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Welcome to our Friends weekly e-mail.
Highlights of my week: In the pastfour months, the governments of France and Germany have been dramatically weakened whilst radical change has happened in the UK and US. So today’s European Political Co-operation meeting in Budapest will confront a very different picture from that at the Blenheim Palace meeting in July. Meanwhile…the Commissioner hearings continue in Brussels and Maria Albuquerque seems to have clinched the finance role with a solid performance. However, she did commit to even more collaboration with the Parliament – a further uptick in its effective powers. Eurogroup reviewed the stability of the financial sector with positive reports from both SSM and SRB – though deposit insurance remains a well-known but still open weakness. The tenth anniversary of `single banking supervision’ was celebrated in Frankfurt with strong re-affirmations of the benefits of pan-EU banks and the independence of the ECB in this field as well as monetary policy – though UniCredit’s bid for Commerzbank was carefully not mentioned! Council signed off on amendments to Solvency II and IRRD, as well as an updated statistics regulation. ESMA brought two more entities under its direct supervision. The imminence of COP29 triggered more progress reports on the financial sector’s impact on green financing – EIOPA reported that taxonomy-aligned investments are now up to 4.5% of insurers’ assets. Council agreed a package of VAT changes to bring it into the digital age. The UK’s FCA enhanced access to market data and investment research – welcomed by both AFME and ICMA. Graham Bishop Articles from 01 - 07 Novemeber 2024
Policy impacting Finance FT's Luce: America wants Trump — no ifs or buts : His re-election is an existential disaster for Democrats and a historic game-changer for allies of the US View Article
POLITICO: Scholz sets stage for German snap election as government collapses : Germany’s chancellor said a confidence vote will first take place on Jan. 15 after announcing he would fire his finance minister. View Article Parliament: Hearing of Commissioner-designate Maria Luis Albuquerque : Ms Albuquerque also committed to fostering a collaborative relationship with the European Parliament, by holding regular and open exchanges. View Article POLITICO: Hearing of Commissioner-designate Albuquerque : As largely expected, all parties voted in favor of the Portuguese nominee except the Left and the far-right Europe of Sovereign Nations Group, according to two people in the room. .. View Article
LSE's Wille: What to expect from this week’s EU commissioner hearings : The European Parliament will hold hearings for new European Commission nominees from 4-12 November. Anchrit Wille explains how the hearings have evolved since they were introduced in 1995 and what this year’s nominees can expect from the process. View Article Bruegel's Veron: Back to the future: main financial services themes for European Commissioner designate Maria Luís Albuquerque : The European Commission should prioritise capital markets supervisory integration and banking-union completion View Article Remarks by Paschal Donohoe following the Eurogroup meeting of 4 November 2024 : The two banking regulators (SSM and SRB) gave us a cautiously positive update on the stability of the financial sector, but they again pointed to the progress that we have to make. View Article Eurogroup: report on banking union, report on CMU : Reports from SSM and SRB: Ministers addressed the state of play in the euro area banking system and the main challenges ahead. Ministers also discussed what remains to be done to bolster the resilience of the banking system. View Article
CEPS' Lanoo, Berg,Thomadakis: From a Capital Markets Union towards a robust Savings and Investment Union : Sustaining the current progress towards a Capital Markets Union (CMU) requires both strong political commitment and high prioritisation. While integration is often cited as a key objective, the more fundamental issue for EU capital markets is their limited depth rather than integration alone. View Article
Statistics: Council adopts revised regulation and approves conclusions on European statistics : The Council welcomes the progress related to information requirements in European Monetary Union, statistics on the excessive deficit procedure, surveillance of macroeconomic imbalances and structural statistics, highlighting areas of improvement. View Article
Robert Schuman Fondation's Betbeze: Draghi Report: as strategic a guide as it is diplomatic for Europe : 'The European Union has to get on track for more growth and jobs in a world that is moving faster than the former is at present; and the European Commission, which holds the legislative initiative, has to be shaped accordingly', View Article
CER's Scazzierri, Tordoir: The EU’s involvement in funding defence - Towards EU defence bonds? : Efforts to strengthen defence capabilities are largely national, but the EU is playing a growing role in some areas – such as fostering joint research. Now, constraints on national budgets are pushing European policy-makers to consider innovative ways to boost and co-ordinate defence spending. View Article
EFR Paper on Core principles for policymaking in the next European legislative cycle : There is a growing consensus that Europe needs to become more globally competitive. Europe has increasingly lagged behind other global regions over the past few years on a range of indicators for growth, innovation and competitiveness. View Article
Banking Union ECB Pesident Lagarde: Welcome address at the tenth anniversary of the Single Supervisory Mechanism : If we think back to how the banking sector was faring a decade ago, we can see just how much has changed. The euro crisis had exposed significant weaknesses: low equity buffers, high levels of non-performing loans and deep exposures to domestic sovereigns. View Article
SSM's Buch: European banking supervision at ten: building a strong institution for a resilient future : European banking supervision has a clear mandate – to keep European banks safe and sound. It can pursue its mandate independently and in the best interests of all Europeans. View Article
SRB Bi-annual reporting note to Eurogroup – November 2024 : This note is aimed at reporting to the Eurogroup of 4 November 2024 on: Progress on resolvability in the Banking Union; Implementation of the Vision 2028 Strategy; Important legislative files; Liquidity in resolution and Recent litigation cases. View Article
Single Resolution Board publishes its new bail-in template for banks : The template has been designed to facilitate the execution of a bail-in decision should a bank fail, or for use in testing exercises; It was produced following a public consultation earlier this year, and banks have 12 to 18 months to put it in place as part of their bail-in preparation. View Article
