news & views of the week....

Here is a summary of some key topics that have been in the news this week that might be of interest to those in the funding & financing markets and beyond. The focus continues in the areas of financial stability, sustainable finance as well as the continuation of the intersection of finance and technological advancements....

Week ending 15th October 2021: This week’s highlights focus on various events in Brussels, Washington D.C. and also from this year’s virtual Sibos conference. The European Commission issued the first NextGenerationEU Green Bond - the world's largest green bond issuance ever; the G20 finance ministers meeting in Washington DC discussed matters specifically focusing on efforts geared towards the promotion of sustainable finance; also from D.C., the IMF released its Global Financial Stability Report, highlighting that risks are rising at some Non Bank Financial Institutions as they reach for yield to meet return targets; additionally from the GFSR, a detailed look and recommendations on the crypto ecosystem and related financial stability challenges; ahead of the G20 meeting, the FSB published details on enhancing resilience in non-bank financial intermediation, including Money Market Funds; and to coincide with Sibos2021, the team at Citi Securities Services released an interesting new study highlighting global efforts to accelerate the securities settlement process with new technologies and digitalization efforts poised to deliver major efficiencies and potential savings….

NextGenerationEU The European Commission issued the first NextGenerationEU green bond, raising €12 billion to be used exclusively for green and sustainable investments across the EU. This represents the world's largest green bond issuance ever. The EU is set to become the world's largest green bond issuer by far, providing a significant boost to sustainable finance markets as well as funding a greener EU recovery from the pandemic. With the strong oversubscription rate and excellent pricing conditions the issuance represents a promising start to the NextGenerationEU green bond programme of up to €250 billion by end-2026. The 15-year bond was more than 11 times oversubscribed, with books exceeding €135 billion. A wide range of investors expressed interest in the bond. The NextGenerationEU Green Bond framework is fully compliant with the Green Bond Principles of the International Capital Market Association - a market standard for green bonds – reassures investors that the funds mobilised will be used for green investments. The funds from the NextGenerationEU green bond issuances will be used to finance green and sustainable expenditure under the Recovery and Resilience Facility….

4th G20 Finance Ministers and Central Bank Governors Washington Meeting on 13 October 2021 The finance ministers of the G20 nations met in Washington DC, to discuss matters related to the international economy and global health, specifically focusing on efforts geared towards the promotion of more sustainable growth. The ministers were joined by central bank governors as part of the IMF-World Bank Group annual meetings. The G20 agreed to coordinate their efforts to tackle climate change and protect the environment, as well as to promote transitions towards greener, more prosperous and inclusive economies and societies. Ministers and Governors urged different G20 work streams to act in synergy to deepen the analysis of the economic and distributional impact of mitigation policies and develop the most appropriate policy mix to move towards low-greenhouse gas emission economies. Such mix should include investment in sustainable infrastructure and innovative technologies, as well as fiscal, market and regulatory tools, including carbon pricing mechanisms, to support clean energy transitions. Sustainable finance remains crucial for promoting the transition towards greener economies and societies, in line with the 2030 Agenda for Sustainable Development and the Paris Agreement. Ministers and Governors endorsed the G20 Sustainable Finance Roadmap which is a multi-year action-oriented document that will inform the broader G20 agenda on climate and sustainability in the years to come….

IMF Global Financial Stability Report, October 2021 GSFR Chapter 1: Global Financial Stability Overview: A Delicate Balancing Act - As the world continues to navigate the pandemic, financial stability risks have been contained so far thanks to the ongoing policy support. Financial vulnerabilities remain elevated in several sectors. Concerns about upside risks to the inflation outlook persist and asset valuations are stretched in some market segments. Emerging and frontier markets continue to face large financing needs amid higher funding costs. Risks are also rising at some nonbank financial institutions as they reach for yield to meet return targets….GSFR Chapter 2: The Crypto Ecosystem and Financial Stability Challenges - The crypto ecosystem offers an exciting new world of opportunities but also challenges. Risks to consumers can arise from a lack of operational or cyber resilience associated with crypto asset providers. Anonymity and limited global standards create significant data gaps for regulators and pose risks to financial integrity. The advent of crypto assets and stablecoins in emerging market and developing economies may accelerate dollarization risks. The chapter concludes with a set of eight actionable policy recommendations….

FSB Chair’s letter to G20 Finance Ministers and Central Bank Governors: October 2021 - Financial Stability Board The FSB is sharpening its focus on the road ahead: This letter from the FSB Chair to G20 Finance Ministers and Central Bank Governors focused on a key area of work on which the FSB submitted reports to the G20 meeting on developing a more resilient Non-Bank Financial Intermediation sector. Following the market turmoil in March 2020, the FSB agreed on an ambitious multi-year workplan to enhance NBFI resilience. A key priority of this workplan has been to address vulnerabilities in Money Market Funds. The FSB, with IOSCO, will carry out further work to enhance the functioning and resilience of short-term funding markets. The letter also notes the considerable progress made on assessing vulnerabilities and identifying policy considerations in other areas within NBFI, including open-ended funds; the impact of margin calls; and the structure of core funding markets. In a follow-up statement, the G20 Finance Ministers and Central Bank Governors reaffirmed the FSB report ‘’As a first step, we endorse the FSB final report on policy proposals to enhance MMF resilience. We will assess and address MMF vulnerabilities in our jurisdictions, using the framework and policy toolkit in the report, recognising the need to tailor measures to jurisdictions’ specific circumstances, as well as taking account of cross-border considerations.’’….

Citi_Securities_Services_Evolution_Whitepaper Citi Securities Services released a new study highlighting global efforts to accelerate the settlement process amidst technological transformation. "Securities Services Evolution" includes insights from 15 Financial Market Infrastructures and almost 400 market participants globally. The global securities landscape is on the verge of transformation, with new technologies and digitalization efforts poised to deliver major efficiencies and potential savings. This represents a radical change for an industry historically fragmented in terms of technology, operating models and process inconsistencies. The periodic volatility and remote working caused by the pandemic have been a catalyst for this change. The pandemic has also highlighted the need for market participants, regulators and FMIs to co-operate on key initiatives, such as digitization and digitalization. Appetite for both is clearly increasing as their potential to transform the industry becomes more widely acknowledged by market participants and FMIs alike. In the early days of the pandemic, high market volatility and volume underlined the critical role that FMIs and securities services providers play. The focus now is on how increased automation can deliver even greater resilience and efficiency, while simultaneously reducing risks and costs….

Closing thoughts....

I am sure this brief collection of topics doesn’t reflect everything you are working on but I hope it reflects some of the things you should be interested in….and I hope you find it of use!

Until the next time, I would be pleased to receive your views on any areas of mutual interest.?