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14 January 2014

95th 'Brussels for Breakfast' meeting at the BBA on 14 January

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Matters of discussion at our monthly roundtable discussion on the developments in Financial Services Regulation included: the CSD regulation, the SRM/SRF and the Basel negotiations.

  • Despite reports in December that a political agreement had been reached in trialogue negotiations on the central securities depositories (CSD) regulation, it was clarified that the technical details would require a lot more attention so final results are not expected before informal tripartite meetings in late March.

  • Several points were made about the ongoing negotiations with the Single Resolution Mechanism (SRM). Despite Mario Draghi saying in December that “we should not create a Single Resolution Mechanism that is single in name only”, those present agreed that the final decision-making process could well turn out to be "clunky", as according to the Treaty only the Council or the Commission could be given the authority to make resolution decisions, not the Single Resolution Board. This would inevitably mean that dozens (perhaps more than a hundred) of people will be involved in each resolution case, making the procedure complex and, in Draghi’s words, “cumbersome”.

  • The euro area states committed to finalise an intergovernmental treaty on the Single Resolution Fund by 1 March. However, EP President Schulz said in a speech on 19 December that “we [the EP] wish the community method to provide the legal basis for the Banking Union and also for the resolution fund. We reject the idea of a further intergovernmental treaty”. This was seen by some as an indication that the SRM discussions might turn into a political battle that would be without an immediate solution, given the end of both the Parliament’s and Commission’s terms of office. However, others expressed confidence that a compromise would be reached in the interest of European financial markets, given the crucial issue of trust in the resolution process that was needed to complement the “cranky” decision-making process.

  • The EU needs to continue shaping the debate at the Basel Committee on Banking Supervision (BCBS), even though the Commission will soon wind down for its changeover in the autumn. It was suggested that the dynamic within the Federal Reserve might well change and the US might take a more vigorous approach at Basel.

Rolling Blog

Graham Bishop - Consultant on EU Integration - Political, Financial, Economic, Budgetary

© Graham Bishop

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