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Highlights of my week: The Belgian Presidency has ticked off some more pieces of legislation as the deadline gets ever closer. The debate about CMU heats up as Eurogroup nears the end of its `reflection’ process. Commissioner McGuiness did not hold back about her disappointment with the outcome of the co-legislators’ decision on EMIR 3.0 and CCPs, or with the extra powers to ESMA. But she highlighted the review clause in 18 months so EMIR 3.0 is only “the first steps of addressing our concerns” Council adopted rules on AIF/UCITS managers to improve liquidity while the FSB’s review of MMFs called for IOSCO to consider actioning its findings. PCS described securitisation as a `categorical imperative’ to go beyond merely a tool to manage bank capital. The International Federation of Accountants (IFAC) reported that 98% of large companies now report some detail on sustainability – with GRI standards most widely used for assurance on the goals. However, City AM said that nearly two-thirds of UK business leaders fear litigation if they miss their ESG targets. Cryptocurrencies had another seesaw week as Coinbase reported that many US customers suddenly saw their balances at zero! But customers need not worry – it was just due to high volumes! What would have happened to regulated banks etc if they made such an announcement? Appropriately the ECB’s Bindseil and Schaaf issued another blast at Bitcoin et al as they are `hardly used for legitimate transfers’ and have a zero intrinsic value. The EUandUK’s Curtice examined Labour supporters’ attitudes to Brexit now that 60% of voters want to join the EU and only 40% stay out. A pity these voters did not give more thought to it in 2016.
Graham Bishop
Articles from 23-29 February 2024
Policy impacting Finance
Eurogroup: Main results In inclusive format: Future of European capital and financial markets : Following the approach agreed on by the Eurogroup (in inclusive format) in May 2023, ministers continued to exchange views on the future of European capital and financial markets. View Article
Remarks by Paschal Donohoe following the Eurogroup meeting of 23 February 2024 : We are now at the end of a very thorough reflection process, which started under a year ago, in response to the call by the leaders of the European Union, for all of us to step up our efforts to take forward the Capital Markets Union. View Article
FSB Chair highlights key issues to the G20 : FSB Chair warns of challenging outlook to global financial stability including debt servicing burdens, stretched asset valuations in some key markets, and leverage and liquidity mismatch in non-bank financial intermediation (NBFI). View Article
BCBS's de Cos: Two truths and a myth in banking regulation : Throughout the years, there has been no shortage of discussions at these Eurofi events about the work of the Basel Committee, and prudential regulation and supervision more generally. View Article
EPC's Duff, Garicano: A two-tier federal budget for the European Union : The European Union is taking on new tasks. But unless legal and political constraints on its budget are lifted, the EU will be left with inadequate financial resources. View Article
EU long-term budget for 2021-2027: Council concludes the mid-term revision : View Article
EURACTIV: Future of far-right group in EU Parliament threatened by Franco-German rift : The smouldering conflict between the ID’s two most influential parties puts the parliamentary group itself in danger and could cause a major reshuffle of party alliances of the right-wing in the European Parliament. View Article
POLITICO: EU must find ‘enormous amount’ of money to face global challenges, Draghi says : The former ECB chief has been tasked with producing a high-level report on the EU’s competitiveness. View Article
FT's Noonan: Bank of England deputy governor calls for more research into non-bank lenders : More data needed on the risks of market based finance to avoid future shocks, says Sarah Breeden View Article
Banking Union
Council adopts regulation on instant payments : The Council adopted today a regulation that will make instant payments fully available in euro to consumers and businesses in the EU and in EEA countries. View Article
Frankfurt will be the home of the EU Anti-Money Laundering Authority : In a joint vote on Thursday, MEPs and EU ambassadors chose Frankfurt to host the EU’s central enforcer in the fight against dirty money, the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA). View Article
AFME welcomes Anti Money Laundering Authority’s operationalisation : The new authority is a welcome addition to the European system of financial supervision and will strengthen the efforts of national authorities in countering financial crime. View Article
Bloomberg: Payments Giant Transactive Shutting Down After Regulatory Probe : Transactive is surrendering its UK license, company CEO says; Firm was processing €1 billion of payments every month in 2022 View Article
SSM's McCaull: Supervising counterparty credit risk – a European perspective : I would first like to clarify why I consider sound CCR management to be so critically important at the current juncture. And I very much welcome the chance to highlight a few concerns and inspire some critical thinking at this CCR outreach event. View Article
SSM's McCaul: From data to decisions: AI and supervision : European banking supervision is committed to exploring the potential of AI to make the work of supervisors more efficient View Article
Capital Markets Union
Capital markets union: Council adopts new rules on alternative investment fund managers and plain-vanilla EU investment funds : The new rules enhance the integration of asset management markets in Europe and modernise the framework for key regulatory aspects. They improve the availability of liquidity management tools, with new requirements for managers to provide for the activation of these instruments. View Article
Commissioner McGuinness at Eurex Derivatives Forum Frankfurt 2024 : So first, if we're serious about the Capital Markets Union, we need efficient market infrastructures within the European Union – including CCPs. View Article
FSB review finds uneven implementation of money market fund reforms : Peer review finds uneven progress in implementing the 2021 FSB policy proposals for money market funds (MMFs) and calls on member jurisdictions to review policy frameworks and adopt tools to address MMF vulnerabilities. FSB also calls on IOSCO to consider the findings of the peer review. View Article
