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My highlights of the week: The European Parliament celebrated 30 years of the Single Market while ECOFIN/Eurogroup celebrated the accession of Croatia to the euro – 30 years after it was at war. Commission President von der Leyen also promised the Parliament a ”Green Deal Industrial Plan” to counter the US plans. SSM Chair Enria blogged about rising counter-party risk to non-banks and the FT reported a massive increase in AML fines but noted the number of repeat offenders! Whether to ban “inducements” as part of the MiFID review produced contrasting views from EBF and the consumer-oriented BETTER FINANCE while ESMA produced studies on marketing and costs of retail products. EIOPA reported concern that access to affordable savings products is low. The ESAs call for evidence on `greenwashing’ produced responses from EFAMA and ICMA. Eurogroup published a major statement on its debates about introducing a digital euro, while the MF warned that global regulators must act fast to contain crypto contagion. ISDA has now produced Irish and French law versions of its master agreement for those who need EU law documents. Is this the beginning of a direct challenge to the supremacy of English law in financial services? Public opinion seems to be continuing its shift against Brexit.
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 13 - 19 January 2023
Policy impacting Finance
Parliament: 30 years of the EU single market: Time to face new challenges : Established 30 years ago in 1993, the EU single market accounts for 56 million jobs and 25% of EU’s GDP; Serious challenges require its transformation and renewed political commitment; A well-functioning single market is key to achieving strategic autonomy and resilience View Article
President von der Leyen at the European Parliament Plenary on the conclusions of the European Council meeting of 15 December 2022 : ...I want to lay out our answer. That is the Green Deal Industrial Plan. The Green Deal Industrial Plan will be built on four pillars. .. to help make this change happen – speed and access –, we will put forward a new Net-Zero Industry Act. View Article
Council: Executive Vice-President Dombrovskis at the ECOFIN press conference : We welcome the Presidency's focus on economic growth to meet the EU's long-term challenges, to keep advancing with the green transition and work towards energy independence; stay the course with reforms and investments; strengthen the resilience and competitiveness of our industry and companies; View Article
Remarks by Paschal Donohoe following the Eurogroup meeting : We are now a Euro family that has 20 family members, which is a sign not only of the continued resilience and strength of the euro.. digital euro.. View Article
Commissioner Gentiloni at the Eurogroup press conference : We should always remember that some thirty years ago Croatia was a country at war. In 2013 they entered the Union and, since 1 January, they share our same currency and are part of the Schengen area. View Article
CEPS: The Recovery and Resilience Facility: What are we really monitoring with a performance-based approach? : The introduction of milestones and targets to monitor National Recovery and Resilience Plans (NRRPs) has been welcomed as a positive step for the EU budget, a shift away from simple money managing to one focused on achieving policy objectives. View Article
Project Syndicate's Bild: Post-Putin Possibilities : It is becoming increasingly unlikely that Russian President Vladimir Putin's regime will survive the war of aggression that he started in Ukraine. That means Russia is once again heading for a period of internal tumult and – possibly – a political and constitutional sea change. View Article
Der Spiegel: Friends and Strangers The Franco-German Relationship Is Cooling at a Critical Time : With only days to go before the 60th anniversary of the treaty that reestablished Franco-German relations after two world wars, communication between Berlin and Paris is faltering. The war in Ukraine has laid bare fundamental differences between the two partners. View Article
Banking Union
Blog post by Andrea Enria, Chair of the Supervisory Board of the ECB: Tackling counterparty credit risk : We observed that the search for yield in a low interest rate environment had incentivised some banks to increase the volume of capital market services provided to riskier and less transparent counterparties, including non-bank financial institutions (NBFIs), such as hedge funds and family offices. View Article
EBA: The liquidity coverage ratio of EU banks declined in the first half of 2022 but is still well above the minimum requirement : The liquidity coverage ratio (LCR) declined to 166% in June 2022. The fall was due to an increase in outflows driven by higher interest rates and volatility which led to a decline in asset prices during the first half of the year. View Article
EBA publishes its annual quantitative monitoring report on minimum requirement for own funds and eligible liabilities complemented by a rela : As of 31 December 2021, the EBA estimated that 70 banks reported an MREL shortfall of EUR 33bn out of a sample of 245. This is down by 42% compared to last years’ quantitative report on MREL on a comparable basis. View Article
BIS: Exploring multilateral platforms for cross-border payments : Joint report by the BIS Committee on Payments and Market Infrastructures (CPMI), the BIS Innovation Hub, the International Monetary Fund (IMF) and the World Bank. View Article
ESBG’s letter to the Commission on the EBA RTS and GL on interest rate risk in the banking book : It also covered supervisory outlier tests (SOT) and EBA Guidelines on IRRBB and credit spread risk in the banking book (CSRBB). View Article
FT: Anti-money laundering fines surge 50% : New data fuels doubts over effectiveness of crackdown on financial crime since 2008 crisis View Article
Capital Markets Union
EBF Position on MIFIR Review : ,..the EBF has concerns about several of the MiFIR reform proposals, which were not subject to proper analysis or impact assessments, making it difficult to assess their impact and potentially leading to unintended consequences for investment firms, clients, and the EU capital market as a whole. View Article
BETTER FINANCE: Potential ban on inducements reduced to false choice between “advice gap” and “biased advice” : In response to warnings about an “advice gap” if inducements – or rather sales commissions – were to be banned, BETTER FINANCE stresses that there can be no “advice gap” if there’s no “advice”: biased advice is not really advice. View Article
Reuter's Jones: Germany joins battle against EU ban on financial product commission : Banning commission-based sales of financial products from banks and insurers would be a "serious setback" to the European Union's capital market and limit choice for consumers, Germany's finance minister Christian Lindner has said. View Article
