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30 November 2015

Deepening EMU – Round-up of Key Events – November 2015

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David Cameron kicked off the In/Out campaign over the UK’s EU membership with a letter sent to Donald Tusk. Bank resolution and SMEs financing were very topical in the EU, as well as MiFID II’s timing issue. Commissioner Hill presented his plans for a European Deposit Insurance Scheme.

By Paula Martín Camargo, Editor


Graham Bishop gave evidence on the subject of the Five Presidents Report and the Communication on Completing EMU at the House of Lords EU Committee. He said he “fears there is a clear risk either of actual Brexit soon, or de facto Brexit by ‘2025 at the latest’”. Brexit was also the central matter of concern for Commissioner Hill at the FT’s ‘Future of Europe’ Breakfast: Hill warned about the fact that Brexiteers have a complete, fundamental misunderstanding of the rules and are misleading about the consequences [of a Brexit] for business models. Mr Bishop continues to develop his Plan for a Temporary Eurobill Fund as a Stepping Stone to Stage 2 of the Plan for Completing EMU.

The British PM claimed to be campaigning for EU reform for the UK to stay in: David Cameron explained in detail the long-awaited list of reforms he wants - in a letter sent to the President of the European Council. Open Europe responded to his speech at Chatham House and the reforms set out in his letter to Donald Tusk, and the European Council on Foreign Relations' Director Mark Leonard published an article on ‘David Cameron’s Brexit brinkmanship’.

There were four main objectives outlined at the heart of the negotiations – some said to be “very difficult” to achieve by Council’s President Tusk. But two of them seem to be key for the UK to remain an EU member: no 'ever closer union' for the UK; and controlling migration from the EU. Safety has proven to be a core principle for British people after the Paris attacks on 13th November, and anxiety over these horrendous terrorist acts and the refugee crisis may be responsible for the shift in public opinion towards a ‘Brexit’: a poll by The Independent showed that more than half of the UK public now want to leave the EU.

The debate over in/out is starting to take its toll on British business, which is suffering from uncertainty and therefore putting pressure on Cameron to accelerate plans for the European Union referendum: new CBI director general Carolyn Fairbairn told City AM that they “are beginning to hear of business investment that’s slowing down”, and The City’s Policy and Resources Committee chair Mark Boleat published that “it’s time business started to play its vital role in Britain’s EU membership debate.” The loss for British business in the event of a Brexit may be huge, according to Britain Stronger in Europe’s paper ‘How UK trade benefits from our EU membership’.

The ‘In’ campaign has repeatedly shown the benefits of the UK staying within the EU, but it claims that the ‘outers’ haven’t told yet What would 'out' look like?: Policy Network’s report rigorously examines four of the most widely canvassed alternatives for the UK instead of EU membership. Andrew Duff published a must-read article on how to achieve Treaty change so as to make the Brexit deal ‘formal, legally-binding and irreversible’.



The FSB’s proposal for a global requirement for TLAC for G-SIBs found a broad consensus in the EBF– which urged a proper and careful implementation of TLAC in Europe. The Basel Committee released two reports related to TLAC in support of the FSB’s Principles. The FSB also welcomed the extension of the industry initiative to promote orderly cross-border resolution of G-SIBs.

The SRB announced that it will align its capital buffer demands (MREL) to the global standard, aiming to avoid duplication. The ECON issued a report on how expensive the resolution of a bank is, in an attempt to estimate the bridge financing needs of the SRF. ICMA published the 2015 Universal Resolution Stay Protocol together with a Securities Financing Transaction Annex.

Bank resolution was also very topical in the UK, with the Treasury Select Committee Chair Andrew Tyrie endorsing ring-fencing reforms and urging regulators to make sure Britain’s biggest banks are in a position to be “resolved”, or fail without a public bailout. The PRA and FCA published their review into the failure of HBOS to analyse the causes of the firm’s failure, and to draw out lessons for the future.

The European Commission presented new measures towards a stronger Banking Union: Commissioner Hill proposed a euro-area wide insurance scheme for bank deposits that was supported by the EBF . However the Banking Federation wanted to ensure that the EDIS will not lead to increases in overall contributions that banks make to deposit guarantee systems.

The G20 Summit produced several important documents such as the two reports issued by the BCBS to G20 Leaders on Finalising Post-crisis Reforms and an update on the implementation of Basel III standards.

The EBA published the outcome of its 2015 EU-wide transparency exercise and announced the details of next year’s EU-wide stress test for consultation.

The European Council updated its rules on electronic payment services: the Directive aimed at further developing an EU-wide market for electronic payments.


The European Council published its conclusions on the CMU Action Plan while an EU association’s trio strongly involved with SMEs provided a set of ideas to improve access to finance for SMEs under the CMU, saying that typical SMEs won’t get the financing they need from capital markets. European SMEs’ struggle to raise equity capital has become a big concern for regulators, but SMEs' growth is said to have been heavily underscored in the CMU Action Plan. In line with this, the G20/OECD issued their high level principles on SME financing. The G20 also published its infrastructure recommendations, which were welcomed by AFME and ICMA.

Insurance Europe published its response to the Commission’s proposals on `STS’ securitisation, arguing that it is broadly correct and workable. The EC reached an agreement on new rules to prevent manipulation of financial benchmarks, and the European Council adopted transparency rules on securities financing transactions.

ICMA explained how the post crisis regulation is driving radical change in the European repo market in a new study, and CPMI-IOSCO released a consultation on its Guidance on cyber resilience for financial market infrastructures.

On MiFID II, the timing issue is posing a real problem to European institutions: ESMA has sent a letter to the European Commission on this matter according to the FT, while Reuters reported a Commission official saying that MiFID II may need to be delayed by a year. Even ESMA’s Chair Maijoor challenged the implementation timetable in his statement to the ECON Committee Scrutiny Hearing on MiFID II.

ECB'S Cœuré delivered a speech on the international regulatory agenda on CCP links, saying that the ongoing EMIR review will provide the ECB with an opportunity to discuss the risks involved and think about potential enhancements to the current regulatory framework.


EIOPA’s chair Bernardino suggested that there should be a Europe-wide framework governing occupational defined contribution pension funds, but the Dutch government rejected EIOPA's pan-European pension’s product. EIOPA also sought evidence on the treatment of infrastructure corporate.

The ESAs consulted on PRIIPsKey Information Documents, and Insurance Europe publishedi ts key messages on the ESAs report.


The European Commission released its Autumn forecast and pointed out that the economic recovery should continue at a modest pace next year despite more challenging conditions in the global economy. In spite of this moderate recovery, Bloomberg wondered whether Europe's Economy was so bad the ECB will shortly run out of things to buy.


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