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Highlights of my week: The final steps in the creation of the new Commission are now underway: the financial declarations have been made and the Parliament has now scheduled public Hearings for early November – in the hope that all will go smoothly and the vote on the entire Commission can take place at the plenary in the last week of November. In the meantime, the far-right scored another victory – this time gaining the most votes in the Austrian election – but a long way from an outright majority. Think-tankers continue to digest the implications of the Draghi Report – even as Letta described Europe as a “financial colony” of the US. However, SSM Chair Buch said the ECB would do anything to remove the hurdles to bank mergers – a modest step towards strengthening EU banks. The Consolidated Tape of securities prices is drawing closer and both EBA and ESMA published their 2025 work programmes. A study for ECON argued that the persistence of national interests remains a key problem for financial integration – just as Insurance Europe pointed to the rising pressures from the demographic hit from a dwindling ratio of active citizens. Better Finance highlighted the `alarming rise of online investment scams’ – hardly an encouragement for the newly-named Savings and Investment Union! The ECB’s Bindseil published a paper via SUERF arguing that many academic papers on retail CBDC design no longer reflect what central banks are actually designing – quite a castigation! Finextra reported that the UK is preparing a switch to T+1 in 2027 with or without the EU. However, the new Labour Government may not wish to upset the EU reset that the Prime Minister is attempting.
Graham Bishop
Articles from 27 September - 3 October 2024
Policy impacting Finance
European Parliament hearings with Commissioners-designate to start on 4 November : On Wednesday, the Conference of Presidents (EP President and leaders of political groups) agreed on the calendar for the hearings of the Commissioners-designate.The hearings will start on 4 November and take place until 12 November. View Article
Project Syndicate's Kisilowski: Austria’s Far Right Did Not Win : Across Europe, far-right populists consistently frame elections as a stark choice between an indistinguishable assortment of corrupt mainstream parties and themselves. But if those are the stakes, a mere plurality victory for the populist party is actually a loss, and should be treated that way. View Article
EURACTIV's Moller-Nielsen: Letta: Europe is a ‘financial colony’ of the US : The Italian technocrat also warned that member states’ refusal to relinquish control of their domestic banking sectors risks exacerbating Europe’s financial subservience vis-à-vis the US. View Article
Project Syndicate's Reichlin: Will the EU Heed Draghi’s Call for Integration? : Draghi has called for the European Union to build something like a war economy and run it hot, using common firepower. But while there is a growing sense of urgency in Europe that could lead to a consensus on the need for deeper EU integration, it could also push the bloc in the opposite direction. View Article
ECIPE's du Roy: Rules Without End: EU’s Reluctance to Let Go of Regulation : The goal is to increase competitiveness so Europe needs to reduce the volume of regulation and improve its quality... emphasised by Mario Draghi in his report on the challenges facing the European economy. The question is: can the EU regulate less and regulate better? View Article
Bank of England: The end of LIBOR : Yesterday, 30 September 2024, the remaining synthetic LIBOR settings were published for the last time and LIBOR came to an end. All 35 LIBOR settings have now permanently ceased. View Article
Basel Committee reports member jurisdictions making progress in implementing Basel III : Member jurisdictions have made significant progress in implementing the final elements of Basel III; Update sets out the adoption status of the framework at end-September 2024; Committee will closely monitor and assess the full and consistent implementation of Basel III standards. View Article
Ireland’s Funds and Asset Management industry contributes nearly €1 billion in direct taxes and employs almost 20,000 people nationally, sur : Industry-government collaboration to unlock further growth potential and ensure Ireland remains a competitive leader in global financial markets View Article
Banking Union
ECON : Council position on the CMDI reform- An initial analysis regarding key aspects of the proposed bank crisis management framework : An initial analysis regarding key aspects of the proposed bank crisis management framework. View Article
Reuters: ECB will do anything to remove hurdles to bank mergers, Buch says : The ECB, as the euro zone's top supervisor, will have the final say on whether UniCredit, Italy's second-largest bank, can raise its stake in its German rival to just below 30%. View Article
Daisy Chain Act: SRB adapts its MREL policy : This Act allows resolution authorities more flexibility in setting internal minimum requirements for own funds and eligible liabilities (MREL) in banking groups, in order to ensure sufficient loss-absorbing capacity. It also simplifies MREL treatment for liquidation entities and related prior permissions. View Article
The EBA publishes its Work Programme for 2025 : The European Banking Authority (EBA) published today its Work Programme outlining the key priorities and initiatives for 2025. View Article
Capital Markets Union
ESMA announces next steps for the selection of Consolidated Tape Providers : The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is publishing additional details on the selection of Consolidated Tapes Providers (CTPs) for bonds and for shares and Exchange-Traded Funds (ETFs). View Article
ESMA 2025 Work Programme: Focus on key strategic priorities and implementation of new mandates : ESMA has contributed to the discussions of how to make European capital markets more efficient and attractive, and in 2025 will advance on those aspects within its control, while working with the co-legislators and others to support the construction of the European Savings and Investment Union. View Article
EIOPA seeks feedback on measures aimed at strengthening the supervision of occupational pension funds’ liquidity management : ... hedging positions also make them vulnerable to rapid changes in interest rates and/or the value of foreign currencies, potentially triggering short-term margin calls that IORPs would need to meet. View Article
