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07 March 2019

This week in "Brussels"
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  Articles from 28 February 2019 - 07 March 2019

  Banking Union
 
 
EBA recommends maintaining protection of depositors in case of a no-deal Brexit
The EBA calls on the Deposit Guarantee Schemes Designated Authorities (DGSDAs) to ensure that depositors in the branches of the UK credit institutions in the EU are adequately protected by the EU deposit guarantee schemes (DGSs), in case of a withdrawal of the UK from the EU with no ratified agreement in place.   View Article
ECB and Bank of England activate currency swap arrangement for possible provision of euro to UK banks
The Bank of England will offer to lend euro to UK banks on a weekly basis and obtain euro from the ECB in exchange for pound sterling. The Eurosystem will stand ready to lend pound sterling to euro area banks, if a need arises.  View Article
Basel Committee discusses policy and supervisory initiatives and approves implementation reports
The Basel Committee on Banking Supervision met to discuss a range of policy and supervisory issues, and to take stock of its members' implementation of post-crisis reforms.  View Article
EBA publishes final Guidelines on the estimation of LGD under an economic downturn
The Guidelines focus on requirements for the quantification of the calibration target used for downturn LGD estimation. The Guidelines complete the EBA's broader work on the review of the IRB approach aiming at reducing the unjustified variability in the outcomes of internal models, while preserving the risk sensitivity of capital requirements.  View Article
EBA launches consultation to update Guidelines on harmonised definitions and templates for funding plans of credit institutions
This update is the result of the experience gained through the EBA's assessment of banks' funding plans in 2017 and 2018 as well as the questions raised via the EBA Single Rulebook Q&A tool.   View Article
Financial Times: German bank merger would erode bail-in rules
The momentum towards a merger of Deutsche Bank and domestic German rival Commerzbank looks increasingly unstoppable. With Deutsche’s chairman Paul Achleitner making little secret of his enthusiasm for a deal, Commerzbank’s management having warmed to it and a key shareholder in both banks — the private equity firm Cerberus — also supportive, the question seems when it will happen, not if.  View Article
ECB: Payments in the EU: reform on reducing charges and increasing transparency adopted
The EU is working towards making payments in euros cheaper. Paying or withdrawing money in euros anywhere in the EU will soon cost the same as at home.  View Article
ECB: SEPA migration - Impact assessment
This report is an assessment by the Eurosystem of SEPA migration with regard to euro credit transfers and direct debits and reflects its views on the fulfilment of the SEPA vision. This vision is of an area in which consumers, companies and other economic players are able to make and receive payments in euro, whether across or within national boundaries, under the same basic conditions, rights and obligations, regardless of their location.  View Article
Bank of England welcomes Access to Cash Review
The Bank of England welcomes the independent Access to Cash Review. The Review highlights the continuing reliance of some groups on physical cash, even as its share of overall payments declines.   View Article
CEPS: Price rules in consumer credit: should the EU act?
One of the key questions addressed by this study is to assess whether EU authorities should take action in order to further harmonise sub-prime lenders. To that end, the present study will assess the sub-prime market’s main characteristics, the different degrees of tightness in price rules across the EU, the main drivers behind the decision to tighten those rules and the main effects of new price rules on the sub-prime market.  View Article
VoxEU: Trade and innovation: The Schumpeterian role of banks
Only strong banks can fulfil their Schumpeterian role by efficiently reallocating credit. The column argues that high capital standards, efficient bankruptcy laws, and a lower cost of bank equity improve credit reallocation and thereby support the productive specialisation of the economy. An efficient banking sector also magnifies the gains from trade liberalisation by easing the process of capital reallocation.  View Article
Changes to the Board of the Financial Conduct Authority announced
Consumer expert Richard Lloyd has been appointed as a Non-Executive Director to the Board of the Financial Conduct Authority (FCA).  View Article
Deutsche Bundesbank: Bundesbank Executive Board approves Dr Jens Weidmann’s nomination for second term of office
The Bundesbank’s Executive Board has approved the nomination of Dr Jens Weidmann for a second term of office as Bundesbank President.   View Article
 