PCS: Securitisation, Europe's categorical imperative : It is rare for Immanuel Kant's name to be associated with the technical subject of securitisation. Yet this is what happened when Christine Lagarde asked for a "Kantian shift" in respect of the CMU. View Article
BETTER FINANCE supports the FSUG statement on Value for Money in Retail Investments : View Article
ISDA's O'Malia: DRR: The Answer to Reporting Rule Rush : ISDA Chief Executive Officer Scott O'Malia offers informal comments on important OTC derivatives issues in derivatiViews, reflecting ISDA's long-held commitment to making the market safer and more efficient. View Article
Environmental, Social, Governance (ESG)
IFAC: Sustainability Reporting and Assurance Practices of Largest Global Companies Continue to Mature, IFAC, AICPA & CIMA Study Shows : 9 8% of companies reported some level of detail on sustainability; 69% obtained assurance on at least some of their sustainability disclosures; The mix of reporting standards used by companies remains fragmented View Article
GRI: More progress still needed on sustainability assurance : IFAC research finds the GRI Standards remain the most frequently used and assured View Article
EFAMA: Political agreement on new ESG rating rules is a crucial step forward : Going forward, there will be much clearer mandatory disclosures on E, S and G factors, their respective weightings, and methodologies used. ESG rating providers will also not be allowed to provide credit rating, auditing or consultancy services to avoid conflict of interest. View Article
AFME: ESG Finance Report Q4 2023 : This report presents the latest data on ESG bond and Loan issuance, ESG bonds outstanding, carbon market prices and futures, and global and European funds with an ESG mandate. View Article
City AM's Ward-Brennan: Business leaders are concerned about facing litigation over missed ESG targets : A new report highlighted that nearly two thirds of UK business leaders are concerned that their ESG targets will put them at risk of litigation. View Article
SUERF's Caselli, Migliorelli : Physical Risk from Climate Change and Local Banks’ Lending: What Lies ahead? : Our discussion suggests that inherent characteristics such as geographical concentration, limited size and significant support to the agricultural sector may expose local banks to physical risk at a greater extent than other bank types, mainly via the lending channel. View Article
Protecting Customers
Bruegel: The state of financial knowledge in the European Union : Countries with higher proportions of people who are financially knowledgeable have higher numbers of people who both save with and borrow from financial institutions, an indication that financial knowledge may improve financial inclusion: Demertzis, Moffat,Lusardi, Lopez View Article
Fin Tech Regulation
ECB's Bindseil, Schaaf: ETF approval for bitcoin – the naked emperor’s new clothes : Bitcoin has failed on the promise to be a global decentralised digital currency and is still hardly used for legitimate transfers. The latest approval of an ETF doesn’t change the fact that Bitcoin is not suitable as means of payment or as an investment. View Article
Coinbase: Amid Ferocious Bitcoin Rally, a Coinbase Snafu Shows $0 Balances for Customers : Multiple users of Coinbase's U.S. platform said on Wednesday that their account balances were wiped out. View Article
Commission: Another step closer to the implementation of DORA and MiCA: Milestone delegated acts adopted : Now it is for the European Parliament and the Council to scrutinise the delegated acts. They have a period of three months to raise objections, which they can extend for another three months. The acts will start applying after the period elapses and no objection is raised. View Article
CER's Meyers: Helping Europe's digital economy take off: An agenda for the next Commission : Despite its current lack of tech giants, the EU has huge potential to unlock a thriving digital economy. Contrary to frequent complaints that Europe is insufficiently entrepreneurial, the number of EU-based start-ups is growing significantly – even outpacing the US by some measures. View Article
CEPS' Ford: The EU-US Data Privacy Framework is a sitting duck. PETs might be the solution : To mitigate the risks of another disputed agreement, the EU and US should turn to a toolbox approach to cross-border data transfers – starting with joint R&D investment in Privacy-Enhancing Technologies (PETs). View Article
Economic Policies Impacting EU Finance
Parliament adopts its position on rules to simplify and fraud-proof withholding tax refunds : MEPs in plenary adopted their opinion on new rules to simplify withholding tax procedures in the EU for investors while making them fraud-proof. View Article
EBF joint financial industry submission on the Proposal for a Directive on Faster and Safer Relief of Excess Withholding Taxes (FASTER) : The industry welcomes efforts aimed at streamlining withholding tax procedures. The FASTER proposal was formulated with the objective of making withholding tax procedures more efficient and secure for investors, financial intermediaries, and governments regarding cross border investments. View Article
ECIP's Bauer, Pandya: EU Autonomy, the Brussels Effect, and the Rise of Global Economic Protectionism : The Brussels Effect, once emblematic of the EU’s alleged influence in shaping global regulations, has now become a factor contributing to global regulatory fragmentation. View Article
Brexit and the City
Bloomberg: How to Save London: The Readout With Julian Harris : Indivior is set to become the latest British-listed company to swap the Square Mile for Wall Street, with the FTSE 250 business confirming this morning that it will consult shareholders over a plan to move its primary listing this summer. View Article
Brexit
EIAG's Cooke and Donnelly: Trade and investment policy: Options for UK policy in 2024 : This paper considers how far the UK can influence the international trade environment, and which specific policies best support UK based firms to increase their global competitiveness. View Article
UKandEU's Curtice: Do Labour supporters back a softer Brexit? : John Curtice explores what Labour voters think about a closer relationship with the EU, looking at levels of support for specific ways in which Brexit might be softened. View Article
Redfield and Wilton: Joining or Staying Out of the EU Referendum Voting Intention : Join 60%, Stay out 40% View Article
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