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Welcome to our Friends weekly e-mail.
European politics continued to dominate attention last week as the snap French elections may have terminated President Macron’s ambitions and today’s British election may terminate the Conservative Party as a political force for a decade (or two?). Meanwhile the European Council exercised state’s rights to nominate personnel for key EU roles but the Parliament must now vote – even as the membership of the `political families’ continues to evolve. BusinessEurope published the policy wish list of the business community as a whole. Almost below the radar, EBA cautioned about the risk outlook for banks and especially about the inter-connections with NBFIs while ESRB fulfilled its function by worrying about liquidity risks. The push for more securitisation in the EU attracted attention and FSB decided to consult on whether last decade’s G20 reforms had simply shifted risk from banks to NBFIs. EIOPA produced one bright spot when it reported that the insurance and pension sectors remain resilient. EBA and ESMA published guidelines for the suitability of board members of crypto-asset market players. The likelihood of a Labour government in the UK stimulated the think tanks to start considering how it might boost EU-UK trade ties but – as EURACTIV pointed out – the UK enjoys talking to itself on these matters! Graham Bishop Articles from 28 June - 4 July 2024
Policy impacting Finance Remarks by President Charles Michel following the European Council meeting of 27 June 2024 : Within just a few hours this evening – faster than expected – we were able to conclude all items, including appointments and nominations. This is a strong signal we are sending to European citizens. It is a strong signal in terms of European democracy, as leaders took into account both the outcome of the European elections and the preparatory work on the strategic agenda. View Article
European Council conclusions, 27 June 2024 : On 27 June, the European Council adopted conclusions on Ukraine, the Middle East, security and defence, competitiveness, other items, the next institutional cycle and a roadmap for future work on internal reforms. View Article
AFME welcomes the adoption of the European Council’s Strategic Agenda for the next institutional cycle : ...the adoption of the Strategic Agenda by EU leaders stresses the vital role of capital markets and banking union to unlock the necessary investment to ensure a more dynamic and competitive European economy. View ArticleEURACTIV: EPP, Socialists, Liberals finalise wishlists for von der Leyen’s second term : The three EU Parliament groups of the centrist majority diverge on some key policy issues for the next mandate, according to draft action plans seen by Euractiv, the basis for their talks with Ursula von der Leyen as she seeks support to win a second mandate as Commission president. View Article
The Belgian presidency of the Council of the EU concludes with significant achievements : The presidency concluded 74 legislative files in trilogue and advanced on about 60 more legislative files in the Council, demonstrating Belgium’s ‘culture of compromise’. View Article
BIS Annual Economic Report: So far, so good : Challenges remain. The recent stickiness of inflation in some key jurisdictions reminds us that central banks' job is not yet done. Financial vulnerabilities have not gone away. Fragile fiscal positions cast a shadow as far as the eye can see. View Article
FERMA publishes its Policy Manifesto urging EU leaders to make Europe “risk-ready for a brighter future” : The Manifesto 2024-2029 calls on EU to address regulatory complexities, lack of insurance for net zero transition, evolving cyber security challenges, and crisis preparedness levels. View Article
ECIPE: Reinventing Europe’s Single Market: A Way Forward to Align Ideals and Action : by Bauer, Pandya, Sharma, Sisto: It is essential for EU institutions and Member State governments to shift their focus from the abstract concept of the “Single Market” to the concrete objective of “legal harmonisation in the EU.” View Article
BUDAPEST DECLARATION BUSINESSEUROPE’S COUNCIL OF PRESIDENTS:REBOOT EUROPE: DELIVERING THE NEW EUROPEAN COMPETITIVENESS DEAL FOR INDUSTRY : In a world marked by rising geopolitical tensions, Europe needs to do a reboot in EU policies in order to address its growing competitiveness gap if it wishes to remain an anchor of peace, prosperity, security and stability and continue to support Ukraine, actively involving European economic actors in its reconstruction. View Article
Bruegel: Divergent economic dynamics grind down the Franco-German EU axis : by Buti, Messori: France must face up finally to its fiscal failings – and can no longer rely on German indulgence View Article
ESRB: systemic liquidity risks and investment fund liquidity : The General Board discussed a unified framework for monitoring systemic liquidity risks in the financial system as a whole. View Article
Banking Union EBA calls for caution amid rising geopolitical risks for the EU/EEA banking sector : It covers the EBA’s common risk assessment; the analysis of banks’ asset encumbrance and funding plan data, with specific chapters dedicated to EU/EEA banks’ Commercial Real Estate (CRE) exposures and EU/EEA banks’ interconnections with non-bank financial intermediaries (NBFIs). View Article
SSM's Elderson: Preparing for the next decade of European banking supervision: risk-focused, impactful and legally sound : ...making European banking supervision more risk-focused, efficient and effective. For example, we recently announced change to the Supervisory Review and Evaluation Process (SREP) – our annual health check of banks – making it more targeted and more risk-focused in a new risk environment. View Article
