Fiona Wright’s Post

Another first: Since 2024 #commerzbank is a proud sponsor of #Eurofi. Last week Valérie Höß and I represented the bank at the conference in Ghent. We had very instructive meetings with our peers as well as with representatives from the official sector. Thursday, I had the great pleasure to appear on a panel together with Paulina Dejmek Hack, Jonás Fernández, Makoto Minegishi, Eva Wimmer, Daniela Stoffel, Anna Marie Dunn, and Henning Dankenbring. Moderated by David Bailey, we discussed the global implementation of Basel III. During my intervention, I recalled the genesis of the (still pending) legislation in the #eu: When the European Banking Authority (EBA) published their first impact assessment the industry was horrified. On average an increase of 24% in capital requirements was projected. Against this backdrop, the industry highly appreciated the guidance by the European Parliament (“adequate account must be taken of the specificities of the European banking models”) and by the Council of the European Union (“not to be expected to result in a significant increase in the overall capital requirements for the banking sector”). In fact, the proposal tabled by the European Commission was fair. John Berrigan was right to compare it to a piece of art: Balanced, nuanced, almost fragile. You better don’t touch it - or it may fall apart. Based on Commerzbank’s business model, we focused our advocacy on six topics: The capital requirements for a) unrated corporates, b) trade finance, c) residential real estate, d) securitizations; e) emissions trading and f) market risk (FRTB). In most of these areas, sensible solutions could be achieved. On the bottom line, Commerzbank does not expect a significant impact on our capital requirements once the new framework comes into force on January 1, 2025. Nevertheless, further work needs to be done: We need a sustainable solution beyond the implementation period and the interim solution for unrated corporates. 2032 may sound far away. However, banks are already underwriting long-term credit that extends beyond the transition period. We have to start discussing a final solution now. Even worse is the situation regarding the implementation of the FRTB. Everybody agrees that this has to happen in sync globally. However, the UK will implement only mid-2025 while implementation in the USA is still up in the air. Against this backdrop, the Commission will have to come up with a Delegated Act persuant to the new Article 461(a) CRR. To prevent inconsistencies between reporting and capital requirements, we prefer the first option: setting the multiplier below 1. This leaves the question open how the multiplier should be calibrated. We need to have this discussion now. In this sense, we look forward to continuing the dialogue with DG FISMA. Finally, I would like to thank Konstantin R. and Ulf Müller-Späth for their support in drafting my notes as well as the article in the conference magazine. #eu2024be #baseliii

Switzerland continues to honor its deep-rooted relationship with cash even as digital payments gain ground. The Swiss National Bank’s plans for a new banknote series, themed "Switzerland and its altitudes", underline its commitment to preserving cash as a valued part of everyday transactions and a secure store of value. With over 90% of Swiss citizens supporting physical money and the enduring popularity of the 1,000-franc note, Switzerland’s approach stands in contrast to trends elsewhere in Europe. This initiative, alongside government support for constitutional protection of cash, highlights Switzerland's unique stance in a rapidly digitalizing world.

🪙How #DigitalCurrencies Could Shape the Future of #Finance The #EuropeanCentralBank has embarked on a preparatory phase to lay foundations for the potential issuance of a #DigitalEuro. If introduced, the digital euro would serve as an alternative to cash, complementing banknotes and coins while providing an additional payment method backed by the #ECB. 📰 In this opinion paper, Prof. Diane Pierret from the Faculty of Law, Economics and Finance - University of Luxembourg is presenting Prof. Martina Fraschini's #research work on #CBDC and #CentralBank policies, to better understand how it will impact banks and the conduct of monetary policy in Europe. ➡️ https://lnkd.in/eeqRVBZ9 ℹ️The article was originally published: 🇫🇷 - in Forbes Luxembourg: https://lnkd.in/e2KHtwhy 🇬🇧 - in Silicon Luxembourg: https://lnkd.in/eYAKidax University of Luxembourg European Central Bank #ResearchLuxembourg

