Feb 202018
 

The Basel Committee on Banking Supervision published a contribution where they assess the impact of  technology-driven innovation in financial services, or “fintech”, on both the banking industry and the activities of supervisors in the near to medium term. The increasing presence of new business model based on fintech developments is posing incumbent challenges to financial institutions.

The impact of such new technologies are however not bounded to the banking sector: the analysis contributes also with a focus on technology developments (big data, distributed ledger technology and cloud computing) and three cse studies on fintech business models (innovative payment services, lending platforms and neo-banks).

The contribution enhanced  the key implications on a set of supervisory issues, here quoted:

  1. the overarching need to ensure safety and soundness and high compliance standards without inhibiting beneficial innovation in the banking sector
  2. the key risks for banks related to fintech developments, including strategic/profitability risks, operational, cyber- and compliance risks
  3. the implications for banks of the use of innovative enabling technologies
  4. the implications for banks of the growing use of third parties, via outsourcing and/or partnerships
  5. cross-sectoral cooperation between bank supervisors and other relevant authorities
  6. international cooperation between bank supervisors
  7. adaptation of the supervisory skill set
  8. potential opportunities for supervisors to use innovative technologies (“suptech”)
  9. relevance of existing regulatory frameworks for new innovative business models
  10. key features of regulatory initiatives set up to facilitate fintech innovation

Implications of fintech developments for banks and bank supervisors (full text)

Feb 112018
 

The European Commission had launched on February 1st launched the EU Blockchain Observatory and Forum with the manifested of providing visibility to this new technology. The Observatory is a European Parliament pilot project proposed by MEP von Weizsacker that will promote discussions and support initiatives aimed at facing the challenges that current business processes are facing, and enabling the creation of new businesses in this direction.

Fintech is retained to be “..a policy priority of the European Commission since it can and will play a major role in achieving the objectives related to the development of the single market, Banking Union, the Capital Markets Union and retail financial services.”

The Commission already constituted a Task Force on financial technology currently working on a FinTech Action Plan, which is going to be presented in the spring. Since entrepreneurs are already offering blockchain solutions to their customers, the EC has the duty to ensure that such businesses are able to develop concurrently across EU countries borders.

Furthermore, the Observatory will invest in training professional profiles to monitor and analyze trends and exploring blockchain potential, and engage with stakeholders and experts in the EU and worldwide.

 

 

EC Blockchain Observer press release

EU Task Force on Financial Technology

Feb 112018
 

The Committee on the Global Financial System (CGFS) of the BIS published a report which examines current trends in business models of banks following  the recent financial crisis. The post-crisis scenarios and a brand new set of regulatory amendments might as well have influenced the business strategies of bankers all over the world. The studies encompasses a panel 0f 21 banks all over the world. The main findings of the study are reported here from the BIS website.

“The experience of the global financial crisis, the post-crisis market environment and changes to regulatory frameworks have had a marked impact on the banking sector globally. The CGFS Working Group examined trends in bank business models, performance and market structure over the past decade, and assessed their implications for the stability and efficiency of banking markets.

The report contains several key observations on structural changes in the banking sector after the crisis. First, while many large advanced economy banks have moved away from trading and cross-border activities, there does not appear to be clear evidence of a systemic retrenchment from core credit provision. Second, bank return on equity has declined across countries, and individual banks have experienced persistently weak earnings and poor investor sentiment, suggesting a need for further cost cutting and structural adjustments. Third, in line with the intended direction of the regulatory reforms, banks have significantly enhanced their balance sheet and funding resilience and curbed their involvement in certain complex activities.”

 

 

BIS CGFS Papers No 60

BIS CGFS Papers No 60: Excel dataset

Feb 112018
 

EIOPA published a report highlighting the major sources of systemic risk in insurance. Sources of risk are distinguished among direct sources (exposure to common macroeconomic and financial shocks) and indirect sources, encompassing activity-based risks (such as network-type involvement in dangerous products) and behaviour-based risks (such as excessive concentrations and inappropriate cross-exposures).

EIOPA’s stated objective is to discourage risky behaviors and excessive levels of exposure, particularly in systemic-risk bearing products. The guidelines distinguishes microprudential policy (bottom-up approach) from macroprudencial policy (top-down approach).

