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My highlights of the week: Commissioner McGuiness shared her `mid-mandate’ thoughts on progress on the regulatory files with ECON, and ECB President Lagarde also re-iterated the need to finalise CMU to the Committee. The Swedish Presidency fleshed out its financial regulation priorities and ECON staff provided an excellent summary. Moving to legislative actions, ECON voted on the Basel III rules – a move welcomed by AFME. ECB’s Elderson set out the supervisory approach to climate and environmental risks and the ECB conveniently published some experimental indicators to help the analysis. The ECB’s Panetta promoted the digital euro and Finextra reported that the ECB may even develop its own app! POLITICO sent us a wake-up call about the prospects of the OECD global tax deal surviving the increased Republican influence in Congress. Crossing the ocean, POLITICO underlined Prime Minister Sunak’s determination to enact the Retained EU Law (REUL) Bill – despite the mounting criticism
Graham Bishop
Articles from 20 - 26 January 2023
Policy impacting Finance
Commissioner McGuinness at the Structured Dialogue with the European Parliament's ECON Committee : Overview of progress on financial files at midpoint of Parliament and Commission terms View Article
ECB's Lagarde: New challenges in a changing world : Completing Europe’s capital markets union (CMU) will be key to financing the green and digital transitions. Equity investors tend to have a greater appetite than banks for high-risk, high-return projects and equity finance tends to increase green innovation. View Article
EURACTIV: Sweden pushes for progress on financial regulations : The Swedish government fleshed out its priorities regarding financial regulation during its six months at the helm of the rotating presidency of the EU Council, in a presentation for member states’ financial attachés, seen by EURACTIV. View Article
FSB's Knott: Daring to know in times of uncertainty and structural shifts : Financial stability is the capacity of the global financial system to withstand shocks, by containing the risk of disruptions in the financial intermediation process that would be severe enough to adversely impact the real economy. View Article
ECON: In-depth analysis by the Economic Governance and EMU Scrutiny Unit (EGOV) : This document provides an overview of the Swedish Presidency priorities in ECON matters, View Article
Banking Union
Economic and Monetary Affairs Committee voted to finalise reforms of banking rules : MEPs adopted changes set to make EU banks more resilient to future economic shocks and implement the international Basel III agreement, taking into account specificities of the EU economy. View Article
AFME welcomes ECON Committee vote on Basel 3 package : ".. It is also vital that cross-border trading on financial markets can continue through the removal of the requirement for banks to establish a subsidiary or branch in the EU under Article 21c.” View Article
Reuters: ECB signs supervision cooperation deal with non-euro zone members : The European Central Bank agreed with six non-euro zone members to cooperate more closely on bank supervision matters, including in exchanging information about cross-border supervised banks View Article
The EBA observed a significant increase in the number of high earners across EU banks in 2021 : This increase is linked to the overall good performance of institutions, in particular in the area of investment banking and trading and sales, continuing relocations of staff from the UK to the EU and a general increase in salaries. View Article
Capital Markets Union
CEPS' Harrison/Wooley: How To make Capital Markets Union work : The solution is to make it a condition of cross-border access to the European capital market that a specified minimum proportion of assets of each portfolio under professional management is invested for savers solely on the basis of expected cash flow. View Article
ESMA analyses preliminary effects of market correction mechanism on EU natural gas derivative market : The report describes the structure and main participants in the EU natural gas derivative market. It focuses on market indicators aimed at assessing the potential effects of the adoption of the MCM. View Article
BETTER FINANCE: Hampered by fragmented and costly intermediated processes,... : ..less than half of European individual shareholders were able to exercise their voting rights at AGMs in 2022 View Article
SUERF's Eiffinger/Bloehm:Eurozone Government Bond Spreads: A Tale of Different ECB Policy Regimes : In studying the drivers of Eurozone sovereign bond spreads, we uncover the roles played by macroeconomic factors, by financial linkages, by political (un)certainty through market sentiment and by the ECB’s monetary policy in bringing these spreads together or in causing their divergence. We learn above all that they tell the tale of two different ECB policy regimes. View Article
Environmental, Social, Governance (ESG)
SSM's Elderson:The management of climate-related and environmental risks in the banking sector through the lens of supervision : I want to describe the progress that we in ECB Banking Supervision have observed in recent years, through the lens of our interactions and exercises with the banks we supervise. View Article