  Capital Markets Union
 
 
Joint trade associations letter on the equivalence of UK trading venues
The letter requests urgent action by EU authorities to adopt equivalence decisions regarding UK trading venues under EMIR and MIFID in the event of the UK leaving the EU without a deal, explaining the impact on EU27 market participants and European derivatives markets of such a ‘no deal’ scenario.  View Article
ESMA to recognise the UK Central Securities Depository in the event of a no-deal Brexit
ESMA announced that, in the event of a no-deal Brexit, the Central Securities Depository established in the United Kingdom – Euroclear UK and Ireland Limited – will be recognised as a third country CSD to provide its services in the European Union.  View Article
BCBS/IOSCO statement on the final implementation phases of the margin requirements for non-centrally cleared derivatives
Based on monitoring of the implementation of the framework across products, jurisdictions and market participants, the BCBS and the IOSCO provide guidance to support timely and smooth implementation of the framework and clarify its requirements.  View Article
John Dizard: A clearing house crisis will pose a particular threat to Europe
The author offers a suggestion for how "the banking system (including grandma’s money) will be called on to participate in the next set of massive “gambling” losses. There are many indications that those losses will have the most serious effect in Europe."   View Article
MiFID II: ESMA makes available the results of the annual transparency calculations for equity and equity-like instruments
ESMA made available the results of the annual transparency calculations for equity and equity-like instruments.  View Article
FCA: Statements of Policy on the operation of the MiFID transparency regime
FCA published Statements of Policy outlining how Britain will operate the MiFID transparency regime, if the UK leaves the EU without an implementation period.  View Article
ESMA publication of the annual calculation of the large in scale and size specific to the instruments thresholds for bonds postponed
This was due to the IT systems requiring more time than expected to complete the required calculations.  View Article
PCS: Regulatory wobbles in the introduction of the new securitisation regime
Although PCS remains optimistic about the new STS regime, such regulatory wobbles are inauspicious. PCS fears that this may not be the last of such wobbles and they strongly urge European authorities reflect deeply on the wisdom of any further shocks to the securitisation market.  View Article
Capital Markets Union: Commission welcomes agreement on new rules to further improve access to capital markets for smaller businesses
The Commission welcomes the political agreement reached by the European Parliament and Member States on new rules that will further help small and medium-sized enterprises to finance their growth, innovate, and create jobs.  View Article
 
  Clients Union
 
 
EU modernises consumer rights and improves their enforcement
Member states' ambassadors meeting in the Council's Permanent Representatives Committee agreed on the Council's position on a draft directive which amends four existing EU directives protecting consumers' interests.  View Article
 
  Insurance
 
 
Bank of England and Financial Conduct Authority agree Memoranda of Understanding (MoUs) with EIOPA and EU insurance supervisors
The PRA, FCA and EIOPA announced that they have agreed Memoranda of Understanding regarding supervisory cooperation and information-sharing arrangements with respect to UK and EU/EEA insurance companies.  View Article
Insurance Europe: Detailed European insurance statistics published: insurers paid out €2.8bn a day in claims in 2017
The latest edition of Insurance Europe’s “European Insurance in Figures” report contains detailed 2017 data on life, health and property & casualty premiums and claims, as well as the industry’s investments and market structure.  View Article
Insurance Europe: European insurers welcome OECD work on financial education
Insurance Europe has welcomed the substantial work done by the Organisation for Economic Co-operation and Development (OECD) on financial literacy and education, as well as its explicit identification of insurance as a component of financial education strategies.  View Article
 
