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Welcome to our Friends weekly e-mail.
Highlights of my week: Brussels attention is now swinging to the personalities of the proposed Commission and – for finance particularly - Commissioner-designate Albuquerque. But reflections on the Draghi report continue and now include 20 states criticising both Draghi and Letta for not paying enough attention to the basic integration needed for completing the single market. However, the first test of sincerity for this process looks set to be flunked as Germany furiously denounced Italy’s Unicredit’s approach to Commerzbank. But can they actually stop it? Bruegel reviewed the EU’s debt sustainability problem flowing from its demographics but few commentators focus on China’s incomparably worse situation. Parliament produced a study on the implications of insolvency law for banking union – another basic requirement for any sort of single market in financial services but consistently avoided by the politicians. The ECB is sharpening its teeth on environmental policy by issuing “fine notices” to banks that seem at risk of non-compliance. The mandatory due diligence required by CSRD has attracted the interest of both accountants and risk managers while the asset managers reflected on the growth of sustainable equity funds in recent years. The pressure from asset owners does seem to be having an effect on corporate behaviour. The problem of stimulating retail interest in CBDC continues. The cost of Brexit may exercise some academics but there seems little recognition that restoring the lost growth would go a long way to solving the UK’s public finance problems.
Graham Bishop Articles from 19-26 September 2024
Policy impacting Finance EPC's Zuleeg, Emmanouilidis: Reactions to the next Commission : Overall, Commission President von der Leyen has got much of what she wanted. Yes, gender balance has not been achieved (60:40 in favour of males) but it looks better than at the outset and the top leadership is largely female, with five of the seven top leadership positions.. View Article
POLITICO: Financial services role goes to Albuquerque ? but she brings baggage : Former Portuguese finance minister is known for introducing harsh economic austerity. View Article
BETTER FINANCE Welcomes EU Financial Services Commissioner-designate's Focus on Savings and Investment Union : With a critical portfolio focused on advancing the development of a Savings and Investment Union (SIU) that prioritises the needs of citizens, Mrs Albuquerque’s nomination comes at a pivotal time as the EU faces an urgent pensions crisis. View Article
ESBG's Simon welcomes the planned structure of the new College of Commissioners : and the mission letters issued by European Commission President Ursula von der Leyen to Commissioners-Designate, outlining priorities for the European Union. View Article
CEPS' Pelkmans: A critical first response to Mario Draghi’s competitiveness report : What it says, what it means - and is it feasible? View Article Delors Centre's Redeker: Why the Draghi Report Is a Huge Opportunity for Germany : But Draghi’s report doesn’t just offer a refreshingly blunt analysis. It is an invitation – particularly for Germany – to tackle these issues jointly in a European framework. To fully grasp this, however, one needs to read the report, not just hit Ctrl+F and search for the word “debt.” View Article
CEPR's Larch: High government debt in the EU or the end of ‘enjoy now, pay later’ : This column provides a brief history of government debt in the EU and draws attention to some important issues that are normally kept in the background. View Article
ECFR's Pauwel: Welcome to Barbieland: European sentiment in the year of wars and elections : Today’s European Union resembles a Barbieland: a place prone to regard itself as more perfect than it really is – and harbouring some notable blind spots. View Article EURACTIV:Twenty EU countries to call for single market push after Letta, Draghi ‘sidelined’ integration goals : Ahead of a meeting of industry ministers in Brussels on today, twenty member states have signed an initiative to remove single market barriers, an effort they feel has been largely neglected in the recent high-level reports by former Italian Prime Ministers Enrico Letta and Mario Draghi. View Article
Bruegel's Kirkegaard: Has Hungarian obstructionism triggered greater EU fiscal integration? : Viktor Orban, by delaying EU aid to Ukraine, may have inadvertently helped make the case for more EU fiscal federalism View Article
Bruegel: How demographic change will hit debt sustainability in European Union countries : by Darvas, Welslau, Zettelmeyer: The European Union faces a dramatic demographic problem in the decades ahead View Article
Basel Committee approves annual G-SIB assessment and advances follow-up response to 2023 banking turmoil : Discusses recent episodes of market and operational disruptions; Basel Committee approves annual assessment exercise for global systemically important banks (G-SIBs); Finalises analytical report on liquidity risk insights from the 2023 banking turmoil. View Article
Banking Union Reuters: Mergers could benefit banks and EU economy, says EU executive : The EU's executive's comments come a day after German Chancellor Olaf Scholz slammed as "an unfriendly attack" Unicredit's move to become the biggest investor in rival Commerzbank (CBKG.DE) View Article
Bloomberg: UniCredit’s Maneuvers Raise Temperature Between Rome and Berlin : Rome officials privately criticize Berlin stance on UniCredit; German chancellor slammed Italian bank’s move on Commerzbank View ArticleSRB Chair Laboureix's ECON hearing speech - Building resilience through resolution planning within our framework and beyond : Bank crises may seem a remote risk and these discussions may seem theoretical. Unfortunately, they are not – as last year’s crises in the US and in Switzerland have so clearly reminded us. View Article
Parliament study: Banking Market Integration in Europe and Insolvency Law : This paper provides evidence that bank interest margins tend to be higher in countries with weaker loan enforcement. View Article
Capital Markets Union BIS: Central clearing in government bond markets: keeping the "safe asset" safe? : by Aquilina, Scheicher, Schrimpf: Enhancing the volume of centrally cleared transactions could help mitigate risks to market functioning by freeing up the balance sheet of dealers and encouraging all-to-all trading. View Article
