Francois Villeroy de Galhau

Let me start with good news about a favourite Eurofi topic: banking regulation and Basel 3. I say it as BIS Chair and former chair of GHOS: we had in Monday an important GHOS meeting in Basel, and we unanimously welcomed the decisive progress made this year in the implementation of Basel 3. By 2025, all jurisdictions – including Europe and – yes – the US – should have implemented it in a broad compliance with the standards. I know each banking industry, on both sides of the Atlantic, tends to consider that the other side has undue advantages. It’s simply not right, and our motto is now straightforward: let us now close this page, and implement the European compromise, no less and no more. No less as some banks would perhaps still dream of, and no more as some theoreticians of regulation would perhaps imagine. And we should now turn to the priority learned from the banking turmoil: “strengthening supervisory effectiveness” [*1] rather than focusing on further regulation. Let me now turn to my theme which is the policy mix to fight our main economic disease: inflation. Continue reading…

The European Central Bank (ECB) has published the results of its second economy-wide climate stress test. The results show that the best way to achieve a net-zero economy for firms, households and banks in the euro area is to accelerate the green transition to a rate that is faster than under current policies. “We need more decisive policies to ensure a speedier transition towards a net-zero economy in line with the goals of the Paris Agreement. Moving at the current pace will push up risks and costs for the economy and financial system. There is a clear need for speed on the road to Paris,” says ECB Vice-President Luis de Guindos. Continue reading…

by Michel Klompmaker

We recently spoke with Twan Houben about the possible impact of the enormously increased national debt in the United States. Twan Houben is concerned with crisis management, hence his special interest in the phenomenon of national debt on the other side of the Ocean. Then what’s going on? According to Marketwatch, the national debt there currently amounts to 33 trillion US dollars. To put that number into perspective, three years ago that was 23 trillion US dollars. It is not rocket science to calculate that with the increased interest rates in the last period, serious problems can arise if new loans have to be taken out to finance the national debt. But what are the consequences in Europe? Continue reading…

The European Commission has analysed the data related to the impact of the exports of 4 categories of agricultural products on the EU market. It has concluded that thanks to the work of the Coordination Platform and to the temporary measures introduced on 2 May 2023, the market distortions in the 5 Member States bordering Ukraine have disappeared. A constructive attitude of all participants in the platform helped to solve concrete problems and ensured that exports to third countries outside the EU are flowing and even increasing. Continue reading…

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…

Tough new rules designed to make the marketing of cryptoasset products clearer and more accurate, and that ban incentives like ‘refer a friend’ bonuses, will come into force on 8 October. The FCA has signalled that in response to industry readiness it will consider giving cryptoasset firms more time to implement certain changes, for instance a 24-hour cooling off period. Firms could be given until 8 January 2024 to introduce features that require greater technical development, with the core rules still coming into effect from 8 October 2023.  

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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…