  Asset Management
 
 
Keynote by ESMA Chair Maijoor at ALFI 2019 Conference
ESMA Chair Maijoor delivered a keynote speech at the ALFI 2019 Conference in Luxemburg on ESMA’s priorities for the asset management community.  View Article
UK Finance: EU rules for investment firms: what will it mean for access to non-EU investment?
UK Finance comments that the agreement of the EU's new rules for investment firms is an important step in helping deliver a well-regulated financial system, by ensuring a coherent approach to the provision of bank-like services across the EU as well as delivering consistent prudential regulation.  View Article
Investment & Pensions Europe: UK regulator demands improvement on ‘misleading’ fee disclosure
The UK’s financial regulator has slammed the asset management industry for failing to clearly disclose a wide range of fees, and set out how it expects the sector to improve or face further investigation.  View Article
 
  Corporate Governance/Accounting
 
 
BIS: High-level summary: BCBS Supervision and Implementation Group industry workshop on governance, culture and conduct
The Basel Committee's SIG met with representatives from internationally active banks and industry associations to discuss key initiatives and challenges with respect to risk governance and operationalising the lines of defence, embedding a strong risk culture and managing non-financial risks.   View Article
IASB: Package of supporting modules on the IFRS for SMEs Standard available
The IFRS Foundation has made available a package of 35 supporting modules to help those applying the IFRS for SMEs Standard.   View Article
IFAC: IPSASB to sharpen focus on public financial management and benefits of IPSAS adoption
At a time of increasing momentum for IPSAS adoption and implementation globally, the IPSASB published its Strategy and Work Plan 2019-2023: Delivering Global Standards. Inspiring Implementation, which will shape the Board’s work and priorities for the next five years.  View Article
IASB: Project summaries on IFRS 8 and discount rates published
The IFRS Foundation has published two documents summarising work by the IASB on possible improvements to IFRS 8 Operating Segments and on discount rates in IFRS Standards.  View Article
FRC consults on stronger Going Concern standard for auditors
The FRC proposes to increase the work required of auditors when assessing whether an entity is a going concern.   View Article
FRC issues Position Paper on development of Ethical and Auditing Standards
The FRC has issued a position paper which sets out how Ethical and Auditing Standards will be developed to respond better to the needs of users of audited financial information, following the recent call for feedback.  View Article
Ethical Boardroom: Capital allocation – a governance perspective
ICGN´s Policy Director George Dallas writes that capital allocation is a fundamental corporate governance consideration, directly relevant to a company’s long-term success and the interests of company shareholders and stakeholders.  View Article
 
  Financial Services Policy
 
 
Sustainable Finance: Commission expert group calls for feedback on EU Green Bond Standard
The Commission's Technical Expert Group (TEG) on sustainable finance has launched a consultation on its preliminary recommendations for an EU GB, and the interim report outlining the status of the work conducted so far.  View Article
Sustainable finance: Presidency and Parliament reach political agreement on transparency rules
Following a provisional agreement reached last week to create a new category of low-carbon benchmarks, the EU is complementing its set of rules to encourage investors to be more aware of the impact of their business on the environment.  View Article
Insurance Europe: EC sustainability taxonomy TEG proposal: a good starting point but more work needed
While the European Commission technical expert group’s (TEG) proposal for a sustainability taxonomy is a welcome step in the right direction, more work must be done to make it easier to use for investors.  View Article
 