Correlations among institutions is irrelevant for micro-prudential policies, and EIOPA guidances are developed at a single-company level, focusing on a stacked level of reserves that might help to absorb risks at a micro-level.

In order to measure spillover effects across all companies, a mixed approach, i.e. based both on fundamentals and market indicators, is proposed. Tackling the issue of systemic risk is currently of primary interest, as macro-prudential policies in the insurance market appears to be still in their early stage.

 

EIOPA: Systemic risk and macroprudential policy in insurance

 

Feb 112018
 

Lanciato lo stress test 2018 della European Banking Authority (EBA), con lo scopo di analizzare la resilienza delle banche EU a shock macroeconomici. Lo scenario base si allinea ai forecasts del Dicembre scorso, mentre lo scenario avverso prevede una riduzione del GDP dell 8.3% nel 2020 rispetto al forecast.

Lo scenario avverso è costruito considerando i quattro rischi sistemici attualmente ritenuti i più pericolosi per la stabilità del settore bancario Europeo:

  • Improvvisi apprezzamenti dei  risk premia nei mercati globali
  • Effetto feedback recessione/bassa redditività del settore bancario
  • Sostenibilità del debito pubblico e privato
  • Rischio di liquidità nel settore finanziario non-bancario

I risultati dello studio sono annunciati per il Novembre 2018.

EBA stress test 2018 methodology

EBA 2018 EU-wide stress test exercise

Le principali caratteristiche degli stress test 2018 (Carlo Milani)

Feb 052018
 

The European Securities and Markets Authority (ESMA) has published today the results of its second EU-wide stress test exercise regarding Central Counterparties (CCPs) established in the European Union (EU).

The CCP stress test assesses the resilience and safety of the EU CCP industry and helps to identify possible vulnerabilities. The results of the second EU-wide stress test show that overall the system of EU CCPs is resilient to multiple clearing member (CM) defaults and extreme market shocks. In addition, the report also highlights individual CCP-specific results.

The stress test builds on the first CCP stress test conducted in 2016, which focused on counterparty credit risk only, with the second exercise including liquidity risks – examining whether CCPs would meet their liquidity needs under different stress scenarios. ESMA tested the resilience of 16 European CCPs with approximately 900 CMs EU-wide. The aggregate amount of collateral held by CCPs on the test date in the form of margin requirements and default fund contributions was approximately €270bn.

 

 

 

ESMA EU CCP Stress Test Report

ESMA Press Release CCP Stress Test

ESMA Q&A CCP Stress Test

 

 

Feb 052018
 

Recently appointed chairman of the International Monetary Fund Committee (IMFC) and South Africa’s Central Bank Governor Lesetja Kganyago breaks the traditionalist mold of central bankers. The central bank governor joined a panel discussion on what fintech means for central banking during the  IMF/World Bank Annual Meeting in Washington.

“Banks” he says “.. need to embrace fintech or they will disappear”. The opportunities  that financial technology offers increase responsibility of central authorities to ensure the integrity of the financial system. Kganyago says that if people have trust in the physical bank notes, there is no reason why a central bank couldn’t start thinking about issuing a digital currency. Further, technology is having a positive impact in fighting corruption.

IMF: Fintech is a Central Banker’s friend

IMF: World Bank Annual Meeting – Washington D.C. (podcast)

IMF: Corruption disruption and economic stability

Feb 052018
 

On January 30th Yves Mersch, member of the Executive Board of the European Central Bank, discussed the key topic of central banks liquidity provisions to entities which are close to resolution.

Specifically, the question is the extent to which this liquidity should be provided by central banks, and it frames in the broader context of the completion of the banking union in Europe. A single European Deposit Insurance Scheme (EDIS) is retained to be a helpful tool that can provide support to resolution schemes.

The ECB’s position on the matter has been constant: resolution measures should be financed by contributions from shareholders and creditors of the bank, or by the State or at Union level, but not by central banks.

A key point here is that a standalone guarantee has never been recognised as adequate collateral under our framework. Guarantees can only play a limited role, and in no circumstances would a guarantee “cure” the lack of financial soundness of a given counterparty or the lack of collateral (or a combination of the two), which is often the case in a resolution scenario.

