1540

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Policy area
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Keyword
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The institutional architecture of EU anti-fraud measures: Overview of a network

18-06-2018

In the European Union, several institutions, agencies and other bodies (collectively referred to as 'EU authorities') are concerned with preventing and combating fraud related to the EU budget. These EU authorities, and the activities they carry out – including policy-making, monitoring and operational tasks – make up a multi-layered network in which Member States and international organisations are also included. At the domestic level, national authorities contribute by detecting, prosecuting and ...

In the European Union, several institutions, agencies and other bodies (collectively referred to as 'EU authorities') are concerned with preventing and combating fraud related to the EU budget. These EU authorities, and the activities they carry out – including policy-making, monitoring and operational tasks – make up a multi-layered network in which Member States and international organisations are also included. At the domestic level, national authorities contribute by detecting, prosecuting and reporting fraudulent behaviour in the use of European Union funds to the European Commission. At the same time, a number of international organisations coordinate efforts across countries and legal systems to combat fraud. The present analysis offers an overview of this network, with a focus on the European Union institutional framework.

Money laundering - Recent cases from a EU banking supervisory perspective

18-06-2018

This briefing (1) provides some insight into recent cases of breaches or alleged breaches of anti-money laundering (AML) rules by SSM supervised banks and (2) identifies some common prudential features. The briefing also outlines (3) the respective roles of European and national authorities in applying AML legislation that have been further specified in the 5th AML Directive adopted by the EP Plenary on 19 April, and (4) ways that have been proposed to further improve the AML supervisory framework ...

This briefing (1) provides some insight into recent cases of breaches or alleged breaches of anti-money laundering (AML) rules by SSM supervised banks and (2) identifies some common prudential features. The briefing also outlines (3) the respective roles of European and national authorities in applying AML legislation that have been further specified in the 5th AML Directive adopted by the EP Plenary on 19 April, and (4) ways that have been proposed to further improve the AML supervisory framework. This briefing is an updated version of the April 2018 EGOV briefing prepared for the hearing: ‘Combat of Money Laundering in the EU Banking Sector’ organised by the European Parliament’s Special Committee on Financial Crimes, Tax Evasion and Tax Avoidance (TAX3) on 26 April 2018.

How demanding and consistent is the 2018 stress test design in comparison to previous exercises?

14-06-2018

We provide an assessment of the design and calibration of the 2018 EU-wide stress test. The adverse scenario for the 2018 stress test is more severe than for previous stress tests in terms of the assumed GDP decline in the EU area. However, the test is less severe in terms of the losses that banks are expected to incur under the scenario. The adverse scenario has a highly asymmetric impact on different European countries, such that countries with a high degree of trade openness are affected considerably ...

We provide an assessment of the design and calibration of the 2018 EU-wide stress test. The adverse scenario for the 2018 stress test is more severe than for previous stress tests in terms of the assumed GDP decline in the EU area. However, the test is less severe in terms of the losses that banks are expected to incur under the scenario. The adverse scenario has a highly asymmetric impact on different European countries, such that countries with a high degree of trade openness are affected considerably more. It seems unlikely that the assumed scenario constitutes the most plausible threat scenario for the EU economy. Since banks use heterogeneous models to forecast the stress scenario impact on loan losses and since the EBA does not publish its own respective benchmark parameters, the public cannot fully assess the true severity of the test in terms of its impact on banks’ capital. We argue that both the lack of transparency and the heterogeneity of banks’ practices to forecast stress scenario induced losses considerably weaken the credibility of the stress test and limit its usefulness in supporting market discipline among European banks.

External author

Rainer HASELMANN , Mark WAHRENBURG

How demanding and consistent is the 2018 stress test design in comparison to previous exercises?

13-06-2018

The 2018 EU-wide stress test requires banks to evaluate the impact on profits and capital of common macroeconomic scenarios for 2018-2020. The methodology set up by the EBA addresses four main sources of uncertainty: credit risk, market risk, financial risks on net interest income and operational risk. Credit risk is assessed on the basis of the new IFRS 9 accounting standard. Market risk includes a valuation of illiquid, hard-to-price level 2/3 financial instruments. Net interest income is assumed ...

The 2018 EU-wide stress test requires banks to evaluate the impact on profits and capital of common macroeconomic scenarios for 2018-2020. The methodology set up by the EBA addresses four main sources of uncertainty: credit risk, market risk, financial risks on net interest income and operational risk. Credit risk is assessed on the basis of the new IFRS 9 accounting standard. Market risk includes a valuation of illiquid, hard-to-price level 2/3 financial instruments. Net interest income is assumed to suffer from an asymmetric increase in the rates earned on assets and paid on liabilities. Operating risk includes conduct risk and takes into account past loss events. This written advice highlights some weaknesses in the EBA methodology, which may lead to a different degree of conservativeness for some business models or countries. It also discusses ways to make future stress tests more realistic and reliable, by addressing resource gaps and improving governance.

External author

Andrea Resti

How demanding and consistent is the 2018 stress test design in comparison to previous exercises?

13-06-2018

The new 2018 EBA EU-wide stress test exercise is similar to previous exercises for what concerns the employed methodology. The major change compared to the 2016 exercise is the inclusion of the new international accounting standards, which contributes to the increased severity of the exercise. The methodology incorporates several measures to guarantee internal consistency. However, despite all the progress made in designing the exercise, there remain critical areas concerning the application of a ...

