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Highlights of my week: With Barnier’s demise as PM, France may now fall into a political crisis but – as a member of the euro area – it is not an immediate financial crisis. UvL is setting up a “Draghi taskforce” so there may be a serious attempt to produce reform but the growing number of “Putin sympathiser” states may frustrate progress. Despite all this, Eurobarometer showed record high trust in the EU and especially the euro. However, the FSB Plenary reviewed its work- particularly on non-bank financial institutions (NBFI) – just as the ESRB published a report on system-wide macroprudential supervision rather than restricting it to banks. The EBA said that EU banks continue to be robust but the ESRB’s diagnosis of aspects of the NBFI eco-system (especially CCPs) is disturbing. The European Payments Council published its annual report on fraud just as two thinks tanks gave their views that the European Parliament may have mis-stepped on extending liability for fraud to entities that are not participants in the fraudulent process. The Retail Investment Strategy was also subjected to serious criticism from a heavy-weight group of professional associations. Meanwhile EIOPA is consulting on a ‘tool’ to enable citizens to understand how under-insured they are. Council agreed its position on FIDA – Financial Data Access – and the ECB published its second update on progress to the digital euro. Across the Channel, there is much hand-wringing about ‘London’s Shrinking Exchange’ as more companies are de-listed. Pollster Kellner showed that Labour’s re-capture of the ‘red wall’ seats was not due to a rise in Labour but a collapse in Tory support as their voters chose Farage’s Reform Party instead.
Graham Bishop
Articles from 29 November - 5 December 2024
Policy impacting Finance
Bloomberg: France Plunges Deeper Into Crisis After Macron’s Premier Ousted : President Macron will make a statement on Thursday at 8 p.m.; Macron will need to name a new premier in a divided parliament View Article
POLITICO: Von der Leyen is creating a task force to turn Draghi report into reality : European Commission team could sit within secretariat-general. View Article
MEPs quiz Lagarde amid gloomy economic environment : Geopolitical instability, a weak Eurozone outlook, and difficulties of forecasting featured prominently during MEPs’ meeting with ECB President Lagarde on Wednesday. View Article
New Eurobarometer survey shows record high trust in the EU in recent years : The latest Eurobarometer released today reveals the highest level of trust in the European Union since 2007 and the highest-ever support for the euro. The survey also shows that Europeans have a more optimistic view about the future. View Article
FSB Plenary meets in Hong Kong : The Plenary also reviewed policy work in several areas, including climate-related financial risks, crypto-assets and global stablecoins, cross-border payments, and non-bank financial intermediation (NBFI). View Article
Project Syndicate's Rogoff: Europe’s Economy Is Stalling Out : ... it is clear that Keynesian stimulus alone cannot pull France and Germany out of their current malaise. To regain the dynamism and flexibility needed to weather US President-elect Donald Trump’s tariffs, Europe’s largest economies must pursue far-reaching structural reforms. View Article
City AM's Mucklejohn: Deutsche Bank boss: A ‘wave’ of European bank mergers is coming : “Scale is an issue which is important in many sub-businesses we have, and therefore the general trend that consolidation is happening is, in my view, a logical trend which we will see even more in future,” the head of Germany’s biggest bank said. View Article
CEPR: Two centuries of systemic bank runs : by Jamilov, König, Müller, Saidi: This column constructs two novel, cross-country databases on bank run events in 184 countries over 1800-2023 and bank sector outstanding deposits. It shows that the costs of systemic bank runs are substantial – real GDP is on average 9% below its pre-run trend. View Article
ECON brief: The European Systemic Risk Board (ESRB): Main features, mandate & accountability : Summary : This briefing paper provides an overview of the European Systemic Risk Board (ESRB), its main features, mandate and accountability arrangements towards the European Parliament. View Article
Banking Union
EU banks continue to be robust although risks from geopolitical tensions and cyber threats remain significant, the EBA Report shows : EBA published the autumn edition of its risk assessment report. The Report is accompanied by the 2024 EU-wide transparency exercise, giving detailed information, in a comparable and accessible format, for 123 banks from 26 countries across the EU and the European Economic Area (EEA). View Article