ECON: Can the Banking Union foster market integration, and what lessons does this hold for Capital Markets Union? : We argue that a significant obstacle to financial integration lies in the persistence of national interests in regulation, supervision, and politics. We explore the lessons that can be learned from ten years of the Banking Union for the development of CMU and the integration of capital markets. View Article
ISDA's O'Malia: Proportionality Needed in Counterparty Risk Guidelines : The collapse of Archegos Capital Management in 2021 highlighted a complex problem: how do you know whether a counterparty has built up similar exposures with multiple trading partners, leading to material concentrations that could result in heavy losses? View Article
EIOPA opens first batch of consultations on technical standards after Solvency II Review : These standards, once adopted, will guide the implementation of the new features within the Solvency II framework to improve supervisory effectiveness, risk management and financial stability in the EU’s insurance sector. View Article
InsuranceEurope's Doubrovine: Rethinking the approach to tackling Europe’s pressing pension challenge : The pension challenge has reached a critical juncture. In addition to demographic changes and the dwindling ratio of active population to retirees, the labour market is undergoing profound changes. View Article
Invest Europe: €143 billion invested in 10 years: VC drives European innovation : European VC investment in 2023 2.3x greater than 10 years ago; Over 1m employed at European VC backed 26,100 start-ups, delivering financial & social returns; European VC funds outperform North American peers ... At 6.3x, Southern Europe sees highest fundraising growth over the decade. View Article
Environmental, Social, Governance (ESG)
Net-Zero Banking Alliance 2024 Progress Report : It summarises information received from 122 member banks up to the end of May 2024 and offers insights into members’ progress on target setting and transition planning,.. View Article
New Global Investor Statement launches with the backing of hundreds of investors urging a whole-of-government approach to addressing the climate: 534 institutional investors and their representatives managing more than USD $29 trillion in assets have already signed on, urging enactment of policies that will unlock the private capital flows needed for a just transition to a climate-resilient, nature-positive, net-zero economy. View Article
CEPR's Hale, Meisenbacher, Nechio: Banks’ climate commitments and the green transition : This column analyses the tension between reducing climate transition exposure and realising green transition goals. The authors find little evidence that banks are moving assets out of high-emission sectors, which is bad news for risk management but good news for climate finance. View Article
EBF: Report of the C-level ESG Risk Roundtable Physical Risks Workstream : The objective was to collect current practices with the aim to identify possible “quick wins” to overcome the challenges. While initially focused on Pillar 3 disclosures for ESG risks, the WS discussions extended to cover broader risks management practices, with focus on climate physical risk. View Article
Finance Watch's Vandeloise: The last stretch: reaping the benefits of the sustainable finance framework : ... these rules set the fundamental transparency requirements at investee, financial institution and financial product level, and act as reference points for other legislation designed to meet the goals of the EU Green Deal. View Article
New diploma from ACCA sets the global standard for sustainability in finance : The ACCA Professional Diploma in Sustainability has been developed in response to the demand for skills and training in this fast-developing area View Article
Protecting Customers
Better Finance: Unmasking Digital Deception: A Data-Driven Approach to Mapping and Combating Online Investment Fraud in Europe : This report highlights the alarming rise of online investment scams that target retail investors across the continent, driven by the rapid digital transformation of the financial sector. View Article
Ensuring the fair treatment of consumers: GFIA responds to IAIS paper : GFIA proposes that the IAIS encourages supervisors to monitor local regulations and conditions that may hold back the ability of insurers to offer products to certain groups, including low-income diverse customers. View Article
Fin Tech Regulation
Joint Statement on DORA & definition of ICT Services : FESE together with AFME, EACH, ECSDA and FIA have issued a joint statement urging the Commission and the ESAs to reinstate the guidance confirming that regulated financial services should not be treated as ICT services for the purpose of DORA... View Article
SUERF's Bindseil, Senner: Macroeconomic modelling of CBDC: a critical review : This reviews how macroeconomics has approached the possible introduction of retail CBDC. A review of the literature reveals that macroeconomic models of CBDC often rely on CBDC design features and narratives which are no longer in line with the one of central banks actually working on CBDC. View Article
ESAs appoint Director to lead their DORA joint oversight : The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESAs) have appointed Marc Andries to lead their new joint Directorate in charge of oversight activities for critical third-party providers established by the Digital Operational Resilience Act (DORA). View Article
Economic Policies Impacting EU Finance
OECD: Tax policy evolving from crisis management towards long-term fiscal priorities : A trend of decreased taxes on businesses and individuals during the pandemic and the subsequent inflationary period is now showing signs of deceleration and reversal, according to a new OECD report. View Article
Brexit and the City
finextra: UK ready to make 2027 T+1 switch without EU : The UK will push ahead with the move to a T+1 settlement cycle for securities trades by the end of 2027, regardless of whether the European Union makes the switch at the same time. View Article
Brexit
EURACTIV: Britain and EU to hold regular summits following Starmer’s ‘reset’ trip : Britain and the EU will hold regular leaders’ summits from next year, following talks in Brussels between British Prime Minister Sir Keir Starmer and European Commission President Ursula von der Leyen on Wednesday (2 October). View Article
Federal Trust video: Stevens: Can Brexit Be Reset? : Starmer is, according to John Stevens, excessively concerned with appeasing the anti-European element of traditional Labour voters. He should confront rather than try appease such sentiments. View Article
Bruegel's Heussaff, McWilliams,Tagliapietra: Identifying areas for EU-UK energy and climate cooperation : Energy and climate cooperation has mutual benefits for the UK and EU, the obstacles are political View Article
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