The new 2018 EBA EU-wide stress test exercise is similar to previous exercises for what concerns the employed methodology. The major change compared to the 2016 exercise is the inclusion of the new international accounting standards, which contributes to the increased severity of the exercise. The methodology incorporates several measures to guarantee internal consistency. However, despite all the progress made in designing the exercise, there remain critical areas concerning the application of a static-balance sheet assumption, the underrepresentation of liquidity risk and the implications of the lack of a fail-pass threshold. Improvements in these areas can enhance reliability of stress test results and empower their role as external and internal communication tools.

External author

Brunella BRUNO, Elena CARLETTI

Valuation Reports in the Context of Banking Resolution: What are the Challenges?

13-06-2018

This paper discusses from a legal perspective the challenges and difficulties involved in the production of the valuation reports required by the BRRD and considers the option of a moratorium tool for use by the resolution authorities as a possible way forward, which could address the concerns about timing and flexibility in the valuation process. Given the discretionary powers of the resolution authorities and the need for SRB independence, the paper also considers the wider issues of legitimacy ...

This paper discusses from a legal perspective the challenges and difficulties involved in the production of the valuation reports required by the BRRD and considers the option of a moratorium tool for use by the resolution authorities as a possible way forward, which could address the concerns about timing and flexibility in the valuation process. Given the discretionary powers of the resolution authorities and the need for SRB independence, the paper also considers the wider issues of legitimacy and accountability in the actions and decisions taken by the Single Resolution Board in light of the unique and complex institutional structure of the SRM.

External author

Rosa María Lastra , Rodrigo Olivares-Caminal

EU-Japan cooperation on global and regional security - a litmus test for the EU's role as a global player?

11-06-2018

Within their partnership, the EU and Japan recognise each other as being essentially civilian (or ‘soft’) powers that share the same values and act in the international arena solely with diplomatic means. However, the evolution of the threats they face and the unpredictability now shown by their strategic ally, the US, have led both the EU and Japan to reconsider the option of ‘soft power-only’ for ensuring their security. They have both begun the — albeit long —process of seeking greater strategic ...

Within their partnership, the EU and Japan recognise each other as being essentially civilian (or ‘soft’) powers that share the same values and act in the international arena solely with diplomatic means. However, the evolution of the threats they face and the unpredictability now shown by their strategic ally, the US, have led both the EU and Japan to reconsider the option of ‘soft power-only’ for ensuring their security. They have both begun the — albeit long —process of seeking greater strategic autonomy. The EU’s Global Strategy adopted in 2016 aims clearly to ‘develop a more politically rounded approach to Asia, seeking to make greater practical contributions to Asian security’. Like the EU, Japan has identified ‘a multipolar age’ in which the rules-based international order that has allowed it to prosper is increasingly threatened. In line with its security-related reforms, Japan has decided to ‘take greater responsibilities and roles than before in order to maintain the existing international order’ and resolve a number of global issues. The EU and Japan may increase their cooperation at the global and strategic level and in tackling these challenges at the regional or local level. The Strategic Partnership Agreement (SPA) between the EU and Japan will provide opportunities for such cooperation, which should also be open to others. This is an opportunity for the EU to demonstrate that it is a consistent and reliable partner, and a true ‘global player’. The Council Conclusions of 28 May 2018 on ‘Enhanced security cooperation in and with Asia’ are a step in this direction but need to be translated into action.

Convergence in EMU: What and How?

05-06-2018

One major characteristics of an optimal currency area is its ability to maintain or foster integration and convergence among its Member States. This objective requires reaching a stable economic and financial situation and developing resilience to shocks. After reviewing the state of convergence in the euro area, this paper proposes a number of recommendations, aimed at improving convergence towards the steady state, as well as financial and cyclical convergence. Recommendations focus on several ...

One major characteristics of an optimal currency area is its ability to maintain or foster integration and convergence among its Member States. This objective requires reaching a stable economic and financial situation and developing resilience to shocks. After reviewing the state of convergence in the euro area, this paper proposes a number of recommendations, aimed at improving convergence towards the steady state, as well as financial and cyclical convergence. Recommendations focus on several policy areas, including cohesion policy, the statute of the ECB, public and private debt sustainability, fiscal rules and minimum wage policy.

External author

J.Creel

EU asylum, borders and external cooperation on migration: Recent developments

18-05-2018

This publication takes stock of recent EU developments in the area of asylum, borders and external cooperation on migration. It discusses key initiatives put forward by the EU in order to respond to migratory challenges, focusing on three major aspects: reforming the common European asylum system, strengthening the EU's external borders and reinforcing the EU's external cooperation on migration.

This publication takes stock of recent EU developments in the area of asylum, borders and external cooperation on migration. It discusses key initiatives put forward by the EU in order to respond to migratory challenges, focusing on three major aspects: reforming the common European asylum system, strengthening the EU's external borders and reinforcing the EU's external cooperation on migration.

Implementation of Macroeconomic Imbalance Procedure - State-of-Play (May 2018)

18-05-2018

This note presents the Member States' situation with respect to the Macroeconomic Imbalance Procedure, taking into account recent assessments and decisions by the European Commission and the Council. It also gives an overview of relevant comments on the MIP published by other institutions. A separate EGOV note describes the MIP procedure. This document is regularly updated.

This note presents the Member States' situation with respect to the Macroeconomic Imbalance Procedure, taking into account recent assessments and decisions by the European Commission and the Council. It also gives an overview of relevant comments on the MIP published by other institutions. A separate EGOV note describes the MIP procedure. This document is regularly updated.

Upcoming events

20-06-2018
How to better combat fraud?
Workshop -
CONT
20-06-2018
Public hearing on Digitalisation in transport
Hearing -
TRAN
20-06-2018
Gender Budgeting: State of Play and way forward - Hearing - 20.6.2018
Hearing -
FEMM

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