EC published the 2020 edition of the Annual European Financial Stability and Integration Review. The review examines recent economic and financial developments and their impact on financial stability and integration in EU. The focus this year is on the banking sector and, in particular, on three main challenges it faces—the increased investments in certain assets, the emergence of cryptocurrencies, and the progress in relation to cross-border banking. In addition, ECB published a report, along with a statistical annex, on financial integration and structures in the Euro area. ECB also published remarks by Luis de Guindos, Vice-President of ECB, on the occasion of the publication of the report.
The EC review this year combines different perspectives on the various structural changes that are taking place in the financial system in Europe. The Annual European Financial Stability and Integration Review presents an in-depth review of the impact and policy implications of the challenges on the financial industry and on banks in particular. The review focuses on the emergence of digital money, including cryptocurrencies and their impact on banks and the financial system. The review also analyzes cross-border-banking developments in EU, focusing on the implications and developments with respect to the macro-prudential measures and the Banking Union, including implementation of the Single Resolution Mechanism and the Bank Recovery and Resolution Directive.
The ECB report on financial integration and structures in the Euro area describes key structural developments such as the process of financial integration, changes in financial structure, and the process of financial development or modernization. It discusses selected financial-sector policies, notably policies related to the European Banking Union and Capital Markets Union and contributes to the debate on how European Economic and Monetary Union can be deepened. The report highlights that the last decade saw rapid growth in fintech entities. However, the sector lacks a statistical classification, which is key to being able to analyze it better and compare it with other sectors of the financial industry. Over time, further development of equity markets could make a significant contribution to decarbonizing EU economies. New ECB research suggests that countries with economies that have a funding structure more focused on equity than bank credit or other forms of debt have reduced their carbon footprints more than other countries in recent decades. Furthermore, non-bank financial intermediaries, of which investment and pension funds are the fastest growing type, now account for almost 60% of total euro area financial assets. The report notes that this deserves attention, as it could reflect not only financial development, but partly also a migration of risks from the banking sector to less regulated sectors.
- EC Notification
- European Financial Stability and Integration Review (PDF)
- ECB Press Release
- ECB Report
- ECB Statistical Annex (PDF)
- Remarks by Luis de Guindos
Keywords: Europe, EU, Banking, Insurance, Securities, Financial Stability, Banking Union, Capital Markets Union, Climate Change Risk, BRRD, SRM, Resolution Framework, EC, ECB
Previous ArticleEBA Issues Opinion on Extension of Macro-Prudential Measure by NBB
EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.
FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).
APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.
BCBS and FSB published a report on supervisory issues associated with benchmark transition.
IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.
ESMA updated the reporting manual on the European Single Electronic Format (ESEF).
EBA published a statement on resolution planning in light of the COVID-19 pandemic.
ECB published a guideline (2020/97), in the Official Journal of European Union, on the definition of materiality threshold for credit obligations past due for less significant institutions.
FED temporarily revised the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes in response to the COVID-19 pandemic.
BCBS Finalizes Revisions to Credit Valuation Adjustment Risk Framework