ESRB publishes report on system-wide approach to macroprudential policy : The report is the ESRB’s response to the Commission’s targeted consultation assessing the adequacy of macroprudential policies for non-bank financial intermediation. It provides a conceptual framework that combines the prevailing focus on entities with a focus on activities... View Article
EBA proposes criteria to appoint a central contact point for crypto-asset service providers to strengthen the fight against money-laundering : EBA launched a public consultation on draft RTS specifying the criteria according to which crypto-asset service providers (CASPs) should appoint a central contact point to ensure compliance with local AML/CFT obligations of the host Member State. View Article
Dominique Laboureix's speech at ECON : As banks have progressed considerably in the last nine years, we are now making a strategic shift to testing these capabilities. This is why a key item for 2025 is a revamp of how we assess banks’ readiness, taking into account these new testing activities. View Article
SRB opens public consultation on resolvability self-assessment : "Our updated approach focuses on banks conducting resolvability self-assessments and regularly testing their capabilities, in order to ensure that they are resolvable and ready to tackle different types of risks and crises,” said SRB Chair Dominique Laboureix. View Article
CEPR: Breaking banks’ information monopoly: The case for deposit data sharing : Cao Garcia-Appendini, Huylebroek. Incumbent banks often maintain an informational monopoly over borrowers, making it difficult to switch to competing lenders or negotiate better terms. This column argues deposit relationships could be a solution.. contributing to more competitive lending markets. View Article
EPC: Yearly update of the “Payment Threats and Fraud Trends Report” : The European Payments Council published the yearly update of the “Payment Threats and Fraud Trends Report” which provides an overview of the most important threats and other “fraud enablers” in the payments landscape, with focus on recent attacks and outline of the broader attack vector landscape. View Article
Ecipe: Shared Liability: The European Parliament’s Misstep in Fighting Financial Fraud Published November 2024 : By: Bauer, Dyuti, Pandya: While the intent to address fraud is commendable, this model misallocates responsibilities by requiring non-financial entities to oversee fraudulent activities, despite their lack of visibility and technical control over financial transactions. View Article
Finextra: MEP amendments to PSR APP fraud liability regime 'undermine effective fraud prevention' : Copenhagen Economics and the Computer & Communications Industry Association (CCIA Europe) have revealed flaws in the European Parliament’s unprecedented extension of liability beyond payments services providers (PSPs) to online platforms and electronic communication service providers... View Article
Capital Markets Union
Retail Investment Strategy - Joint Statement: Finance sector calls for co-legislators to reassess the RIS in light of the European Commissio : The undersigned associations welcome the new European Commission’s objectives to boost the EU’s competitiveness, focus on the enforcement of existing legislation and simplify regulatory frameworks. View Article
ICMA publishes its semi-annual report that provides detailed data on EU and UK corporate bond market trading activity : One of the core objectives of MiFID II/MiFIR was to provide greater public transparency of secondary trading activity in the EU and UK markets. View Article
IOSCO: Evolution in the Operation, Governance and Business Models of Exchanges: Regulatory Implications and Good Practices : The Report focuses on equity exchanges but may be of relevance to other types of trading venues and trading in other classes of financial instruments. View Article
OECD: Strong action is needed to make retirement systems more inclusive, resilient and innovative : The design and governance of asset-backed pensions should be enhanced to foster more inclusive and resilient systems, secure better outcomes for individuals and contribute to sustainable economic growth and innovation, according to new analysis from the OECD. View Article
IAIS Global Insurance Market Report 2024 highlights key risks and trends facing the global insurance sector : IAIS published its annual Global Insurance Market Report (GIMAR) for 2024, detailing the results of this year’s Global Monitoring Exercise (GME), the IAIS’ risk assessment framework to monitor key risks and trends and detect the potential build-up of systemic risk in the global insurance sector. View Article
FSI and IAIS publish joint note on parametric insurance : The note explores how key design elements such as index selection, trigger mechanisms and payout structures can enhance the adoption of parametric insurance against NatCat. View Article
EIOPA seeks feedback on its proposal for the development of a natural catastrophes tool to raise awareness on potential risks and on prevent : It aims at helping citizens better understand how exposed is their property to natural hazards, the benefits of adequate insurance coverage and what prevention measures they can take to reduce potential losses. View Article