ECB publishes new climate-related statistical indicators to narrow climate data gap : New experimental and analytical indicators to help analyse climate-related risks in financial sector and monitor green transition; ECB and national central banks to further improve indicators to match quality standards of official ECB statistics View Article
CEPR: Banks’ exposures to high-carbon assets may represent a medium-term vulnerability for the financial system : Climate change is a potential major source of financial risk. Besides the physical impact, losses may also stem from the depreciation of high-carbon assets during the green transition. View Article
InsuranceEurope Time and further regulatory clarification on sustainable finance framework needed to address greenwashing risk, not new rules : No new regulation on greenwashing is needed for the sustainable finance framework to deliver on its high ambitions while addressing greenwashing risks. View Article
EuropeanIssuers joint statement on Corporate Sustainability Due Diligence Directive : The statement, co-signed by 27 European associations in the business industry, calls for realism, proportionality, and workability of the EU due diligence framework to enable and guide businesses in taking necessary steps towards more sustainable supply chains. View Article
Reuters: EU urges European banks to step up funding for critical minerals : European Commissioner Thierry Breton urged European financiers this week to provide more funding to suppliers of minerals needed for the energy transition, as the European Union prepares its Green Deal industrial plan. View Article
Fin Tech Regulation
ECB's Panetta at ECON: The digital euro: our money wherever, whenever we need it : Together with cash, a digital euro would offer Europeans access to means of payment that allow them to pay everywhere in the euro area, free of charge. Being easily accessible and convenient to use would support adoption and financial inclusion. View Article
finextra: ECB contemplates development of basic digital euro app : The European Central Bank is considering a new digital euro app, which would include basic payment functionalities and create a standardised approach to connecting end users to intermediaries. View Article
BEUC: THE CYBER RESILIENCE ACT PROPOSAL : This proposal answers a longstanding need that BEUC and its members have identified and warned about repeatedly. Over the past years, BEUC members have demonstrated that too many connected products sold on the European market lack even the most basic security features. Too many products are putting consumers at risk on a daily basis. View Article
Breugel: Has the Digital Markets Act got it wrong on app stores? : The app-store obligations in the European Union’s Digital Markets Act are unlikely to weaken the market power of Apple and Google. View Article
Economic Policies Impacting EU Finance
EURACTIV: ‘We will not sacrifice the single market’ in global race for green subsidies, EU’s Vestager says : The EU executive is currently working on a new “temporary crisis and transition framework” for state aid allowing EU countries to subsidise companies in sectors that are considered “strategic” for the the green transition. View Article
POLITICO: New OECD chief, Republican lawmakers on a collision course over global tax deal : Failure to negotiate could cause EU-US relations to deteriorate. The Organization for Economic Cooperation and Development’s new tax chief has a big Hill to climb. View Article
Brexit and the City
CityUK: Improving regulatory efficiency on authorisations : Our ‘Improving regulatory efficiency on authorisations’ report puts forward recommendations for action that would transform the Financial Conduct Authority’s (FCA) and the Prudential Regulation Authority’s (PRA) approach to authorisations processes by improving speed, efficiency and effectiveness. View Article
Reuters's Jones: British banking damaged by slow supervisors warns industry report : Britain's regulators can be slow, inefficient and unpredictable, raising costs and slowly damaging the financial sector's global competitiveness, industry body TheCityUK said in a report. View Article
Reuters' Jones: Frankfurt 'STIRs' up euro clearing battle with London : Frankfurt expands derivatives clearing on Monday in an early test of how well European Union ambitions to lure trillions of euros of business from London could work in practice. View Article
Brexit
Chatham House UK-Europe relations finally head in the right direction : As relations between the UK and its European neighbours become less contentious, plenty of opportunities exist to build on this positive momentum in 2023. View Article
UKandEU: Where next? The future of the UK-EU relationship : Six and a half years since the Brexit referendum, UK relations with the EU have still not settled into a coherent and consistent pattern. Partly, this is because the process of leaving itself took so long. View Article
POLITICO: UK’s Rishi Sunak stands by plan for post-Brexit bonfire of EU laws : The Retained EU Law Bill — which orders all government departments to either repeal or reform all EU-derived law still in force by the end of this year — has come under mounting criticism ...amid fears the deadline is unachievable and could cause gaps in a host of key legislative areas. View Article
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