The European Parliament believes that, following Brexit, the European Union should “spare no effort” in enhancing its global competitiveness in the financial sector, in a report on the international role of the euro which it adopted, on Thursday 25 March, by a large majority (494 votes in favour, 94 against, 100 abstentions) without amending the one adopted in committee (see EUROPE 12672/21).
MEPs recognise that the market for the clearing of euro-denominated interest rate derivatives depends heavily on UK-based central clearing counterparties (CCPs) and take note of the equivalence decision, effective until the end of June 2022, that the European Commission took in September 2020 (see EUROPE 12564/9).
But the Parliament “encourages the industry to follow the Commission’s call to reduce their exposure and dependence on third country CCPs, in particular over-the-counter (OTC) derivative exposures that are denominated in euro and other Union currencies”.
MEPs also underline the importance of regulatory cooperation between the EU and the UK, based on a voluntary, non-binding framework outside the Trade and Cooperation Agreement (TCA), which would allow for a dialogue on all relevant regulatory issues while fully respecting each side’s regulatory and supervisory autonomy.
In mid-March, Commissioner for Financial Services Mairead McGuinness expressed confidence that the EU and London would finalise “a cooperation agreement” on financial services before the end of the month, in line with the specific declaration annexed to the bilateral cooperation agreement signed at the end of 2020 (see EUROPE 12679/5).
On Wednesday evening, when presenting the report to the plenary, Danuta Hübner (EPP, Poland) stressed that the international role of the single currency remained “below its potential”. While the answer to this challenge had always been left to market forces, “recently, we realised that with supportive policies, the euro can become a currency that is widely welcome, used and trusted all over the world”, she noted.
Among the areas for action, Ms Hübner mentioned the strengthening of market infrastructures, ‘green’ finance and the ongoing work on the creation of a digital euro.
On behalf of the Commission, Virginijus Sinkevičius supported the Parliament's position in favour of completing the euro area banking union and capital markets union, the creation of a market for ‘green’ euro-denominated financial securities through the Next Generation EU Recovery Plan, and measures that would allow for greater use of the euro in trade, notably in the energy sector and greenhouse gas emission allowances.
“We need to ensure that the EU is not over-reliant on third country infrastructure”, the Commissioner also said.
See the ‘Hübner’ report: https://bit.ly/3fgYvfh (Original version in French by Mathieu Bion)