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Highlights of my week: The flow of ideas for the next mandate of the EU institutions continues. Internationally, the G7 Finance Ministers/Governors called for attention to the remaining vulnerabilities in the financial system and the CPMI set out a work programme that will be focussed on the financial infrastructures. Nobody seems to think the wave of financial regulatory activity in the last two decades has reached its end point! The SSM has decided to update SREP – the most detailed inquisition of banks’ health – but EBA reported that the funds available to support failing banks are still rising. ESG issues remain central as the ECB’s Cipillone warned that current policies will fail to produce “net zero by 2050”. However, the financial sector has a major role to play and the new ISSB standards have attracted supporting legislative efforts from more than half the global jurisdiction – though not yet the US or UK and the EU was the first adopter. Despite much criticism of it, Project Syndicate's Frankel came to the support of Europe’s Carbon Border Tax, arguing that the CBAM may be the best chance the world has. Brexit has gone quiet for the moment as the UK’s General Election got underway and the two biggest parties try hard not to talk about the substance of the “elephant in the room” despite pressure groups trying to push for closer relations with the EU.
Graham Bishop
Articles from 24-30 May 2024
Policy impacting Finance
G7 Finance Ministers and Central Bank Governors’ Communiqué, Stresa, 23-25 May 2024 : ...a continued focus on financial stability and regulatory issues remains vital to ensure the effective functioning of the financial system... the importance of work carried out by the FSB and the Standard-Setting Bodies (SSBs) to identify and monitor vulnerabilities in the financial system... View Article
BIS/FSI: Building a more diverse suptech ecosystem: findings from surveys of financial authorities and suptech vendors : by Prenio, Pustelnikov and Yeo: Almost all financial authorities have ongoing suptech initiatives that are focused on four broad areas: data visualisation, regulatory reporting, financial risk assessment and supervisory automation. View Article
CPMI work programme and strategic priorities for 2024–25 : The key themes of the CPMI's 2024–25 work programme comprise the following: Risk management of financial market infrastructures (FMIs); Enhancement of cross-border payments; Digital innovation in payments, clearing and settlement. View Article
HIGHLIGHTS FROM THE EBF BOARD To build a competitive Europe, we must lay the right foundations now : To make this a reality, a purposeful approach to how banks together with capital markets can act as a catalyst for Europe’s success is needed. View Article
Bankenverband's Altendorf/Schmalz: Strengthening Europe and its financial sector - an agenda untill 2029 : An open, democratic Europe is not only essential for our cohesion and our social progress, but also vital for our economy. The private banks are demonstrating how competitive and attractive Europe can be, also in the future – for its citizens, the economy and a strong financial sector. View Article
Joint statement of the parties to the European Economic Area Agreement on the occasion of the 30th anniversary of its entry into force : This exceptional milestone invites us to reflect on the contribution of EEA cooperation to continuous development, long-term shared prosperity, peace and stability. Today, the EEA has grown to encompass 30 States and nearly half a billion people. View Article
FT: Macron and Scholz: we must strengthen European sovereignty : The EU needs more single market, innovation and investment to secure a common future View Article
EURACTIV: The EPP game and Meloni’s challenges : Italy’s conservative Prime Minister Giorgia Meloni has for months been politically courted by the centre-right European People’s Party (EPP) and recently by far-right leader Marine Le Pen. View Article
ECIPE's Erixon: Tocqueville, the Revolution and the European Parliament election : In the French city of Tours, in the heart of the Loire Valley, we can find an explanation for Europe’s turbulent politics....What is going on? The support for these political rebels is the world turned upside-down for anyone with political education in post-war Europe. View Article
Reuters: Wall Street's faster trade settlement sees some temporary bumps : The transition to faster trade settlements for securities in the U.S. has faced processing bumps although the switch has mainly been smooth, market participants said on Wednesday. View Article
Banking Union
