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Welcome to our Friends weekly e-mail.
Highlights of my week: The European Council issued another grand declaration about taking decisive steps to achieve SIU and CMU but implementation will require a functioning European Commission. That prospect may now be receding into 2025 as the Parliament seemed to reach deadlock on the political balance of new Commissioners after the Hearings. The context is the rise of the far right and now – even worse – the personnel choices of Trump 2.0 for his new government. However, there was good news to be celebrated – 10 years of “European banking supervision”. But not all problems have been `resolved’ – the lessons form 2023 about the difficulties of bank resolution are still emerging from the FSB and think tank SUERF. One of Schuman’s famous `concrete steps’ was taken by Euronext in proposing a single prospectus document – in English – for its seven exchanges to simplify capital raising in the EU. COP29 is not over yet, but ECB President Lagarde warned of the growing gap between climate commitments and actual investment cash. Good news from IFRS and IAASB: corporate climate disclosures are progressing but – bad news – ACCA reports that only 20% of businesses are prepared for climate disasters. Both SSM and FCA are focussed on banks’ cyber resilience but BEUC reports that DMA obligations remain an issue for Apple, Alphabet/Google and Meta. Graham Bishop Articles from 8-14 November 2024
Policy impacting Finance European Council: Budapest Declaration on the New European Competitiveness Deal : 2. Taking decisive steps towards a Savings and Investments Union by 2026, and making urgent progress on the Capital Markets Union. This will create truly integrated European capital markets which are accessible to all citizens and businesses, View Article
EURACTIV: S&D to block Fitto and Várhelyi, blaming Weber’s actions : “There is no room for negotiations that go beyond the agreement established between the three political families.” View Article
POLITICO: Who aced (and flunked) the commissioner hearings? Here’s what our insiders have to say. : Our team of policy reporters dissect what you need to know about Brussels’ biggest event of the year. View ArticleBETTER FINANCE Welcomes Key Aspects of Commissioner-Designate Albuquerque's Vision but Urges Stronger Focus on Retail Investor Protections : BETTER FINANCE supports Ms Albuquerque’s focus on the SIU and the Capital Markets Union (CMU) as pillars to drive sustainable growth in the EU. However, while her citizen-centric approach is encouraging, BETTER FINANCE also has significant concerns regarding safeguards for retail investors. View Article
Chatham House's van Rij: Trump and his growing number of European allies threaten the European project : With Trump in the White House, a key challenge for Europe will be the growing transatlantic illiberal ties which risk undermining European unity. View Article
Carnegie Europe's Szelényi : Orbán’s Rebellion Against Europe Gains Momentum : Emboldened by Trump’s win, Orbán is determined to place Hungary at the center of European—and even global—decisionmaking. His European partners must think creatively and strategically to manage his disruptive influence. View Article
ECIPE's Henig: Europe’s Renewed Trade Policy Challenge : Inevitably talk is already turning to the way in which US trading partners will respond to Trump’s proposed 10% or even 20% tariff. There aren’t going to be good answers to that, but we’ll be better prepared if we understand the starting point. View Article
Friedrich Merz and Enrico Letta discuss European competitiveness at the Hertie School : President Woll raised the issue of the CMU – “a project that everybody agrees upon in principle and nobody in practice.” Merz argued for a competitive European stock exchange, citing the example of two European companies that prospered during the pandemic but eventually chose the US market... View Article
CEPR's Jense, Beetsma: Financing Europe’s grand ideas : A large proportion of the financing needs for Europe’s digital, energy, and demographic transitions, as well as defence, will have to be covered by public funding. This column argues that these can all be seen as European public goods... View Article
Breugel's Scott-Morton: A fork in the road for EU competition policy : In her instructions to the incoming EU competition commissioner, Ursula von der Leyen equivocates on the issue of national champions ...leaving the commissioner-designate, Teresa Ribera, great latitude in her policy choices. View Article