EIOPA opens second batch of consultations on legal instruments after Solvency II review : EIOPA has launched today the second series of consultations regarding its proposed report on biodiversity risk management, as well as on five legal instruments to reflect the changes expected to be introduced to the regulatory framework as part of the Solvency II review process. View Article
Environmental, Social, Governance (ESG)
Commission provides further clarifications on the EU taxonomy for sustainable economic activities : The publication, which aims to make the taxonomy easier to use, is part of the Commission’s simplification agenda and its effort to reduce the administrative burden on companies applying the EU sustainable finance framework. View Article
City of London: COP29’s financial focus shows private capital holds the key to reaching net : COP29 made it clearer than ever: the private sector must play a crucial role if we are to meet the Paris Agreement’s goals. Chris Hayward, Policy Chairman, explains why the time for bold, decisive action is now—or risk falling behind. View Article
Hertie School's Heist: Four and a half takeaways from COP 29 : With expertise in global environmental politics, including UN climate negotiations, diplomacy, and climate finance, Feist reflects on the key outcomes of the negotiations and their implications for international climate policy. View Article
PubAffairsBrussels: Can carbon markets make a breakthrough at COP29? : Voluntary carbon markets (VCMs) have a strong potential, notably to help bridge the climate finance gap, especially for Africa. View Article
Bruegel's Pisani-Ferry, Tagliapietra: An investment strategy to keep the European Green Deal on track : In this Policy Brief, we assess the investment needed to achieve the 2030 climate goal and climate neutrality by 2050 View Article
Net-Zero Asset Owner Alliance calls for regulatory mandates on Scope 3 disclosure : As regulations on these emissions evolve worldwide, with the CSRD in the European Union and emerging regulatory frameworks in Japan and California, the NZAOA’s new paper highlights the growing urgency for standardising disclosure and the need for policymakers to act decisively. View Article
EuropeanIssuers Unveils First Study on Opportunities and Challenges of Sustainability Reporting for Listed Companies in Europe : Luc Vansteenkiste, Chairman of EuropeanIssuers and Board member of the EFRAG Sustainability Reporting Board, commented: “The journey toward fully realising the potential of the CSRD is one of both complexity and opportunity...." View Article
Fin Tech Regulation
Capital markets Union: Council agrees to make consumers’ financial data more accessible : The Council today reached an agreement on a proposed framework for Financial Data Access (FIDA) that aims to open the access of financial institutions to each other’s customer data. View Article
ECB: Timeline and progress on a digital euro : ECB updates digital euro rulebook following joint review with consumers, retailers and payment service providers; launches new research to incorporate users’ digital euro design preferences; Stakeholder engagement across euro area remains key priority to support ongoing legislative deliberations View Article
CEPS' Arnal: AI and credit: Addressing the still open questions to prevent innovation paralysis : AI holds great transformative potential for virtually all businesses, and the financial sector is undoubtedly one of them. Although AI brings advantages, it can also amplify risks or pose new ones. View Article
Brexit and the City
Bloomberg's Moon: LSE (London's Shrinking Exchange) : An M&A frenzy this year may have had dealrooms (and newsrooms) buzzing, but for London’s stock market it isn’t as much fun. View Article
City of London: Lord Mayor urges Government to accelerate UK investment reforms : .. are current efforts sufficient to boost investment in UK equities and support the growth of British companies. By highlighting proposals to incentivise investment through ISAs and revisit stamp duty on UK share trading, he will advocate for a balanced approach to help homegrown businesses thrive. View Article
The FCA sets out next steps for establishing a bond consolidated tape : The FCA is establishing a bond consolidated tape (CT) to ensure that data is accessible in a cost-effective way. View Article
Brexit
EU-UK Forum's Kellner: Exposed: the truth about Labour's Red Wall "triumph" : It is a myth that Labour won the election by winning back thousands of strongly pro-Brexit voters in Red Wall constituencies that had swung to the Conservatives in 2019. View Article
UKandEU's Menon: Time to Choose? : Anand Menon examines the difficult choices facing the UK government and the relationships with US and Europe View Article
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