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Meeting of 9-10 September 2020 Account of the monetary policy meeting of the Governing Council of the European Central Bank
October 8, 2020--Held in Frankfurt am Main on Wednesday and Thursday, 9-10 September 2020
1. Review of financial, economic and monetary developments and policy options
Financial market developments
Ms Schnabel reviewed the financial market developments since the Governing Council's previous monetary policy meeting on 15-16 July 2020.
The functioning of euro area financial markets had, by and large, been restored. Stress symptoms had largely dissipated and liquidity had returned to the market. The Composite Indicator of Systemic Stress (CISS) remained only marginally higher than before the coronavirus (COVID-19) period, with the difference primarily being driven by still elevated volatility, particularly in stock markets.
Financial conditions had also improved broadly in the euro area. The GDP-weighted government bond curve had shifted further down and had returned to its pre-crisis level. Large parts of the curve were again in negative territory and very close to the lowest level ever recorded. Government bond spreads too had reached, or were close to, their pre-crisis levels and investment-grade corporate bond spreads had fallen by nearly 20 basis points since the Governing Council's previous monetary policy meeting. High-yield bond spreads had even fallen by nearly 50 basis points.
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Source: ECB
Investing in People is Crucial to Economic Recovery in Central Asia
October 7, 2020---- Central Asian economies are on course to contract by 1.7 percent this year, a sharp reversal from the 4.9 percent growth in 2019, says the latest edition of the World Bank Economic Update for the Europe and Central Asia region released today.
The impact of the coronavirus (COVID-19) pandemic varies across Central Asia. Kazakhstan and the Kyrgyz Republic will see an economic contraction of 2.5 percent and 5.5 percent, respectively this year. Tajikistan and Uzbekistan, on the other hand, will avoid a recession but growth is likely to be tepid at 1.6 percent (from 7.5 percent in 2019) in Tajikistan and 0.6 percent (from 5.6 percent in 2019) in Uzbekistan.
World Bank Economic Update for the Europe and Central Asia
Source: World Bank
UK regulator bans sale of crypto derivatives to retail users
October 6, 2020--Quick Take
The U.K.'s Financial Conduct Authority (FCA) has today officially banned the sale of cryptocurrency derivatives and exchange-traded notes to retail users, more than a year after first proposing such a ban.
The ban will come into effect on January 6, 2021.
"We are extremely disappointed by the FCA’s decision...," Townsend Lansing, head of product at CoinShares, told The Block.
The U.K's Financial Conduct Authority (FCA) has today officially banned the sale of cryptocurrency derivatives and exchange-traded notes to retail users, more than a year after first proposing such a ban.
The FCA said these products are "ill-suited" for retail consumers due to various reasons, including "extreme volatility" of cryptocurrencies.
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Source: theblockcrypto.com
Deutsche Boerse/Dax: wider, deeper, stricter
October 5, 2020--Exclusive clubs often have permissive rules. The collapse of Wirecard, a fintech giant riddled with fraud, showed up the quirks of those governing the Dax, the index representing the corporate elite of Germany. A revamp of the rule book-and a possible enlargement- proposed by exchange operator Deutsche Boerse is necessary and welcome.
The overhaul would make it harder for risky businesses to join the index. A company could be booted out if it delayed filing accounts. Proven profitability would be necessary. There has been unease over Wirecard’s replacement with lossmaking food delivery company Delivery Hero.
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Source: technocodex.com
New iShares ETFs on Xetra: Eurozone government bonds with focus on climate change
October 5, 2020--Since Monday, two new exchange traded funds issued by iShares have been tradable on Xetra and Börse Frankfurt.
The iShares EUR Govt Bond Climate UCITS ETF EUR enables investors to invest in euro-denominated fixed income government bonds of eurozone countries that have an investment grade rating and a minimum residual maturity of one year.
The underlying index is overweight in bonds from countries that are less exposed to the effects of climate change. For this purpose, the physical risk of climate change (e.g. natural disasters) and the precautionary measures taken by the respective country are considered, as well as the cost of reducing greenhouse gas emissions. Investors have the choice between an accumulating and a distributing share class.
Name: iShares EUR Govt Bond Climate UCITS ETF EUR (Acc)
Asset: IE00BLDGH553
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Source: Deutsche Börse
ECB intensifies its work on a digital euro
October 2, 2020--Publication of Eurosystem High-Level Task Force report on digital euro
Eurosystem needs to be ready for possible future decision to introduce digital euro
Public consultation and experimentation to be launched
The European Central Bank (ECB) today published a comprehensive report on the possible issuance of a digital euro, prepared by the Eurosystem High-Level Task Force on central bank digital currency (CBDC) and approved by the Governing Council.
A digital euro would be an electronic form of central bank money accessible to all citizens and firms-like banknotes, but in a digital form-to make their daily payments in a fast, easy and secure way. It would complement cash, not replace it. The Eurosystem will continue to issue cash in any case.
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Source: ECB
Europe must prepare to launch a digital euro 'if and when' necessary to complement cash payments, ECB says
October 2, 2020--Europe must prepare to launch a digital euro to help citizens access money in a fast-changing digital landscape, the European Central Bank said on Friday.
"We should be ready to issue a digital euro if and when developments around us make it necessary," said Fabio Panetta, an executive board member at the bank.
A digital euro would help in scenarios where people stop using cash significantly, if other forms of electronic payment are unavailable, or if foreign digital money took over, the bank said.
Main concerns include potential cyber risks, privacy, and whether the central bank would acquire sensitive information on users.
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Source: markets.businessinsider.com
ESMA updates statements on the impact of Brexit on MiFID II/MiFIR and the Benchmarks Regulation
October 1, 2020--The European Securities and Markets Authority (ESMA), the EU's securities markets regulator, has updated two statements on its approach to the application of key provisions of MiFID II/MiFIR and the Benchmark Regulation (BMR).
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Source: ESMA
EDHEC European ETF, Smart Beta and Factor Investing Survey
October 1, 020--Summary :
The latest edition of the EDHEC European ETF, Smart Beta and Factor Investing Survey was conducted as part of the "ETF, Indexing and Smart Beta Investment Strategies" research chair at EDHEC-Risk Institute, in partnership with Amundi.
The data shows an increase in the use of ETFs to invest in SRI/ESG (55% of respondents in 2020, versus 33% in 2019), with a satisfaction rate of 87% (68% in 2019).
Achieving broad market exposure still tops the list of reasons for using ETFs, with 77% of respondents using them frequently for this purpose.
Cost and quality of replication still remain the two main drivers for selecting ETF providers. 50% of respondents would like to see further developments in SRI/ESG-based ETFs and/or low-carbon ETFs, compared to 38% in 2019.
65% of respondents incorporate ESG into their investment decisions to allow for a positive impact on society and 58% of them to reduce long-term risk.
However, the majority (63%) do not want this to be done at the expense of performance.
More respondents (45%) favour a best-in-class (positive screening) approach to SRI/ESG implementation over the thematic approach (30%) and the negative screening approach (25%).
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Source: risk.edhec.edu
Avoiding 'sin stocks' is no longer enough for ESG ETFs
October 1, 2020--Traditional socially responsible exchange traded funds that rely on simply excluding "sin stocks" and other securities linked to sectors such as coal mining or tobacco look set to become a thing of the past, data show.
Instead, investors are leaning towards so-called positive screening approaches that choose best-in-class companies which score high on specific environmental, social and governance performance criteria, according to experts on the rapidly expanding ESG ETF investment industry.
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Source: technocodex.com
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