78 days to Brexit: UK Parliament is the only British institution so far to have ‘taken back control’

11 January 2019

An explosive year for Europe started with fireworks: the ECB appointed administrators to Italy’s Banca Carige, while the UK Parliament forced amendments to PM May’s Brexit plans that will restore its power over the process. An extension of Brexit date and allowing a People’s Vote seem more likely.

Paula Martín Camargo

The UK Parliament started the New Year taking back the driver’s seat of the Brexit battle in Britain after a series of raucous parliamentary skirmishes that have laid bare the strength of the opposition to a cliff-edge withdrawal from the EU among lawmakers. An extension of the official departure date seems now a plausible option and has been floated to EU officials, who are open to the idea but dismiss further concessions that would make the plan more palatable to British Parliament members.

MPs managed to pass a key amendment which will force PM Theresa May to come back to Parliament with an alternative plan just three sitting days after the deal she agreed in Brussels last month is rejected next Tuesday – as it is widely expected to be. This controversial tweak limits May’s supposed strategy to run down the clock right to Brexit eve so MPs are left with the binary choice of staring right into the no-deal abyss or voting the PM’s proposal.

The clash is therefore set for next week with a vote on the 15th that will most probably see May’s deal rejected – the deadline for May’s alternative motion would then be January 21. The Tory leader will then have to propose a motion that will be amendable, which could see MPs testing options such as a so-called Norway plus model or even a second referendum – a People’s Vote on the final deal the majority of Britons now want, as shown in the widest poll on the issue to date. The whole Brexit process could ultimately be cancelled if a majority in Parliament or a landslide popular vote calls for it: the EU top judge ruled that the UK can unilaterally withdraw Article 50. [...]


The EBA published its annual report on risks and vulnerabilities in the EU banking sector, which found  further improvements in EU banks resilience but highlights challenges connected to profitability, funding and operational risk. The Banking Authority’s updated risk Dashboardshowed that EU banks have further improved their resilience, but profitability remains weak. It will run its next EU-wide stress test in 2020, in line with its previous decision to aim for a biennial exercise.

The impact and implementation of IFRS 9 was thoroughly assessed by the EBA in its first observation report, while the Chair of the IASB Hans Hoogervorst addressed financial industry concerns that the new accounting model might exacerbate procyclicality and discussed current risks in the global financial system.

The ECB announcement that it has appointed temporary administrators to the troubled Banca Carige to safeguard the bank’s financial stability was the first time the European Central Bank used these powers - Graham Bishop assessed whether Carige is a foretaste of a new dimension of the slow-burning EU banking crisis, and if this is the first bank where, paradoxically, the final nail in the coffin may be IFRS 9. The ECB announced that it will directly supervise 119 banks this year. [...]

Capital Markets Union

ECMI issued its 2018 Statistical Package on the dynamics of European and global capital markets.  ISDA published an analysis of recent trends in the size and composition of over-the-counter derivatives markets, using the latest data from the Bank for International Settlements and ISDA.  [...]

Asset Management

EFAMA welcomed the vote of the EP’s Economic and Monetary Affairs committee amending the proposal on cross-border distribution of funds, which was followed by the Council agreeing its position on new regulatory and supervision framework for investment firms. EFAMA and AMIC published a joint report on liquidity stress tests in investment funds, which highlights the role of stress tests as an important risk management tool which allows the fund manager to assess the impact of different market stresses at the portfolio level. Stress testing will be also applied to Money Market Funds: ESMA published the responses to its Consultationon stress test scenarios under the MMF Regulation.  [...]

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