The Institute of International Finance (IIF) on December 1st conveyed its financial services regulatory priorities for engagement with the new European Commissioner for Financial Stability, Financial Services and Capital Markets Union, Mairead McGuinness.

The IIF reiterated its support for the goals of a resilient, stable European financial sector that can support economic growth and contribute to a green transition. These goals have become even more critical as a result of the impact of COVID-19 on societies across the world. With that in mind, the IIF and its members bring their considerations on a number of important policy areas:

• Supporting a green transition, where the IIF encourages not only a close look at the investment component, but careful consideration of the role of financial markets and banks especially in financing the transition to a low-carbon, resilient economy. 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. 
• Achieving a risk-sensitive regulatory capital framework remains a priority, with a synchronized international implementation of the Basel III framework. Importance of considering the impact of the COVID-19 crisis and evaluating the performance of the Basel framework through the crisis. Where possible, global responses should be developed to known issues and the IIF encourages all major jurisdictions to implement consistently in both substance and timing. 
• 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. 
• Addressing cyber risk and building up operational resilience by formulating principles-based and risk-based approaches, properly coordinated internationally, 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. 
• 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.
• Enhancing the framework for combatting financial crime by further coherence and consistency in the implementation of the Union rulebook with a common enforceable regulatory standard and by improving the effectiveness of the regime. 

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