When it comes to the digital euro, will policy-makers choose "team people" or "team banks"? Currently, "team banks" seems to be the favourite. 🔍 Check out the insightful analysis by Alexander Fanta and Thomas Bollen on the reasons why banks are scared of the digital euro, and how the banking lobby is shaping crucial decisions on it. https://lnkd.in/eXjKn9aE 

In European banking, PIIGS can still fly—https://on.ft.com/3VTWFo6 via @FT Several initiatives have been undertaken to clean balance sheets during the period of negative interest rates, resulting in a significant improvement in the financial strength of southern European banks which now shine brightly 👏

In a Digital Euro domestic impact assessment exercise OeNB experts discuss the impact of the introduction of a Digital Euro on Austrian banks' liquidity and profitability situation. While the effects on banks differ with size and business model, the Digital Euro does not pose a threat to financial stability. See more in our latest Financial Stability Report: https://lnkd.in/gU4VvP9t

A well-researched and well-written article by Alexander Fanta and Thomas Bollen. These journalists of Follow the Money EU requested access to information, and in response the European Central Bank released two dozen letters and emails. These documents give an interesting insight into bank lobbying strategy, and it seems that banks are doing (almost) everything to protect the status quo, even the CFO's of the largest European banks are involved. In a letter, they plea for a low limit: 'To make sure the digital euro doesn’t become a “store of value” – a place where they can safely keep their money for a longer period of time – they urge the Commission and ECB to limit the amount to preferably somewhere between 500 to 1,000 euros. In addition to this holding limit, the banks demand that, unlike bank deposits, digital euro accounts shall pay no interest.' The digital euro is now being discussed in Brussels, and it promises to be an exciting debate, as several politicians have fundamentally different ideas. For example, Paul Tang argues that "holding limits can only be justified for a transition period" and “I do not demand from central bankers to start a revolution, but it is neither their institutional task to prioritise the interest of the banking sector over the public interest. The introduction of a new form of money should not be a decision that central bankers can take by themselves.” I am curious to see how this will end!  

Yesterday (July 30), the Bank of England released a Discussion Paper outlining its approach to innovation in money and payments. This paper is a call for responses to foster a comprehensive dialogue on advancing the UK's payments landscape. Key Highlights: - Financial Stability and Central Bank Money: The Bank highlights the risks associated with financial markets shifting away from central bank money. To mitigate these risks, the Bank aims to preserve central bank money as the foundation of confidence in the financial system. - Technological Innovations: The Bank plans to explore and implement technological innovations, including enhanced functionality for the renewed Real Time Gross Settlement (RTGS) system and experiments with wholesale central bank digital currency (CBDC). - Retail Payments: Emphasizing the need for ease, speed, and confidence in payments for households and businesses, the Bank underscores the importance of clear leadership from UK authorities. Collaboration with HM Treasury, the Financial Conduct Authority, and the Payment Systems Regulator will be crucial. Quote from Andrew Bailey, Governor of the Bank of England: "Confidence in money and payments is fundamental to the Bank’s responsibility for monetary and financial stability. As innovation in this space continues, our role must also evolve, to support a robust and dynamic UK economy." The Bank invites feedback on the Discussion Paper until October 31, 2024. Stay informed on regulatory developments by following Global Regulatory Insights! #BankofEngland #FinancialInnovation #Payments #CBDC #RTGS #GRI

🇱🇺 The European Investment Bank (EIB), HSBC & Banque de France jointly executed a €100m #digitalbond issuance, settled with wholesale central bank digital currency. #Luxembourg #wCBDC #digitalcurrency Emanuele Vignoli, John O'Neill, Emmanuelle Assouan, Cyril Rousseau. https://lnkd.in/eX63Uc7Q

European bank M&A activity is heating up, but why now? What are the drivers behind this trend, and how can credit investors benefit? Adrian Cighi and Elsa Dargent explore the factors fuelling consolidation in the European banking sector, including the need for scale, the growing complexity of customer needs, and cyclical effects. Find out more in the latest Bond Vigilantes blog: https://lnkd.in/epCh-GRz