SSM's Buch: Reforming the SREP: an important milestone towards more efficient and effective supervision in a new risk environment : The Supervisory Board has decided to update its annual health check of banks, the Supervisory Review and Evaluation Process. Triggered by structural shifts, new risks and external shocks, the changes aim at making the SREP more efficient and effective. View Article
FAQ on the SREP of tomorrow : ..delivering on our mandate to keep Europe’s banks safe, we reviewed the SREP to make sure that it stays fit for purpose and that our supervisory processes are more effective and efficient than ever. View Article
ESBG: SRB consultation on the Minimum Bail-in Data Template : ESBG expresses its support for the new minimum bail-in data template, while emphasizing that this development should have occurred earlier alongside the initial Bail-in Data Set release. Having precise instructions from the start would have allowed institutions to adapt their systems efficiently... View Article
Capital Markets Union
ESMA reports on the application of MiFID II marketing requirements : ESMA, together with the NCAs, finds that globally, marketing communications (including advertisements) comply with MiFID II requirements, and investment firms generally have procedures in place to ensure compliance with MiFID II of marketing materials, including during their development. View Article
The EBA publishes its final Guidelines on STS criteria for on-balance-sheet securitisation : The EBA published the final Guidelines on the criteria related to simplicity, standardisation and transparency and additional specific criteria for on-balance-sheet securitisations (so-called STS criteria). These Guidelines will ensure a harmonised interpretation of these STS criteria.. View Article
Funds to protect deposits in case of bank failure are going up, EBA data shows : The European Banking Authority (EBA) today published end-2023 data related to two key concepts and indicators in the Deposit Guarantee Schemes Directive (DGSD), namely available financial means (AFMs) and covered deposits. View Article
EU Policy. Watchdogs and carnivores: von der Leyen’s capital markets plan faces multiple hurdles : Despite election campaign pledges, policymakers and the industry can’t decide how to Make European Equity Great Again....Voters approaching the ballot box in June are likely to be more concerned about immigration, inflation and war than how to boost equity and bond markets. View Article
BETTER FINANCE answer to ESMA Consultation Paper on the draft guidelines on reverse solicitation under the Markets in Crypto Assets Regulation: BETTER FINANCE supports ESMA’s broad approach to guiding prudential regulation concerning the solicitation of EU clients by third-country firms, which is essential to protect European consumers from non-MICA compliant entities and therefore investor protection safeguards. View Article
Environmental, Social, Governance (ESG)
ECB's Cipillone: Europe’s tragedy of the horizon: the green transition and the role of the ECB : Under current policies, we would fall well short of the net zero target in 2050. Even if all existing national pledges were fulfilled, there would still be a large gap View Article
OECD: Climate Finance Provided and Mobilised by Developed Countries in 2013-2022 : The report outlines the aggregate trends in annual climate finance provided and mobilised by developed countries for climate action in developing countries over the period 2013-2022. View Article
IOSCO advances Global Sustainability Disclosures Agenda with enhanced Capacity Building Initiatives : Meeting the challenges of consistent sustainability disclosures was a key topic atIOSCO’s Presidents Committee Meeting, attended by representatives from all 130 member-jurisdictions. View Article
Jurisdictions representing over half the global economy by GDP take steps towards ISSB Standards : The IFRS Foundation releases Jurisdictional Guide at IOSCO Annual Meeting to support regulators. Many jurisdictions are seeking full alignment with or adoption of the ISSB Standards: the European Union was first; the CSRD said ESRS would incorporate ISSB Standards to the greatest extent possible. View Article
IFAC Congratulates IFRS Foundation and ISSB on Growing Global Commitment to ISSB Standards, Welcomes New Jurisdictional Guide : International Accountancy Profession Commits to Empower Sustainability Transformation View Article
IAIS contributes to G7 framework on public-private insurance programmes against natural hazards : In 2024, under the Italian Presidency, the G7 continued to identify disaster risk finance as a priority topic View Article
