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The blog from Brussels Finance Watcher's Weekly
12 March 2026
EU Financial Regulation: Small Steps, Big Signals
Amidst the confusion of the Iran War, the wheels of EU financial regulation continued to grind forward. Both Eurogroup and ECOFIN met and issued predictable communiqués - but the FT reported that the "E6" - the EU's six biggest economies, accounting for more than 70% of EU GDP - have jointly written to the Commission calling for ESMA to become the single supervisor of major stock exchanges. Is the roadblock of unanimity about to crumble in this small corner of the EU's legislative system? There are many hurdles still to overcome, but it is a hopeful sign that real change may come instead of ritual communiqués.
The SSM's Machado characterised the SIU programme as a plan to redirect abundant savings to productive investment, fundamentally reshaping the role of banks. The French Banking Federation called on the Commission to fast-track reforms strengthening banks' lending capacity. Parliament's research services examined the proposed recalibration of securitisation to improve banks' capital efficiency - another piece of the same puzzle.
The ECB's Elderson urged bank supervisors to account for nature-related financial risks, while a PWC/IIF survey of 24 major financial institutions found that ISSB sustainability standards are simply being layered on top of existing frameworks from other standard-setters. Are we building coherence or complexity? PensionsEurope added to the chorus, calling for IORP-specific rules under SFDR 2.0.
At the international level, IFAC reported that more than 1,000 accountancy firms have received private equity investment - raising serious concerns about audit quality and independence. When the auditors themselves become the audited, one might reasonably ask whether we are eroding the very foundations of capitalism.
A week of incremental moves - but occasionally, increments matter.
( Key words: EU financial regulation, ESMA single supervisor, capital markets union, SIU savings investment, securitisation reform, SFDR 2.0, ISSB standards, audit independence, private equity accountancy, nature-related financial risks)
(Previous blogs are archived here)
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(Graham Bishop was a member of this Group, and an author)
ELEC position paper: Why EU Capital Markets Union has become a “must have” and how to get there – ELEC Group of Wise Persons
Its report highlighted the need for CMU - with five concrete proposals for action by EU policymakers on insolvency proceedings, securitisation, stimulating retail investment, expand ESMA's powers, check feasibility of a globally significant `safe asset'.
Executive Summary
Five proposals for policymakers
1. Harmonise the key elements of corporate insolvency proceedings and consider adopting an opt-in regime based on international standards, perhaps by “enhanced co-operation” among a willing group of Member States
2. Create the conditions for securitisations to become a complement to bank finance
3. Stimulate retail investment via an array of actions including tax incentives and more auto-enrolment in pension funds
4. Empower ESMA to become the supervisor of wholesale capital markets via joint supervisory teams with national competent authority (NCA) staff
5. Investigate the feasibility of developing the ultimate High Quality Liquid Asset for financial institutions – a “safe asset” in the form of a Eurobill fund
Five reasons why CMU has moved from being `nice to have’ to `must have’:
1. Europe’s green and digital ambitions require more private capital and a more efficient deployment of the existing stock
2. Efficient financial markets with modest asset management fees can produce and protect wealth for ageing populations
3. Mature capital markets provide cheaper and more diversified sources of funding, spurring innovation and economic growth
4. Developed capital markets promote Europe’s strategic autonomy
5. Deep and integrated capital markets strengthen financial stability by facilitating risk-sharing, reducing the strong reliance on bank finance and pricing risks efficiently
more at ELEC-LECE
European League for Economic Co-operation
(ELEC is a network of European entrepreneurs of goodwill, aimed at putting timely intellectual pressure on European decision makers to further economic integration in Europe. It acts in complete independence from national or private interests, public authorities or any pressure groups.)
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Graham Bishop has drawn together a collection of his earlier works on the possible role of “market discipline” in ensuring financial stability in the Economic and Monetary Union (EMU). The first paper was published by Salomon Brothers in 1989 during the Maastricht Treaty negotiations and the final paper in the series was published in 1993. They established Graham Bishop's reputation as a thinker about the practical mechanics of the single currency - set within the political choices about financial market regulation.
His central point was that public debts denominated in a currency that a government could not order to be “printed” – the euro – had a fundamentally different credit quality than paper money that could be printed at will – in extremis. That different quality should be reflected properly in the then-newly developed system of risk weightings for banks holding public debt as a core asset. This argument was seen as an `inconvenient truth’ at the time.
Three decades on, Italy’s blocking of revision to the ESM Treaty and Germany’s unwillingness to complete the European Deposit Insurance Scheme (EDIS) illustrate that risks to financial stability remain significant – if merely latent.
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My recent papers on the City of London after Brexit have stirred great interest - with several videos.
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I have recorded a video with the Federal Trust's Brendan Donnelly to set out my views about the prospects of a Brexit reset for the City of London. Sadly, I believe hopes of a major improvement are doomed as the plans will inevitably founder on the rock of derivatives clearing.
