Things worth reading: the European View

This month's view from Europe, courtesy of Edith Rigler:

Euro zone inflation down –Eurostat,news release 7 January 2014

Euro area annual inflation is expected to be 0.8% in December 2013, down from 0.9% in November3, according to a flash estimate4 from Eurostat, the statistical office of the European Union.

EU set to drop ringfencing of big banks – Financial Times, 6 January 2014

The EU is set to drop financial reforms that would force big banks to ringfence their retail departments from riskier investment operations. A draft European Commission paper would no longer make banks automatically split operations and would give national supervisors more leeway in applying the reforms. But the draft proposal, drawn up by EU Commissioner Michel Barnier, does add a "narrowly defined" ban on 30 big banks using their own money for trading, so-called proprietary trading.

Slow migration to SEPA causes concern – Handelsblatt, 2 January 2014

The fact that only 10% of approximately 35 million direct debits in Germany have not yet migrated to the SEPA format causes concern for the Association of German Banks. Less than a month remains before SEPA formats become mandatory.

European labour market opens for Romanians and Bulgarians – EU Business, 1 January 2014, Handelsblatt, 1^st January 2014

Romanians and Bulgarians have the right to work in any of the EU's 28 countries from 1^st January 2014 but the European Commission does not expect a "major increase" in emigration.  Over 3 million people from Bulgaria and Romania already live outside their home countries in other EU Member States. Approximately 160,000 Bulgarians and Romanians already work in Germany. An annual influx of 100,000 to 180,000 immigrants into Germany is expected and has caused a political row.

Baltics soon to be a complete eurozone region? – EUbusiness, 29 December 2013

Latvia just joined the eurozone on 1^st January 2014. Lithuania is aiming to join in 2015, completing a three-country Baltic region of the single currency (Estonia is already a member of the eurozone). Other nations in the region – e.g. Poland and the Czech Republic – are however not in no rush to adopt the euro.

German financial supervisor points to risks of Bitcoin – Bundesanstalt für Finanzdienstleistungsaufsicht, 19 December 2013

The German financial regulatory authority BaFin has now published a supervisory assessment  as well as virtual currencies in general.  BaFin refers to great risks inherent in Bitcoins as well as security weaknesses. Additionally BaFin expects transactions costs to increase.

German Central Bank is alarmed about SEPA delay – Wirtschaftswoche, 4 December 2013

Less than two months before the regulatory date of February 2014 when national payments cease to exist and only SEPA instruments are permissible, the number of SEPA Direct Debits is still minute, despite the fact that Germany is the largest direct debit country in Europe.

German banks are developing SEPA contingency plans  - Deutsche Mittelstands Nachrichten, 3 December 2013

In terms of migrating to SEPA (Single Euro Payments Area),  about 50% of German banks have devised a contingency plan should they not be able to comply with the regulatory deadline of 1 February 2014. More than 40% of insurers are not ready yet;  SMEs are significantly lagging behind. There are 3.6 million corporates in Germany.

Banks plan an attack on PayPal – Manager Magazine, November 2013

Banks in Germany have been working quietly behind the scenes to attack on-line payment providers such as PayPal and others. The payments area is seen as a “mine field” which banks have grossly neglected. PayPal´s advantage is offering “convenience”. Banks are now trying to develop direct debit-based solutions to fight off the growing competition.

Ethical conduct still not a natural fit for financial services, report finds – Economist Intelligence Unit, 25 November 2013

“A crisis of culture”, a new Economist Intelligence Unit (EIU) report,  finds that while financial services firms are taking steps to improve their record on ethical conduct, basic tensions in how the industry works make long-term change a distant goal.

Banks face increased competition from internet providers – Wirtschaftswoche, 18 November 2013

More and more internet providers and innovative small start-ups are showing banks how to revolutionise payment methods and  to simplify payments. Banks are worried and concerned about future revenues.