UNEP FI: Assessing climate transition risk: methodologies and roles for financial institutions : The financial sector is leading the transition to a lower-carbon future, and real estate asset valuations are increasingly tied to energy efficiency, making inefficient buildings tangible financial risks. Carbon pricing and operational cost impacts further influence these valuations. View Article
UNEP FI: Managing physical climate-related risks in loan portfolios : This report offers an in-depth analysis of physical climate risk management to equip retail banks with tools to effectively assess, manage, and minimise physical climate risks in their business. This report focuses on the nuances to provide concrete, actionable insights for financial institutions. View Article
GRI and IFRS Foundation collaboration to deliver full interoperability that enables seamless sustainability reporting : In response to market demand, the two organizations will work together to optimize how GRI and ISSB Standards can be used together View Article
Response of the Platform on Sustainable Finance to the EFRAG’s public consultation on draft ESRS : While reporting may not be the ultimate goal, it serves as a necessary step because what cannot be measured cannot be effectively managed. In this context, the Platform welcomes EFRAG´s LSME and VSME ESRS. View Article
IMF Blog: Europe Can Reap Sizable Energy Security Rewards by Scaling Up Climate Action : By Dolphin, Duval, Sher, Rojas-Romagosa: Meeting the continent’s emission reduction targets could enhance energy security metrics by 8 percent by 2030—and that would be just the start View Article
EBF: Report of the C-ESG Risk Roundtable Climate Scenario Workstream : The Climate Scenario Analysis (CSA WS) objective is to share, amongst participating banks, the current practices and targeted evolutions on Climate and ESG scenario analysis, internal capital assessment and risk materiality analysis. View Article
Bankenverband's Neuman/Schwantes: 3 questions, 3 answers: ESG risk management : Nowadays, sustainability risks in the three areas of environmental, social and governance – or ESG for short – have become an integral part of banks’ risk management. After all, one of the main tasks of a bank is to quantify and manage risk. And ESG risks are no exception. View Article
Project Syndicate's Frankel: Europe’s Carbon Border Tax Advances the Fight Against Climate Change : The European Union’s Carbon Border Adjustment Mechanism (CBAM) may look like a potential source of international discord..but the EU’s strict carbon-pricing regime may be the best chance the world has to achieve the Paris climate agreement’s ambitious emissions-reduction goals. View Article
Protecting Customers
ECA: Auditors join the new EU Ethics Body set up today : Eight EU institutions and bodies have set up a new EU Body for Ethical Standards; A major step towards fostering a common culture of integrity and ethics; EU auditors’ 2019 report on ethical standards in EU institutions bears fruit View Article
Fin Tech Regulation
City AM's Mucklejohn: London retains title as tech capital of the world as Oxford and Cambridge close in on New York : The Z/Yen Smart Centres index – which ranks 79 global commercial centres on their ability to create, develop and deploy tech – showed London remained in first place, a title it has held in the biannual ranking since overtaking New York last May. View Article
Economic Policies Impacting EU Finance
CEPR: Gradual expansion of the EU economy ahead, time to tackle fiscal challenges : By: Verwey, Bardone, Bethuyne, Orsini: Following a period of broad stagnation, the EU economy staged a comeback in the first quarter of 2024. This column argues that despite a challenging external environment, strong domestic fundamentals set the stage for gradual acceleration of economic activity. View Article
Brexit
CEPR: Selling England (no longer) by the pound: Currency mismatches and the dollarisation of UK exports : By Garofalo, Rosso, Vicquery: In the aftermath of the depreciation that followed the Brexit referendum in 2016, UK exporters progressively shifted to invoicing most of their exports in dollars, rather than in pounds. View Article
FT's O'Dwyer/Foster: Next UK government must forge better trade relations with EU, says lobby group : British Chambers of Commerce warns companies face ever higher costs stemming from Brexit View Article
CER's Berg: Delivering the goods: An EU trade agenda for the next UK government : The Labour Party’s red lines will restrict its ambitions for changing the EU-UK relationship, but if it forms a government it should push Brussels for concessions, particularly on trade in goods. View Article
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