The UK has never publicly shown any sign of recognising the EU’s concerns about its financial stability flowing from potential problems in the derivatives markets but the EU has kept on legislating to resolve potential problems. Most recently the “Active Account Requirement” (AAR) was enacted and becomes operational in a matter of days.
That will probably be too late to retain the current June 30th ending of the EU’s equivalence decision for UK CCPs. So it may have to be rolled over for say another 18-24 months. Accordingly, any further renewal will be overshadowed by the possible consequences of the UK’s 2029 General Election and the possibility of a Brexit-favouring government.
As always, I am delighted to receive any feedback at graham@grahambishop.com
A Brexit Reset for the City of London?
My rough speaking notes for the video are here and my detailed 2022 evidence to a House of Lords enquiry is here.
Three years after leaving the EU, there are no discernible signs of any benefits for UK finance. There are multiplying signs of a lack of substance to the initial, bold slogans. I polled the audience on whether the UK will become a `rule-taker' for green and digital finance? I was very surprised at the strength of the audience response: 84% agreed strongly/somewhat and only 11% disagreed somewhat!
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In this latest Federal Trust video, Graham Bishop describes the growing risks to the City of London from Brexit. He contrasts the methodical approach of the European Union to building its Capital and Banking Union with the confused rhetoric of the British government. He concludes by warning that a smaller City of London will be able to contribute less to the already stretched public finances of the UK.
SPEAKERS:
Brendan Donnelly is the Director of the Federal Trust and a former Conservative MEP. Graham Bishop is a member of the Federal Trust and an analyst and commentator on economic affairs.
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He has drawn together a collection of his earlier works on the possible role of “market discipline” in ensuring financial stability in the Economic and Monetary Union (EMU). The first paper was published by Salomon Brothers in 1989 during the Maastricht Treaty negotiations and the final paper in the series was published in 1993. They established Graham Bishop's reputation as a thinker about the practical mechanics of the single currency - set within the political choices about financial market regulation.
His central point was that public debts denominated in a currency that a government could not order to be “printed” – the euro – had a fundamentally different credit quality than paper money that could be printed at will – in extremis. That different quality should be reflected properly in the then-newly developed system of risk weightings for banks holding public debt as a core asset. This argument was seen as an `inconvenient truth’ at the time.
Three decades on, Italy’s blocking of revision to the ESM Treaty and Germany’s unwillingness to complete the European Deposit Insurance Scheme (EDIS) illustrate that risks to financial stability remain significant – if merely latent. _________________________________________________________________________________________
Federal Trust VIDEO with Bishop and Stevens: Brexit is Crippling the City of London
In this video, our Council member, financial expert Graham Bishop, reviews the prospects for the City of London after Brexit. He argues that the British government’s “Edinburgh reforms”, designed to help the City, are little more than pro-Brexit propaganda. They will usually make little difference and in some cases risk repeating the mistakes which led to the financial crisis of 2007-2009
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Studio Europa Maastricht: Looking back at ‘Euro at 20: shifting paradigms?’ - Graham Bishop's contribution
Studio Europa Maastricht organised the conference Euro at 20: shifting paradigms? to commemorate the 20-year anniversary of the euro and the EMU. In this blogpost we will share all photos, videos and transcripts of the day with you.
About Euro at 20
At Euro at 20 economists, politicians, journalists and central bankers engaged in dynamic discussions with each other and the many attendees. The conference consisted of keynote lectures and various sessions on topics about the euro and the Economic and Monetary Union (EMU).
Takeaways
The general consensus of the experts was that the euro and the EMU structure it was built on have come a long way in the last 30 years. However, there were also critical voices that stated there are still challenges to overcome. Notably, the proposed solution to these challenges can be summarised in one word: solidarity. Be it through fiscal transfers, EU recovery funds or Eurobonds, solidarity is imperative for protecting and sustaining the EMU’s unique yet fragile equilibrium.
It was inspiring to hear the constructive visions the diverse group of attendees had on the euro’s future. The Q&A sessions that followed the panels allowed for lively debate between experts and the audience on the actions needed to reach this envisioned future. What everyone could agree on, however, was that the currency policymakers had in mind when signing the Maastricht Treaty, is one worth working for.
Studio Europa Maastricht
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Financial Services Club/ZYen video with Alderman Mainelli and Graham Bishop: Brexit: Ending the City's Dominance of European Finance?
Among other implications, the loss of its status as the main Euro clearing centre might also put in jeopardy its role as the leading global US Dollar hub.
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GrahamBishop.com analysis targets the interaction of the driving forces of politics and economics as they force the required changes in financial regulation – at the macro level rather than covering the micro aspects of detailed implementation. These are precisely the topics where a well-informed financial professional should remain competent – as part of their Continuing Professional Development (CPD).