Banking Union ECB: Ten years of European banking supervision : In marking the 10-year anniversary of the SSM, supervisory and finance officials as well as industry stakeholders shared their thoughts about the achievements and challenges of European banking supervision. Contributions from Lagarde, Buch, Donohoe, Berrigan, Botín, Campa, Laboureix, Lalucq etc. View Article
SSM: Sound practices for intraday liquidity risk management : The 2023 banking turmoil highlighted a number of lessons learnt in the context of liquidity risk management. Some of these lessons relate to the management of intraday liquidity risk – traditionally a less scrutinised area that could be viewed as financial plumbing. View Article
FSB: The importance of resolution planning and loss-absorbing capacity for banks systemic in failure: Public statement : Ensuring bank resolvability remains the most efficient way to tackle the problem of the implicit ‘too big to fail’ subsidy for big banks and to avoid a bail-out by the taxpayer. Lessons from the 2023 bank failures reinforced the need to maintain momentum and advance the work on bank resolvability.. View Article
SUERF's Laviola, Cirillo, Pennesi: The 2023 Banking Turmoil: Implementation Lessons for Resolution Authorities : SRB Working paper: In the 2023 banking turmoil in the U.S. and Switzerland authorities managed to preserve financial stability - but a discussion on the effectiveness of the post GFC prudential frameworks started, .. identifying some implementation issues in bank crisis management regimes. View Article
SUERF's Restoy: Post-turmoil bank failure management: the European challenges : The 2023 banking crises in the United States and Switzerland tested those countries’ post-GFC resolution frameworks. This episode showed that there are strong reasons to extend resolution planning obligations to all banks whose failure could have adverse effects on the financial system. View Article
Capital Markets Union FT: Euronext plans US-style prospectus to boost corporate fundraisings : European exchanges operator aims to harmonise listing information across seven countries View Article
FERMA asks EIOPA for simplicity in next-level of Solvency II measures : FERMA has submitted a response to EIOPA’s consultation on new proportionality regime under Solvency II, which calls upon EIOPA and national competent authorities to ensure Solvency II will be applied in a truly proportionate manner. View Article
Commercial Risk: German insurers voice concern for Solvency II reform : German insurance association GDV has added its concern about the future of Solvency II reforms. Welcoming final adoption of the directive amending Solvency II, Jörg Asmussen, general manager of the GDV, warned supervisors about the risks in the next level of designing technical details. View ArticleISDA's O'Malia: Finding Contractual Provisions in Stressed Markets : When trouble strikes, firms need to get a grip on their derivatives exposures quickly. That can mean having to scour hundreds of pages of paper or PDF documents to determine what options are available, a grueling process that can take time.... There is a better way... View Article
Environmental, Social, Governance (ESG) ECB's Lagarde: Mind the gap: what it takes to finance a greener future : Complacency in fighting climate change and preserving biodiversity is endangering our economic survival. The longer we wait, the higher the costs will be. Christine Lagarde, President of the European Central Bank, warns of the growing gap between the commitments made and the investment needed. View Article
IOSCO Report on Transition Plans : Climate-related transition plans can be a core component of climate disclosures, aiming to articulate the outputs of entities’ internal strategic planning and risk management processes to prepare for risks, opportunities and potential changes in business models associated with the transition ... View Article
Euronews: Climate finance is the hot topic at COP29 but would it be a loan, who pays and what’s it spent on? : These needs are meant to be addressed via a global fund, and at COP29 it's time for the world to set a new collective quantified goal (NCQG) for climate finance. But with countries in disagreement about virtually all aspects of climate finance ... View Article
Over 12,000 trained since launch of UN SSE, IFRS Foundation, IFC capacity building program : On the occasion of COP29, the UN SSE, the IFRS Foundation and the IFC celebrate the one year mark since the start of their joint capacity building program on climate disclosure. Since the launch 1 year ago, the organizations have trained over 12,000 market participants around the world. View Article
IFRS: New report sets out global progress towards both mandated and voluntary corporate climate-related disclosures : Over 1,000 companies have referenced the International Sustainability Standards Board (ISSB) in their reports and 30 jurisdictions are making progress towards introducing ISSB Standards in their legal or regulatory frameworks. View Article
