by Massimo Balducci

The amount of resources to be mobilised by the EU Resilience and Recovery Fund (and connected funds) is huge. It is comparable with the amount of resources triggered off by the Marshall Plan after World War II. Compared with the GDP in some countries, the EU will invest more resources than the Marshall Plan did. In the case of Italy, the Marshall Plan invested about 12% of the Italian GDP. The EU will invest around 19% of the Italian GDP in Italy. Will the EU investment have an impact comparable with the one of the Marshall Plan? Or will it mostly be a positive impact and have negative unanticipated consequences that outweighs any positive outcome? Compliance shall possibly be called upon to play a key role to curb any negative unintended outcome. Here, the experience of the Marshall Plan can provide us with a useful frame of reference. A negative (i.e. what should be done differently in comparison to the Marshall Plan) point of reference and a positive one (i.e. what the EU should try to do following the Marshall Plan).   Continue reading…

The Financial Conduct Authority (FCA) has announced proposals to ensure that firms provide tailored support for users of consumer credit and overdraft products who continue to face payment difficulties due to coronavirus (Covid-19). The proposals will cover users of credit cards and other revolving credit (store card and catalogue credit), personal loans, overdrafts, motor finance, buy-now pay-later (BNPL), rent-to-own (RTO), pawnbroking and high-cost short-term credit (HCSTC) products. During the initial phase of the pandemic, payment deferrals provided consumer credit borrowers with immediate and temporary support. They have helped millions of consumers through the immediate impacts of the current emergency and helped firms provide support at unprecedented scale. Continue reading…

Recently, the European Commission adopted its first-ever Strategic Foresight Report, aiming to identify emerging challenges and opportunities to better steer the European Union’s strategic choices. Strategic foresight will inform major policy initiatives. It will support the Commission in designing future-proof policies and legislation that serves both the current needs and longer-term aspirations of European citizens. The 2020 Report presents the rationale for using foresight in EU policy-making, and introduces a comprehensive concept of EU resilience. Continue reading…

by Lieve Lowet

This is the second part in a series of three articles written by me, which focuses on coal, climate change and capital. 

The recent findings of the Coal Policy Tool of Reclaim Finance reveal that indeed, as Sweeney said, managing climate-related risk remains a novel process for many. If insurers and reinsurers want to be part of the solution, more serious action is required beyond divestments and a few pioneers. If a sector is not insurable, it is not bankable. And if it is not bankable, most coal projects cannot be financed and built. The Indian Adani Group’s Carmichael Australian coal mine controversy is a warning. Whereas the European insurers and reinsurers are roughly and broadly speaking ahead of their American, Korean or Japanese counterpart across the five criteria Reclaim Finance examined in underwriting, and the best practice case is a large European insurer, there is still a lot of work to be done by insurers and reinsurers alike to reduce capacity meaningfully and to avoid the liability risk. Continue reading…

by Lieve Lowet

This blog is the first of a series of three articles written by me about coal, climate change and capital. The articles will be published on three consecutive days. 

When I googled “how relevant is coal for climate change”, the first answer which popped up was “coal is the single biggest contributor to anthropogenic climate change. The burning of coal is responsible for 46% of carbon dioxide emissions worldwide and accounts for 72% of total greenhouse gas (GHG) emissions from the electricity sector.” Phasing out coal from the electricity sector is the single most important step to get in line with the 1.5°C reduction target as laid down in Article 2 of the Paris Agreement. In that context, do insurers and reinsurers want to be part of the problem or part of the solution? Continue reading…

Watching speeches is an unusual experience when we’re limited to communicating virtually. It is strange to give them in this way, too. Especially as in this case it is my last opportunity before I step down as interim chief executive of the FCA. But the next few minutes do allow me to take stock and also offer some brief thoughts on the future of regulation. First of all, what lessons can we take from Covid-19 so far? In terms of society, technology and the manner in which we regulate?

Second, how the FCA itself might change to meet some of these challenges, and what constants may remain? And third, given the backdrop of the UK’s exit from the EU, what’s the kind of regulation we need?

Continue reading…

Financial markets largely recovered from March’s acute stress, according to the third BIS Quarterly Review1 of 2020.This was supported by both monetary and fiscal policy, and investor sentiment arising from better than expected economic indicators in the initial aftermath of the lockdown phase of the pandemic. However, the Review indicates that the economy’s upturn has been uneven and corporate balance sheets remain fragile. The associated concern of stretched valuations being disconnected from underlying economic prospects, most notably in some segments of the equity and corporate credit markets, has since been reflected in the recent stock market sell-off.  Continue reading…

Mr. Yves Mersch, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the European Central Bank, recently gave a speech at the Eurofi Financial Forum, Berlin on 11 September 2020. He reflected on two issues: our role in the extraordinary measures taken to keep economies afloat since the outbreak of the current crisis, and the limits of the ECB’s prudential mandate. The pandemic has dealt an unprecedented peacetime blow to the European economy. In spring, a great number of our businesses went into full lockdown. Crucially, however, banks in the euro area were able to offer vital support. To this end, ECB Banking Supervision provided far-reaching capital and operational relief, making record levels of lending possible during this exceptional time. Continue reading…

The Commission has recently adopted a proposal for a Council Recommendation to ensure that any measures taken by Member States that restrict free movement due to the coronavirus pandemic are coordinated and clearly communicated at the EU level. The Commission’s proposal sets out four key areas where Member States should work closer together:

Common criteria and thresholds for Member States when deciding whether to introduce travel restrictions; Mapping of common criteria using an agreed colour code; A common framework for measures applied to travellers from high-risk areas; Clear and timely information to the public about any restrictions.

Continue reading…