected clients (GCC) under the Capital Requirements Regulation (CRR). View Article
Anti-money laundering: the Commission updates its list of high-risk third-country jurisdictions to strengthen the international fight against AML : Third-country jurisdictions were added to the list: Democratic Republic of the Congo, Gibraltar, Mozambique, Tanzania and the United Arab Emirates, while other jurisdictions were delisted: Nicaragua, Pakistan and Zimbabwe. View Article
Capital Markets Union
Capital Markets Union: Council agrees negotiating mandate on proposal to strengthen market transparency : EU member states’ representatives today agreed a mandate for negotiations with the European Parliament on the proposed regulation reviewing the Markets in Financial Instruments Regulation (‘MIFIR’) and the second Markets in Financial Instruments Directive ('MiFID II'). View Article
AFME welcomes Council agreement on some aspects of MiFIR, but further progress needed : “AFME is concerned with the rigid approach the Council has adopted to bond market transparency. These policy changes are not justified by any data analysis and, as a result, there is a significant risk that liquidity provision in illiquid or large sized bond trades could be hampered...." View Article
EFAMA commends the efforts of the Czech Presidency and Member States in reaching an agreement on the review of MiFIR/MiFID : EFAMA members breathe a collective sigh of relief as this agreement moves us closer to a firm roadmap to deliver a real-time consolidated tape for equities, and builds the foundations for real-time pre-trade equity data. View Article
Financial markets: member states agree position to revise EU rules on central securities depositories : The planned review will make EU securities settlement more efficient by simplifying requirements and clarifying authorisation processes among other things. View ArticleCouncil agrees position on establishing a framework for the recovery and resolution of insurance and reinsurance undertakings (IRRD) : Member states' representatives agreed a negotiating mandate (general approach) on the Insurance Recovery and Resolution Directive (IRRD). This proposal will reinforce the Solvency II Directive, in the aim to make the insurance and reinsurance sector more resilient and enhance the protection of policyholders, taxpayers, the economy and financial stability within the EU. View Article
InsuranceEurope: Insurers share their views on the integration of sustainability risks in Solvency II : Sustainability is a key element of the Solvency II review and insurers are supportive of the changes that can help clarify how sustainability risks, including climate-change risks, are appropriately integrated into the Solvency II framework... View ArticleEIOPA publishes supervisory statement on inflation : The statement supports consistent Solvency II calculations by raising awareness of the main impacts of higher inflation that (re)insurance undertakings should consider. View Article
PensionsEurope report 2022 - Trends and developments in funded pensions : The analysis reveals that until the end of 2021, the assets of euro area pension funds continued growing more than their liabilities, increasing their aggregate funding ratio. A global increase in inflation kicked off in early 2021 and it has stayed very high until today. View Article
Environmental, Social, Governance (ESG)
European Parliament: Climate change: Deal on a more ambitious Emissions Trading System (ETS) : Emissions in the ETS sectors must be cut by 62% by 2030; Free allowances to industries will be phased out from 2026 and disappear by 2034; An ETS II for fuel emissions from the building and road transport sectors as of 2027 View Article
Commission: Sustainable finance: guidance on reporting under the Taxonomy : About 4,000 large companies will start reporting on their environmental performance under the EU Taxonomy from 1 January 2023. Are you one of them and want to know better what and how to report? View Article
IPE: ISSB releases draft definition of ‘sustainability’ for new reporting framework : In the statement, the board said it had agreed to define sustainability as “the ability for a company to sustainably maintain resources and relationships with and manage its dependencies and impacts within its whole business ecosystem over the short, medium, and long term”. View Article
IASB publishes its review of classification and measurement requirements relating to financial instruments : Feedback from stakeholders and research undertaken as part of the PIR show that the requirements set out in IFRS 9 are working as intended and provide useful information to the users of financial statements. View Article
BETTER FINANCE position on the classification of investment funds regarding sustainability : EU Law rightly requires information provided to individual investors to be clear, i.e., “presented in a way that is likely to be understood by, the average member of the group to whom it is directed, or by whom it is likely to be received”, and as such, retail investors expect definitions and classifications of funds to be understandable. View Article
Delors Centre's Mack: The EU must not procrastinate on urgent audit market reforms : After the Wirecard accounting scandal, the EU Commission promised to reform the rules for auditors. Now it must finally present them: The problems are clear and there are plenty of proposed solutions. View Article
Protecting Customers
InsuranceEurope: An EU-wide ban on commission would unnecessarily limit consumers’ access to financial advice : View Article
Fin Tech Regulation
BCBS: Prudential treatment of cryptoasset exposures : The prudential treatment of banks' exposures to cryptoassets, including tokenised traditional assets, stablecoins and unbacked cryptoassets. The standard is a new chapter of the consolidated Basel Framework (SCO60: Cryptoasset exposures) that the Committee has agreed to implement by 1 January 2025. View Article
Bloomberg: Basel Oversight Body Backs Standards for Banks’ Crypto Exposure : Endorsement billed as step toward mitigating bank-sector risks; Crypto volatility writ large in 2022 by bankruptcies like FTX View Article
FT: ECB's Panetta: Caveat emptor does not apply to crypto : Trading in unbacked digital assets should be treated by regulators like gambling View Article
finextra: Digital euro to get thumbs up or thumbs down in 2023 : The European Central Bank says it will finalise the the overall design of a digital euro in the second half of next year as it publishes its second progress report on the project. View Article
GFIA: New FSB cyber incident reporting initiatives should encourage best practices and not create new requirements : Any new initiatives should aim to encourage best practices and refrain from establishing new requirements, such as additional information channels or multiple layers of reporting. View Artic
Brexit and the City
London as a financial centre since Brexit: evidence from the 2022 BIS Triennial Survey : Historically, London has enjoyed an outsized role in euro-denominated financial transactions. We examine the latest evidence on whether Brexit has affected its central role in trading of interest rate derivatives, foreign exchange, international banking and bond underwriting. View Article
Brexit
CER's Springford: The cost of Brexit to June 2022 : My latest update estimates Brexit reduced Britain's GDP by 5.5 per cent by the second quarter of 2022. My model avoids the cherry-picking of data, and performs better than its critics’ methods...Brexit had reduced GDP by 5.5%, investment by 11%, and goods trade by 7% in the second quarter of 2022. View Article
UKandEU's Stowers and Wager: A year in Brexit-five charts exploring how public opinion on the EU has changed in 2022 : In 2022, the number of people saying that the UK’s relationship with the EU was one of the most important issues facing the country continued to fall: in fifth place in the public’s list of concerns in January, and out of the top 10 altogether by the end of the year. View Article
ECIPE's Henig: 2023 will be a defining year for Brexit and trade : Notwithstanding endless discussions and early data, Brexit cannot yet be definitively declared a success or failure. View Article
Institute for Government's Rutter: The UK can't improve its Brexit deal without EU agreement : Brexit is back, but Jill Rutter says it is not clear that the EU is in the market for reducing the economic damage caused by the Johnson-Frost deal View Article
British Chambers of Commerce: Brexit Trade Deal Not Delivering : More than three quarters (77%) of firms, for which the Brexit deal is applicable, say it is not helping them increase sales or grow their business View Article
Federal Trust's Donnelly - video: THE LATEST BIT OF BREXIT NONSENSE : In this new video, our Director Brendan Donnelly argues that the so-called "Brexit Freedom Bill" is both pointless and dangerous. View Article
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