Capital Markets Union Solvency II and IRRD: Council signs off new rules for the insurance sector : The new rules on Solvency II will boost the role of the insurance and reinsurance sector in providing long-term private sources of investments to European businesses. At the same time they will make the sector more resilient and prepared for future challenges. View Article
Commercial Risk: Ferma ‘watchful’ of Solvency II proportionality promise : Ferma said it remains “watchful” on the next steps as it wants to ensure that the regulation is more straightforward and “better serving”, in particular to captives and their parent companies. View Article
Insurance Europe calls on the European Commission to withdraw Artificial Intelligence Liability Directive : While appreciating the EC’s commitment to facilitating compensation for damages involving AI, the current proposal – the federation argues - could increase compliance burden for businesses and create confusion among consumers about their rights. View Article
ESMA to become direct supervisor for two additional data reporting services providers : Two entities currently supervised at national level will come under ESMA’s direct supervision, as they do not fulfil the derogation criteria for the second consecutive year. View Article
ICMA publishes its semi-annual report that provides detailed data on EU and UK sovereign bond market trading activity : Previous versions of this report included both sovereign and corporate analysis. Following readers’ input and feedback, the report will now be published in two different editions: A sovereign edition (this report); A corporate edition (to follow) View Article
BETTER FINANCE Unveils Troubling Trends in European Pensions with New Report : With sustained inflation, opaque fees, and inefficient asset allocation affecting retirement funds, the report underscores the urgent need for regulatory action and greater transparency to safeguard savers’ purchasing power. View Article
BETTER FINANCE: Will you afford to retire? | The Real Return of Long-term and Pension Savings | 2024 Edition : Was 2023 the year when European retail investors finally obtained the “fairer deal” that outgoing European Commissioner Mairead McGuinness had wished for them (McGuinness, 2023)? As far as long-term and pension products are concerned, this report presents mixed results. View Article
Environmental, Social, Governance (ESG) EU adopts rules to better measure the environment’s contribution to the economy : The new rules extend the scope of the European environmental economic accounts, introducing forest accounts, ecosystem accounts, and environmental subsidies accounts. The amended regulation aims to provide better information for the European Green Deal... View Article
Council publishes 2023 international climate finance figures : The European Union and its 27 member states contributed €28.6 billion in climate finance from public sources and mobilised an additional amount of €7.2 billion of private finance to support developing countries to reduce their greenhouse gas emissions and adapt to the impacts of climate change. View Article
ISDA's O'Malia: A Clear Plan for Voluntary Carbon Trading : The voluntary carbon market could play a big role, but this requires robust and consistent standards. It will also involve the public and private sectors working together, and we’ve identified five key areas where that work should start. View Article
EIOPA factsheet shows increasing share of green investments in EU insurers’ portfolios : EIOPA’s analysis of the data reveals that 4.5% of insurers’ direct corporate bond and equity investments are currently aligned with the Taxonomy. When considering only non-financial exposures, the share of Taxonomy-aligned investments rises to 10.7%, up from 5.7% in 2022. View Article
UNEP FI: Net-Zero Asset Owner Alliance sets the pace on climate ambition, action and transparency in latest Progress Report : As world leaders gear up for negotiations at COP29 in November, the UN-convened Net-Zero Asset Owner Alliance (NZAOA) publishes its fourth Progress Report revealing significant progress towards net zero commitments, including reductions in absolute financed emissions of at least 6% on average annually. View Article
GRI: Impact materiality: a pre-condition for financial resilience : Corporate accountability is high on the global agenda, with the role of companies in addressing sustainability challenges a key thread throughout the recently concluded Biodiversity COP16 in Colombia, September's Climate Week NYC – and the upcoming Climate Change COP29 in Azerbaijan. View Article
Fin Tech Regulation Joint Guidelines on the oversight cooperation and information exchange between the ESAs and the competent authorities under DORA Regulation : View Article
Economic Policies Impacting EU Finance Economic and Financial Affairs Council, 5 November 2024 : The Council reached an agreement on a package of legislation on value added tax (VAT) in the digital age. The package consists of three proposals that set out to tackle VAT fraud, support businesses and promote digitalisation. View Article
ECA: Can the EU effectively combat harmful tax practices? : The European Court of Auditors (ECA) has conducted a comprehensive audit to examine how the EU framework addresses these issues and will publish its report this month. View Article
Brexit and the City FCA enhances access to market data and investment research to support growth : The FCA has set out a package of measures to reinforce the UK’s leading position in the bond, derivatives and asset management sectors, supporting growth. View Article
AFME welcomes FCA’s Policy Statement for Improving transparency for bond and derivatives markets : The FCA model developed after active consultation with the market now better optimises timely transparency, as well as facilitating the adequate protection of investors and liquidity providers from the very real risks ... View Article
ICMA welcomes the FCA’s Policy Statement for improving transparency for bond and derivatives markets : This is an important step in bolstering the UK’s infrastructure for the trading of domestic and international bond markets and in ensuring that London remains a leading centre for global capital markets. View Article
Brexit UKandEU's Reland: Eel or no eel? An early test for the UK-EU reset : With the EU objecting to a UK ban on sand eel fishing, Joel Reland sets out three wider lessons for the UK-EU relationship. View Article
CEPR's Breinlich, Magli : Changes to firms’ service delivery post-Brexit : This column analyses UK services trade following the Brexit referendum. UK firms circumvented expected future barriers by switching to modes less affected by Brexit, such as commercial presence sales. However, this came with lower UK employment growth... View Article
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