On 13 September, Neil Esho, Secretary General of the Basel Committee on Banking Supervision, at the Eurofi Financial Forum 2023, Santiago de Compostela. When asked how he went bankrupt, Mike Campbell, a Scottish war veteran who features in Hemingway’s novel, The Sun Also Rises, responded: “two ways: gradually and then suddenly”. This description of financial failure – clearly not new – is also an apt description that sums up many an episode of banking distress. This includes the failure of a number of US regional banks earlier this year, and the merger of two large Swiss G-SIBs. Continue reading…

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has recently published the second Trends, Risks and Vulnerabilities (TRV) Report of 2023. ESMA sees that financial markets are adapting to the new economic environment of durably higher inflation and interest rates, however risks remain high in ESMA’s remit. Markets are set to remain very sensitive to potential deteriorations in economic fundamentals or risks in the financial sector. Continue reading…

Yesterday, the European Commission adopted a key package of initiatives to reduce tax compliance costs for large, cross-border businesses in the European Union. The proposal, called “Business in Europe: Framework for Income Taxation” (BEFIT), will make life easier for both businesses and tax authorities by introducing a new, single set of rules to determine the tax base of groups of companies. This will reduce compliance costs for large businesses who operate in more than one Member State and make it easier for national tax authorities to determine which taxes are rightly due. The new, simpler rules could reduce tax compliance costs for businesses operating in the EU by up to 65%. Continue reading…

by Luiz Pereira da Silva,

Central banks, and central bankers, stand at a crossroads. They face not one, but five major forks in the road. In line with their mandate and in addition to their known achievements, central banks, in the 21st century need to reflect carefully on how the new challenges could affect their role. I will list five of these forks: (1) the re-emergence of inflation; (2) climate change; (3) inequality; (4) digital financial innovation; and (5) artificial intelligence. As you know, modern central banks have been successful because they have been capable of strengthening their analytical thinking when facing challenges in the past, balancing risks properly and choosing the best path, even if that path looked challenging. Now, the many consequential issues that we face imply that central banks will have to carefully identify and analyse the paths they mean to tread. Continue reading…

The infrastructure of the malware and botnet known as ’Qakbot’ has been taken down in an international operation led by the United States involving actions in the United States, France, Germany, the Netherlands, the United Kingdom, Romania and Latvia. The Qakbot malware infected more than 700.000 victim computers, facilitated the delivery of ransomware and caused hundreds of millions of dollars in damage worldwide. This is one of the largest financial and technical disruptions of a botnet infrastructure leveraged by cybercriminals to commit ransomware, financial fraud and other cyber-enabled criminal activity.

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The European Banking Authority (EBA) has published its third Report on the functioning of anti-money laundering and countering the financing of terrorism (AML/CFT) colleges. The Report finds that competent authorities had taken important steps to improve the functioning of AML/CFT colleges. Nevertheless, many colleges had not reached full maturity. The Report highlights good practices that will be useful for competent authorities to further improve the effectiveness of AML/CFT colleges and of supervisory outcomes. Continue reading…

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has published its first consultation package under the Markets in CryptoAssets Regulation and invites comments from stakeholders by 20 September 2023. In this first of three consultation packages, ESMA is seeking input on proposed rules for cryptoasset service providers (CASPs), in particular related to their authorisation, identification and management of conflicts of interests and also how CASPs should address complaints. Continue reading…

The Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) and the International Organisation of Securities Commissions (IOSCO) have on 23 August published a Report on current central counterparty practices to address non-default losses highlighting the need for CCPs to have adequate resources and appropriate tools to address NDLs. CCPs have become increasingly important to the financial system for managing counterparty risk, especially since the introduction of the clearing obligation for standardised OTC derivatives following the 2007–09 global financial crisis. Continue reading…

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, has recently published its Data Strategy for 2023-2028. Over the coming five years, ESMA will work to facilitate the use of new data-related technologies, reduce reporting compliance costs by regulated entities, enable the effective use of data at both EU and national level; and make data more broadly available to the public. Continue reading…

The Swiss Financial Market Supervisory Authority (FINMA) has on 24 August published guidance on the money laundering risk analysis. By doing so, it is creating transparency about its observations and experiences gained from supervisory practice in this area. FINMA has repeatedly identified shortcomings in the area of the money laundering risk analysis during on-site supervisory reviews. This prompted it to conduct an in-depth review of the money laundering risk analyses of more than thirty banks in spring 2023.

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