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16 June 2015

111th Brussels for Breakfast

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Brexit, Grexit, PSD2, CMU, bank resolution and `Liikanen’ receding were amongst the topics covered. Hosted by the BBA and organised by the CSFI – with Graham Bishop and Nickolas Reinhardt of Afore Consulting. The subsequent CISI webcast is CPD-eligible.





(After this event, Graham Bishop went to CISI for a 30 minute live interview that is eligible for CPD for CISI members, and we plan to roll the concept out for much wider CPD eligibility)


1.       Brexit:

a.       I cited again the remarkable poll at a Deutsche Boerse event on CMU (link) where 91% of the senior City professionals present felt that the City would be better off in CMU – implicitly supporting Britain staying in the EU.

b.      Foreign Secretary Hammond set out the four main themes of the UK request in a POLITICO article. For the City, the most important is likely to be support for further euro area integration – implicitly accepting that the UK will not veto any `enhanced co-operation’ that may be needed. His demand for great involvement of national Parliaments might start by allowing the UK’s own Parliament proper scrutiny of EU legislation and then paying attention to it … (according to a Member of the House of Lords EU Scrutiny Committee!)

2.        Grexit:

a.       The end game feels very close now. About half the customer deposits in Greek banks are `overnight’ and a formal default by the Government would put a question mark over the Deferred Tax Assets that comprise 40% of the Greek banks’ core capital. That would leave the ECB very little option but to cut off liquidity to the banks– with obvious catastrophic results.

b.      Is a referendum the answer, rather than allowing perhaps 6% of electors to devastate the other 94%? (more)

3.       PSD2 rules for payments: The ability to make easy payments is the actual revolution that creates the single market. PSD2 updates the payments laws to recognise technological advance for instant secure internet and mobile payments. Paypal was the first attack on payments by `fin tech’ and Google/Samung Pay the latest. Is Transfer Wise about to do the same for retail foreign Exchange payments?

4.       CMU:  more responses to COM Green Paper from the ECB and ESMA, as well as others. The ECB wants a single rulebook to enhance integration- eventually leading to a single supervisor of capital markets. ESMA underlined the need for investor protection to make savers feel secure.

5.       Bank resolution: The EBA is now producing Guidelines to Implelment BRRD on exactly how to tell when a bank is failing and what to do about resolving it. Will these be given a first test on Greek banks soon?

6.       Bank split up proposals from the Liikanen Report were rejected by the Parliament by a coalition of the left and the Greens. As a number of Member States have already enacted their own `ring fences’, will they have enough of an incentive to compromise with Parliament – or is this now in the long grass?  



NOTE: 112th Brussels for Breakfast will be on 14th July

© Graham Bishop

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