Only 20% of businesses and organisations are prepared for climate-related disasters, new research from ACCA reveals as COP29 climate summit : Organisational survival hinges on proactive climate risk assessment - CFOs and finance teams are key to steering this transformation View Article
CFA Institute Highlights Solutions for Net-Zero Investing: Benchmarks, Incentives, and Time Horizons Critical for Investors : The report underscores the growing importance of adopting a holistic investment approach that incorporates net-zero targets alongside traditional risk and return metrics. View Article
ESRS perspectives Summaries of views from Accountancy Europe : Accountancy Europe has contributed to every step of the ESRS’ development and finalisation, including to EFRAG’s guidance. In this series of publications, we summarise the ESRS’ provisions on these concepts and share our views on ESRS aspects that merit further guidance and clarification. View Article
IOSCO Issues Statement of Support on the IAASB’s International Standard on Sustainability Assurance (ISSA) 5000 : IOSCO reiterates its support for this work and commends the IAASB for its timely development of the Standard in response to the public need for assurance standards to cover all sustainability assurance providers. View Article
EIOPA recommends a dedicated prudential treatment for insurers’ fossil fuel assets to cushion against transition risks : EIOPA published today its final Report on the prudential treatment of sustainability risks within Solvency II, recommending additional capital requirements for fossil fuel assets on European insurers’ balance sheets to accurately reflect the high risks of these assets. View Article
Fin Tech Regulation SSM: Evolving IT and cybersecurity risks : ECB Banking Supervision continuously evaluates banks’ management of IT risk, with supervisors’ findings from on-site inspections and banks’ IT risk reporting providing two major sources of information. As has been emphasised in recent years, banks still have work to do across a range of measures. View Article
FCA: New rules to strengthen resilience of UK’s financial sector : UK financial regulators have confirmed new rules to bolster the resilience of technology and other third parties providing key services to financial firms. View Article
November 2024 update on implementation by Apple, Google & META of their obligations under the DMA - BEUC analysis of non-compliance : In this new report, we summarise some ongoing issues with Apple, Alphabet (Google) and Meta which the Commission should take onboard to assess the compliance of these gatekeepers with their DMA obligations. View Article
Economic Policies Impacting EU Finance ECON: The implementation of country-specific recommendations under the European Semester cycles : Summary : This note provides an overview of the European Commission’s assessment of the implementation of the country-specific recommendations issued annually to EU Member States under the European Semester for economic policy coordination. View Article
Brexit and the City CITY AM: London Stock Exchange boss: Britain needs to re-think ‘weird’ view of capital markets : The UK needs to view London’s capital markets as a “driver of the domestic economy” rather just a venue for share trading, the boss of the London Stock Exchange said yesterday. View Article
TheCityUK: Sovereign Wealth Funds: Global trends and the UK’s role in the evolving landscape for Sovereign Investment Vehicles : Sovereign Wealth Funds’ (SWFs) Assets under Management (AuM) have seen a substantial increase over the past decade, rising from $6.7 trillion globally in 2014 to $12.7 trillion in 2023. These funds have evolved into a significant international investor class. View Article
Brexit UKandEU: How people voted in the Brexit referendum still shapes their view of the world : John Denham, Conor Gaughan, and Tim Oliver unpack polling for the British Academy exploring how English voters view the world and the country’s place within it. They highlight that whether someone voted Leave or Remain is still a good predictor of their wider view of the world. View Article
Federal Trust's Stevens, Donnelly - Video: Is Trump the destroyer of Brexit? : In the latest Federal Trust video, our Chair John Stevens and Director Brendan Donnelly discuss the implications of Donald Trump’s reelection as US President. They argue that his Presidency may well usher in a reconfiguration of British politics and facilitate in the medium term the UK’s return to the European Union. View Article
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