EA January 2014

EU Launches Long-Awaited Overhaul of Megabank Regulation

spellmanThe European Union’s long-delayed overhaul of megabank regulation now proposes curtailing or banning the riskiest financial activities in hopes of avoiding a repeat of the 2007-2009 global financial system meltdown. 

Until now, the post-crisis EU banking reforms had not acted to rein in “too big to fail” banks, focusing instead on establishing a new regulator, the European Banking Authority; stepping up capital provisions to help banks weather economic shocks; launching a mechanism to bail out problem banks; imposing limits on bankers’ compensation as an antidote to the “more pay more problems” phenomenon; and, starting a common deposit guarantee. EU-based banks must also adhere to new global standards, notably Basel III capital requirements [1] These include a “leverage ratio” designed to curb banks’ reliance on debt by setting a minimum standard for how much capital a bank must hold as a percentage of its assets.


Letter from Paris—Back to the Future

jacquelinegrapin2013At the very moment when revelations about François Hollande’s private life were shaking up Paris, his radical political swing to center right policies have created even more surprise--from both supporters and opposition.   Hollande has moved dramatically from his initial course of spending for social benefits and reducing unemployment by creating public sector jobs, and piling on tax increases for businesses, investors, and consumers.   The French socialist president has invited his government to switch gears.


Perspectives: The German Trade Surplus, Bane or Boon?

alexanderpriviteraThe recent publication of a United States (U.S.) Treasury report characterizing Germany as a risk to the world economy because of the huge surplus in its trade balance, highlights how for many U.S. economists the German economic model remains deeply flawed. Indeed, this is not the first time that the U.S. government has pointed a finger at Germany’s massive current account surpluses and branded them a source of dangerous global imbalances.

Germany’s Elections May Force Focus on Domestic Affairs

ulrikeguerotvictoriakupschThe German elections and the recent formation of a coalition government have created a large gap between the necessary and the politically possible in Germany’s approach to European and foreign relations. The first decisions of the new German government and its composition point to a focus on domestic affairs, where European and international affairs will remain a matter of closed-door and perhaps neglected policies.


MAR, ESMA, MiFID, MiFIR, EMIR, UCITS 5, ELTIF - A Busy Year Ahead for EU Regulation of Financial Services

spellman2014 will usher in a busy, even dizzying, year for financial services regulation within the European Union as member-states’ securities laws are further harmonized and the breadth of supervised activities widens to cover new market developments.