Financial Services Regulation and Compliance - General Cross Sectoral September 2022
Domestic
CBI publishes pre-Budget letter to Minister for Finance
On 12 September 2022, the CBI published the pre-Budget letter sent to the Minister for Finance by Governor Gabriel Makhlouf on 22 July 2022.
The letter sets out the challenging and uncertain economic backdrop to Budget 2023. The economy began 2022 with strong momentum as the impact of the pandemic subsided, but now faces numerous headwinds, including energy price shocks and supply chain pressures that have resulted in high inflation.
In the letter, the CBI stressed four areas of priority for consideration in Budget 2023. These are the following:
- ensuring those most vulnerable to the inflationary shock are supported through temporary, targeted supports to limit adding to existing excess demand and inflationary pressures
- increasing government investment and supporting public services while ensuring value for money, reducing fiscal vulnerabilities, including reliance on excess corporation tax receipts, and keeping the economy on a sustainable growth path
- building resilience in the public finances, by ensuring the capacity is there for fiscal policy to respond in a countercyclical way in the future
- building resilience in the economy, reducing the impact of future adverse shocks by sustainably addressing the structural challenges around infrastructure, climate change and population ageing
Governor Makhlouf said: “As the Government prepares its Budget for 2023, it remains important to focus on building resilience for the medium term as well as addressing shorter term challenges. As the ECB Governing Council indicated last week fiscal support measures to cushion the impact of higher energy prices should be temporary and targeted at the most vulnerable households and firms to limit the risk of fuelling inflationary pressures, to enhance the efficiency of public spending and to preserve debt sustainability.”
Foreign direct investment screening in Ireland – key features of the Screening of Third Country Investments Bill 2022
On 21 September 2022, Screening of Third Country Investments Bill 2022 was debated in Dáil Éireann. The landscape of foreign direct investment into Ireland will be changed significantly by the Screening of Third Country Investments Bill 2022 (the Bill), which introduces an investment screening mechanism in Ireland for the first time.
Once introduced, the Bill will allow the Minister for Enterprise, Trade and Employment to scrutinise a wide range of transactions involving a non-EU/EEA/Swiss undertaking (person, company, or other entity) and relating to the control of Irish businesses and assets in key sectors including critical technology and infrastructure businesses and assets.
Certain deals will be subject to mandatory notification, while the Minister will have the right to call in other deals for review. The Minister can block or impose conditions on deals. The proposed 90-day Ministerial review period is significantly longer than the current 30-day domestic competition review period. The potential for such a long period between signing and completion of a transaction is likely to lead buyers to seek increased gap protection provisions. The Bill is a priority piece of legislation for the Irish Government and it is expected that the legislation will be enacted later this year.
European
ECB selects external companies for joint prototyping of user interfaces for a digital euro
On 16 September 2022, the ECB announced that it will collaborate with five companies to develop potential user interfaces for the digital euro.
The aim of this prototyping exercise is to test how well the technology behind a digital euro integrates with prototypes developed by companies. Simulated transactions will be initiated using the front-end prototypes developed by the five companies and processed through the Eurosystem’s interface and back-end infrastructure. There are no plans to re-use the prototypes in the subsequent phases of the digital euro project.
Together with the ECB team, the selected companies will each focus on one specific use case of a digital euro:
- peer-to-peer online payments – CaixaBank
- peer-to-peer offline payments – Worldline
- point of sale payments initiated by the payer – EPI
- point of sale payments initiated by the payee – Nexi
- e-commerce payments – Amazon
The firms were chosen from a pool of 54 front end providers. Their selection follows the April 2022 call for expressions of interest in joining the prototyping exercise. All 54 companies fulfil a number of “essential capabilities” that were outlined in the call, while the five providers chosen best matched the “specific capabilities” required for the assigned use case.
Proposal for a Directive of the European Parliament and of the Council on consumer credits 2021/0171 (COD)
On 15 September 2022, the first trilogue on the proposal for a Directive on consumer credits took place. During the trilogue, the European Parliament and Council presented their mandates and main priorities. Among the points mentioned were the scope, the information provided to consumers, the creditworthiness assessment, the advertisement of credit, the overdraft facilities and overrunning, the caps, and the penalties.
IMCO Rapporteur, Ms Kateřina Konečná stressed: "I am very pleased that today we have successfully launched the next phase of negotiations on the new Consumer Credit Directive. For me personally, especially in light of the current energy crisis, which is likely to at least partially spill over into an economic crisis, it is extremely important that we negotiate a proposal that protects vulnerable consumers from the negative impact of these crises as more consumers will be targeted to get consumer credits to make ends need. Parliament will do its maximum to protect them."
Sanctions imposed in response to the crisis in the Ukraine
Since February, the EU imposed a number of sanctions in response to the crisis in the Ukraine. Given that the crisis is developing and sanctions are continuing to evolve, the CBI is publishing details of new restrictive measures/sanctions that are adopted in this regard, as well as any associated EU/UN guidance, on their dedicated webpage.
For more information on these topics please contact any member of A&L Goodbody's Financial Regulation team.
Date published: 17 October 2022