  Political
 
 
Emmanuel Macron: Dear Europe, Brexit is a lesson for all of us: it’s time for renewal
We can’t let nationalists exploit public anger, writes the French President. "I want an ambitious project that lets the people really take back control."  View Article
The Guardian: Donald Tusk claims anti-European forces meddled in Brexit vote
Donald Tusk has claimed external powers meddled in the Brexit vote as he called for EU member states to do more to protect the upcoming European elections.  View Article
New Europe: EPP and S&D numbers slip according to new EU Parliamentary projections
Small changes in the seat projections of the European Parliament were made public on Friday with the European People’s Party and the Progressive Alliance of Socialists and Democrats combined numbers hitting a new low.  View Article
POLITICO: How Britain would vote in the European election
Whether Britain will still be a member of the EU in May is anyone’s guess. But if it is — and these days, it’s hard to rule anything out — the big question is how voters would react. POLITICO has a poll that finds that results would be less destabilizing than many fear.  View Article
Yanis Varoufakis: Europe’s leaders are aiding Italy’s populists
The fact that Italy’s public debt has a lower credit rating than private debt is a reflection not of public debt’s intrinsic inferiority but of a political choice made by European leaders. By bolstering an authoritarian politician, that choice is now blowing back on them.  View Article
CEPS: The European Court of Justice: Do all roads lead to Luxembourg?
Questions of great political and constitutional significance are increasingly being submitted to the European Court of Justice, which prompts the question whether the Court has become the arbiter of all major problems facing the European Union today.  View Article
Eurotrack: which countries do Europeans think should be in the EU?
Recent YouGov Eurotrack survey data reveals how the borders of the European Union might shift if it were up to the public in key European nations. Romania and Bulgaria's presence in the EU has proved particularly unpopular.  View Article
 
  Financial
 
 
Council greenlights rules on screening of foreign direct investments
The EU will soon have in place a set of new rules to better scrutinise direct investments coming from third countries on the grounds of security or public order.  View Article
 
  Economic
 
 
OECD sees global growth slowing, as Europe weakens and risks persist
The global economy is slowing and major risks persist, with growth weakening much more than expected in Europe, according to the OECD’s latest Interim Economic Outlook.  View Article
Markets retreat and rebound: BIS quarterly review
Shifting macroeconomic prospects in major economies, and their implications for monetary policy, dominated market developments at the end of 2018 and in the early months of 2019.  View Article
OMFIF: Germany just avoids technical recession
According to the first official estimate of fourth quarter GDP growth, the German economy narrowly escaped a technical recession at the end of 2018.   View Article
OMFIF: Weidmann ECB chances rising again
The rising probability of a comparatively 'soft' British departure from the European Union has added to the chances that Jens Weidmann, Bundesbank president, could after all become head of the European Central Bank when Mario Draghi steps down at end-October.  View Article
EuroMoney: Why is the ECB so much murkier than the Fed?
Andrea Enria must open up the European Central Bank’s bank data and supervision to scrutiny, writes Dominic O’Neill, but he faces resistance, and not just from banks.  View Article
Financial Times: The European refinancing dilemma
Since 2014, the ECB has lent vast sums to the continent’s banks as part of a series of historically unprecedented interventions to boost the economy. Its so-called targeted longer-term refinancing operations (TLTRO) aim to provide banks with “stable and dependable funding in times of market uncertainty”, and incentivise them to lend more. The ECB is expected to make an announcement about these loans.  View Article
The Economist: Why a global manufacturing slump is a recurring threat
China’s on-and-off efforts to curb lending spill over to the rest of the world.  View Article
ACCA: Experts discuss tax as a force for good
EU and global expert discussed how shifting tax from labour to natural resource use, pollution and consumption could help meet the goals of the Paris Climate Agreement, the UN Sustainable Development Goals (SDGs) and an inclusive, circular economy.  View Article
Bruegel: Tense transatlantic relations put EU in tough spot
The global multilateral system is being challenged by the US and China, which prompts the EU to rethink how well it can compete in the world.  View Article
Wolfgang Münchau: China gains the upper hand over Germany
Münchau writes in the FT that probably the single biggest geopolitical issue for the EU right now, and especially for Germany, is future relations with China.  View Article
Volume of retail trade up by 1.3% in euro area
In January 2019 compared with December 2018, the seasonally adjusted volume of retail trade increased by 1.3% in the euro area (EA19) and by 1.1% in the EU28, according to estimates from Eurostat.  View Article
Euro area unemployment at 7.8%
The euro area (EA19) seasonally-adjusted unemployment rate was 7.8% in January 2019, stable compared with December 2018 and down from 8.6% in January 2018. This remains the lowest rate recorded in the euro area since October 2008.   View Article
 

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