The Institute of International Finance (IIF) on February 11th conveyed its financial services regulatory priorities for engagement with the new European Commission in a letter to Executive Vice-President Valdis Dombrovskis.

The IIF shares the goals of a resilient, stable European financial sector that can provide efficient financing to the economy, support economic growth and contribute to a green transition. With that in mind, the IIF and its members bring their considerations on a number of important policy areas:

• Achieving a risk-sensitive regulatory capital framework with a consistent international implementation of the Basel III framework and calling for dynamic reviews by the Basel Committee in those areas where data supports the need for fine-tuning certain elements of the final package.
• Avoiding market fragmentation in particular with an acceleration on the completion of the Banking union and to overcome the intra-EU home-host fragmentation or ‘ring-fencing’ of capital and liquidity of cross-border banking groups. The IIF also urges for an acceleration in the much-needed creation of a Capital Markets Union for more diversified sources of funding for the European economy and allow a broader distribution of risk among private sectors actors. 
• Enhancing the framework for combatting financial crime by further coherence and consistency in the implementation of the Union rulebook and by improving the effectiveness of the regime, such as through better financial crime information sharing among banks and between authorities and banks and through congruous customer due diligence (“CDD”) and monitoring requirements.
• Addressing cyber risk and building up operational resilience by formulating principles-based and risk-based approaches that make it easier for firms, their counterparts and the official sector to work together to quickly address cyber incidents and prevent them from further impacting the overall financial system. The IIF encourages the EU to play an active role in the formulation of new supervisory approaches to operational resilience maturity that are in close coordination with global approaches so as to avoid fragmentation on what is a cross-border issue.
• Promoting a balanced and sound digital policy framework where IIF urges the European Commission to work with the financial services industry to support the necessary investment in digital transformation of the sector. More specifically, we encourage the European Commission to remain vigilant and build a regulatory framework that takes a horizontal approach to a data framework that can include comparable activities as well as institutions within its perimeter – i.e., that the same risks and activities are subject to the same rules.
• Supporting a green transition, where the IIF encourages not only a close look at the investment component, but careful consideration of the role of banks in financing the transition to a low-carbon, resilient economy. It will be important also to ensure the banking sector's continued capacity to finance the real economy, especially small and medium sized enterprises (“SMEs”). Furthermore, we support the Commission’s intention to consider the need for further corporate environmental, social and governance (“ESG”) disclosures as an essential input to the finance industry’s ability to support those companies. The IIF is supportive of the ambition of the new Commission’s flagship European Green Deal, and encourages the Commission to reach out to all relevant stakeholders on all aspects of the Green Deal to ensure the widest possible inclusion and understanding, including the international dimension. 

The IIF response also includes more detailed comments in an annex to the letter to the Commissioner for further considerations, incl on the positioning of the European financial industry in a global context.

The letter reflects a global vision that is the IIF’s, but also one that has been discussed in particular with the IIF members with a significant presence in Europe.