SRB publishes document on bail-in approach in the Banking Union : The SRB has published a document for banks, investors and other stakeholders on executing its bail-in decision... View Article
CEPS' Arnal, Anderson: Making instant and inclusive payments a reality in the EU : The generalisation of instant euro payments in the EU will lead to very relevant benefits in terms of liquidity management, market competition and convenience for users. View Article
Capital Markets Union Bruegel's Christie: EU securitisation push needs markets, not housing guarantees : Scale and liquidity are two challenges that remain in the pursuit of EU securitisation. CMU tops the wish lists of European Union leaders, outside experts and seasoned financial insiders as a way to find the extra €1 trillion or more needed annually for the green and digital transitions. View Article
FSB consults on interim findings of its evaluation of the effects of the G20 financial regulatory reforms on securitisation : The reforms have contributed to a redistribution of risk from banks to the non-bank financial intermediation (NBFI) sector. View Article
PCS: Good news for Italian banks : In one of those highly technical yet genuinely impactful regulatory decisions, the EBA issued an opinion backing a decision of CONSOB on collateral for synthetic transactions. View Article
EIOPA: Europe’s insurance and pension fund sectors stay resilient amid tense risk landscape : Europe’s insurance and occupational pensions sectors have remained robust on aggregate, despite widespread challenges. The insurance sector is solidly capitalized. View Article
EIOPA issues opinion on the supervision of captive insurers : The Opinion aims at facilitating a risk-based and proportionate supervision of captive (re)insurance undertakings and further support the convergence of supervisory expectations in the context of creating a level playing field within the EU. View Article
IAIS publishes preview of 2024 Global Monitoring Exercise results, reflecting financial stability of the insurance sector : Interim results indicate stable solvency, liquidity and profitability positions in 2023, with slight improvements compared to 2022. Aggregate systemic risk scores increased at year-end 2023, mainly driven by an increase in level 3 assets. View Article
Recovery and resolution planning: GFIA responds to IAIS’ Holistic Framework consultation : In its response, GFIA argues that only when meeting established risk-based criteria and in proportionate manner should insurers be required to contribute to a supervisor’s resolution plan or submit a recovery plan. View Article
Recovery and resolution planning: Insurance Europe responds to IAIS’ Holistic Framework consultation : Insurance Europe supports the need for recovery and resolution planning requirements where there is a clear need..However, the federation of insurance associations objects to the IAIS’s proposals to extend supervisory expectations for RRP which, it argues, goes too far. View Article
Environmental, Social, Governance (ESG) Commission: Report on the monitoring of climate-related risk to financial stability : The report takes stock of analytical work and policy responses carried out by the EU so far. View Article
Fin Tech Regulation AFME: Scaling DLT-Based SSA and Government Bond Markets - A Roadmap Strategy for European Issuers : While DLT is being adopted in different parts of capital markets, this roadmap focuses on adoption of DLT in markets for bonds issued by European sovereigns, supranational institutions and public-sector agencies. View Article
CEPR: The digital euro can strengthen financial stability, with limits : By Bidder, Jackson, Rottner: A theoretical model matched to empirical data suggests that the digital euro – if complemented with a suitable holding limit – can increase financial stability and improve welfare. View Article
EBA and ESMA publish guidelines on suitability of management body members and shareholders for entities under MiCA : These two sets of guidelines are part of the EBA and ESMA‘s ongoing efforts to foster a transparent, secure, and well-regulated crypto-assets market, and complement the recently published governance package. View Article
Brexit and the City POLITICO: Paris was on the cusp of becoming the EU’s finance hub. Then came the election. : The French vote could deal a massive blow to the capital’s post-Brexit ambitions. View Article
Brexit FT's Foster, Bounds: What are Labour’s options for boosting trade with Europe? : An assessment of the economic benefits of the party’s pledge to revisit the Brexit agreement View Article
EURACTIV's Moller-Nielsen: Labour victory unlikely to restore pre-Brexit economic ties, experts say : A Labour victory in the UK general election on Thursday (4 July) could foster greater levels of trust and closer economic ties with the EU – but is unlikely to restore pre-Brexit integration, as policy divergence looks set to remain a longer-term reality, experts say. View Article
UKandEU's Curtice: What do Labour voters want Starmer to do about Brexit? : John Curtice looks at the extent to which Labour’s stance on Brexit reflect the views of those who intend to vote for the party on Thursday. View Article
CER: EU-UK relations: Towards a post-election agenda : by Aslak Berg , Ian Bond , Zach Meyers , Luigi Scazzieri: Britain’s next government needs a coherent strategy towards the EU, ranging from trade and regulation to energy, foreign policy and defence. View Article
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