EFAMA: MiFIDII/MiFIR review will be key to the future success and competitiveness of the EU’s capital markets : With international competition for investment heating up markedly, European legislators need to ensure that EU regulation is helping, and not hindering, capital market growth and participation. View Article
ESMA and NCAs to look at marketing of financial products : ESMA is aware of the key role that marketing communications and advertisements in determining consumer behaviour and influencing investment decisions ...launching exercise to assess the application by investment firms and credit institutions of the MiFID II requirements on marketing communications. View Article
ESMA: Costs of retail investment products continue slow decline : Costs have declined somewhat, but investors should continue to consider fund fees carefully in their investment decisions. Active UCITS remained more expensive than passive funds and ETFs, such that their net performance was on average lower in comparison. View Article
EU insurers welcome IAIS work to promote operational resilience good practices; call for more convergence not new rules : It is important to avoid imposing new requirements in jurisdictions where the IAIS’ objectives have already been met, such as in the EU with the Digital Operational Resilience Act. View Article
EIOPA: Insurance and pension products rode the market rebound and offered high returns in 2021 : The report aims to improve transparency in the sector, facilitate comparisons between similar products and thereby, ultimately, enhance the EU’s Capital Markets Union. View Article
Environmental, Social, Governance (ESG)
ICMA response to the ESAs' Call for Evidence on greenwashing : ICMA welcomes the opportunity to provide feedback to the European Supervisory Agencies’(ESA) Call for Evidence on greenwashing. This feedback is given on behalf of ICMA and its constituencies, and especially the Executive Committee of the Principles and the Asset Management and Investors Council (AMIC). View Article
EFAMA: ESAs work on greenwashing should note the difference between misleading with intent and regulatory uncertainty : EFAMA stresses that the core attributes of greenwashing need to be understood to address misleading practices, and thereby strengthen the integrity and effectiveness of EU capital markets. View Article
BDB's Lange: Dark green initiatives alone won’t suffice : Transition finance is an essential factor in the fight against climate change. Why is it not enough to simply focus on supporting activities that are already green? View Article
InsuranceEurope: Industry welcomes EFRAG’s first set of European Sustainability Reporting Standards; calls for refinements : The associations welcomed the fact that the disclosure requirements have been refined and have been focused on important disclosures and data points. It is also positive that the final proposed ESRS include phase-in provisions to allow time for data availability throughout value chains. View Article
UNEP FI: Launch of NZIA Target-Setting Protocol Version 1.0 : World-Leading Insurers and United Nations Launch Pioneering Target-Setting Protocol to Accelerate Transition to Net-Zero Economy View Article
GRI: Effective risk management means depoliticizing ESG : The backlash in the USA against ESG (Environmental, Social and Governance), such as legal moves in the State of Texas to restrict financial institutions from using ESG investing criteria, raise questions about the relevance of sustainability data. View Article
Protecting Customers
EIOPA: Consumer trends report sees progress on consumer-centric products with room for further improvement : EIOPA’s Consumer Trends Report reveals that access to affordable insurance and pension products aligned with consumers’ needs remains low: as shown by the Eurobarometer survey, over a third of European consumers do not own any savings products ... View Article
Fin Tech Regulation
Eurogroup statement on the digital euro project, January 2023 : In order to be successful, a digital euro needs to be a common European and inclusive project, supported by the European public, and built on a solid democratic basis. View Article
BIS: Addressing the risks in crypto: laying out the options : The recent high-profile failures of FTX and other crypto firms have re-ignited the debate on the appropriate policy response to address the risks in crypto, including through regulation. View Article
IMF's Adrian: Cyber Resilience—Delivering through Disruption : What cybersecurity challenges could arise as new forms of money and technology alter the financial landscape? And finally, how can we foster effective regulation and supervision of cyber risks, and achieve operational and cyber resilience... View Article
IMF's Li and Sugimoto: Crypto Contagion Underscores Why Global Regulators Must Act Fast to Stem Risk : Stronger financial regulation and supervision, and developing global standards, can help address many concerns about crypto assets View Article
Fondation Robert Schuman: Digital Sovereignty: for a Schuman Data Plan : If, in the digital field, Europe faces issues of sovereignty, it is because it has left the sector open for over twenty years to the American Tech giants, who have imposed a game whose rules that have never been understood here. View Article
Brexit and the City
Why Use ISDA’s EU Law Documents? Reasons to Consider ISDA’s French and Irish Law Master Agreements : ... provide choice to firms that wish to trade under an EU member state law, enabling them to opt for whichever ISDA documents best suit their needs. View Article
Brexit
POLITICO: UK’s Rishi Sunak stands by plan for post-Brexit bonfire of EU laws : Retained EU Law Bill aims to scrub EU-derived laws still in force in the UK by end of the year. View Article
FT: Starmer to tell Davos he wants to fix post-Brexit relationship with EU : UK opposition leader and shadow chancellor to push message of financial responsibility to world’s political elite View Article
EU-UK Forum's Bale: Least said, soonest mended? Public support in Brexit Britain for re-joining the EU : Brits seem less and less enamoured with Brexit, encouraging some to begin to wonder whether – whisper it softly – there might soon be majority support for rejoining the European Union. A look at the polling suggests, however, that anyone who hopes so might be jumping the gun. View Article
UKandEU's Portes/Springford: The impact of Brexit on the UK labour market - an early assessment : In the aftermath of the pandemic, big labour shortages in health and social care, transport and hospitality have emerged, as many foreign nationals left UK during the pandemic and fewer arrived, while inactivity rose by more than half a million. View Article
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