ECB: Hedge funds: good or bad for market functioning? : By Ferrara, Linzert, Nguyen, Rahmouni-Rousseau, Skrzypinska, Vaz Cruz: Hedge funds have substantially increased their trading activity in euro area government bond and repo markets. The ECB Blog evaluates how this plays out for market functioning and intermediation. View Article
PensionsEurope messages on FIDA (Financial Data Access regulation) to the Hungarian presidency : We clearly indicated our full support for option 3 to exclude pension rights in officially recognised occupational pension schemes, under the Solvency II and IORPII directives with an opt-in possibility. View Article
Environmental, Social, Governance (ESG) Reuters: ECB started issuing fine notices to banks not meeting climate expectations : The ECB has long complained that banks are not meeting its supervisory expectations on climate issues and warned there would be financial consequences if interim deadlines or its year-end target date are missed. View Article
Accountancy Europe: Corporate Sustainability due diligence directive – what the accountancy profession should know : With the Corporate Sustainability Due Diligence Directive, the European Commission aims to trigger behavioural change in businesses; and hold them accountable. CSDDD introduces mandatory due diligence obligations to EU and non-EU large companies; and establishes liability in case of non-compliance. View ArticleFERMA: EU Policy Note on the Corporate Sustainability Reporting Directive : CSRD requires more strategic involvement by risk managers to meet sustainability reporting demands, FERMA states View Article
EFAMA: Significant growth of sustainable equity funds over the last 5 years : This publication provides an in-depth analysis of the trends and dynamics within the sustainable equity UCITS market, covering the rapid growth in net assets and the evolving investor landscape over recent years. View Article
IIGCC: How the Draghi report on European competitiveness lines up with investor recommendations : The lengthy report sets out a vision for a “new industrial strategy for Europe”. Critically, the transition to net zero is identified as one of the central drivers of the EU’s future economic growth and competitiveness. View Article
What has NZAOA achieved since 2019? A look at five key milestones : As Alliance members acted on portfolio decarbonisation—with an eye on making an impact in the real economy—knotty topics arose. Beyond development of target-setting methodologies, the Alliance introduced a new standard for sustainable finance by issuing clear positions and calls to action... View Article
Findings reveal GRI reporting enhances corporate social performance : There is a direct correlation between the proper utilization GRI Standards and a stronger corporate social performance... At the halfway point to achieving the SDGs, many targets remain off track View Article
FTSE Russell 2024 survey: Asset owners remain positive about sustainable investment : View Article
SSM's Elderson: Energy performance data - a must-have for managing climate-related credit risk : Real estate lending represents a significant share of supervised banks’ banking books. The real estate sector is also a concrete example of how physical and transition risks affect traditional prudential risk categories, in this case credit risk. View Article
ECB: Economic and financial impacts of nature degradation and biodiversity loss : by Ceglar, Parker, Pasqua, Boldrini, Gabet and van der Zwaag: Businesses, the financial sector and policymakers have long underestimated, or even disregarded, the economic significance of ecosystem services, many of which are neither traded in markets nor directly assigned a monetary value. View Article
Fin Tech Regulation ECB's Cipollone: From dependency to autonomy: the role of a digital euro in the European payment landscape : A digital euro would strengthen Europe’s financial sovereignty and resilience because it would be built with European technology and infrastructure. It would empower Europe to independently develop and manage digital payment solutions, supporting the further deepening of the Single Market. View Article
CEPR's Zamora-Perez, Nocciola: Consumer demand for central bank digital currency as a means of payment : This analysis shows that, while consumers may initially prefer to use more traditional payment methods, a design tailored to their specific needs could significantly increase uptake of a central bank digital currency. Raising awareness and capitalising on network effects could also boost demand. View Article
Economic Policies Impacting EU Finance OECD: New treaty advances Pillar Two global minimum tax Subject to Tax Rule designed to protect tax bases in developing countries : The international community took another concrete step today towards ensuring fairer and better international tax arrangements, in particular for developing countries, by further strengthening global minimum taxation with the implementation of the new Pillar Two Subject to Tax Rule. View Article
Insurance Europe response to the European Commission's call for evidence for evaluating the Anti-Tax Avoidance Directive (ATAD) : The European (re)insurance industry is concerned about the inefficiencies and high compliance costs arising from the overlap of the ATAD with the Minimum Corporate Taxation Directive and the sixth version of the EU Directive on administrative cooperation (DAC6). View Article
Brexit and the City ZYen: The Global Financial Centres Index 36 : GFCI 36 Results -Leading Centres: New York leads the index, with London second. Hong Kong has overtaken Singapore to regain third position. View Article
Brexit UK TPO's Holmes: Keir Starmer has several Brexit fixes he can try, and he shouldn’t let his ‘red lines’ get in the way. : In recent weeks Sir Keir Starmer has visited Germany, France, Ireland and Italy, each in the name, he says, of turning a corner on Brexit, resetting the UK’s relationship with Europe and – most importantly – raising economic growth. The OBR estimates Brexit costs the UK 4% of GDP pa. View Article
ECIPE's Henig: Negotiating Uncertainty in UK-EU Relations: Past, Present, and Future : View Article
FT: UK traders set up own ‘inspection points’ for EU goods to tackle Brexit chaos : Businesses sign up to ‘trusted trader’ scheme to cut costs and ease trade friction View Article
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