Emergency liquidity assistance can be provided by national central banks on the basis of their national competences and to pursue national objectives, namely, to preserve financial stability. Hence, the provision of central bank liquidity should not be ruled out in advance, yet neither should be taken for granted. Resolution planning should not be designed assuming a priori that central bank liquidity will fill the gaps.

 

 

The limits of central bank financing in resolution

Gen 262018
 

Via libera della Consob al nuovo Regolamento in materia di informazioni di carattere non finanziario. Il Regolamento – adottato in attuazione di una direttiva europea (2014/95/UE), recepita nell’ordinamento nazionale (decreto legislativo 254/2016) – disciplina le modalità di pubblicazione, verifica e vigilanza sulle dichiarazioni di carattere non finanziario.

A partire dai bilanci relativi agli esercizi avviati nel 2017 le società quotate, le banche e le assicurazioni di grandi dimensioni (che abbiano almeno 500 dipendenti e soddisfino determinati requisiti dimensionali) dovranno redigere, a corredo della tradizionale rendicontazione finanziaria, anche una dichiarazione sui temi di carattere non finanziario (la Dnf), come gli aspetti ambientali, sociali, quelli attinenti al personale, al rispetto dei diritti umani, alla lotta contro la corruzione attiva e passiva .

La Dnf intende armonizzare, sia pure con rilevanti margini di flessibilità, la pubblicazione delle informazioni non finanziarie con l’obiettivo di renderle facilmente accessibili a investitori e consumatori.

Il Regolamento prevede un regime diversificato di pubblicazione e di trasmissione diretta alla Consob della Dnf, a seconda che la società che redige la dichiarazione sia o meno quotata in un mercato regolamentato o diffusa tra il pubblico in misura rilevante. In particolare, al fine di contenere gli oneri gravanti sulle imprese, è previsto che le società quotate e diffuse utilizzino i canali di pubblicazione e trasmissione già previsti dall’attuale disciplina del Testo Unico della Finanza, mentre per le altre società è prevista la pubblicazione della Dnf sul proprio sito internet al fine di garantire un più facile accesso a tutti gli stakeholder interessati.

Per quanto riguarda la verifica di conformità della Dnf, effettuata dal revisore legale, le imprese potranno scegliere fra due forme di attestazione (limited assurance e reasonable assurance), connotate da livelli crescenti di approfondimento. L’opzione potrà essere totale o parziale, combinando i due metodi di verifica.

Con riguardo alle modalità e ai termini per il controllo effettuato dalla Consob sulle Dnf, in analogia con quanto avviene per l’informativa finanziaria, è previsto che la vigilanza sulle dichiarazioni avvenga su base campionaria valorizzando le segnalazioni dei sindaci, dei revisori e degli altri stakeholders.

Nuovo Regolamento Consob in materia di informazioni di carattere non finanziario

Gen 262018
 

 

L’Autorità bancaria europea (EBA) ha pubblicato un report sullo stato di applicazione delle linee guida sui metodi di calcolo dei contributi ai sistemi di garanzia dei depositi (Deposit Guarantee Schemes o DGS). Le linee guida EBA definiscono i principi e specificano gli elementi necessari per calcolare i contributi da parte delle banche in un’ottica di tipo risk-based.

L’analisi evidenzia che gli orientamenti EBA hanno ampiamente raggiunto l’obiettivo di introdurre livelli di contribuzione diversi per le istituzioni in base alla loro rischiosità. Tuttavia, la metodologia descritta nelle Linee guida, e attualmente in uso, comporta un eccessivo livello di flessibilità e potrebbe dover essere rivista in futuro per garantire un approccio più coerente, pur continuando a soddisfare le specificità nazionali. La relazione sottolinea inoltre che l’approccio adottato dagli Stati membri sembra garantire un buon livello di trasparenza senza eccessivi obblighi di segnalazione aggiuntivi. Pertanto, secondo l’Autorità europea non sembra esserci un’esigenza immediata per modificare le linee guida.

Comunicato stampa
Report sull’applicazione delle Linee guida in materia di contributi ai sistemi di garanzia dei depositi