Covid–19 Resource Centre

The current Covid-19 pandemic is impacting governments, citizens, and businesses across Europe and the globe. The pandemic has also confronted treasurers with a number of profound challenges. The EACT would like to make available to you, our member associations and member companies, an overview of some of the most relevant public policy initiatives that supervisors, regulators, and politicians are discussing or have taken to provide support for European businesses and citizens. 

There are also resources available from across some of our member associations that we would like to draw your attention to: 

• Verband Deutscher Treasurer (Germany) Covid-19 information portal. 
• Association of Corporate Treasurers - ACT (UK) Covid-19 centre. 
• Association Française des Trésoriers d'Entreprise - AFTE (France) Covid-19 section. 
• Associazione Italiana Tesorieri d' Impresa - AITI (Italy) Covid-19 centre. 

In these difficult times, with many of us working under strict confinement rules, we would also like to urge you to reach out either directly to us at EACT or to your national treasury associations (here) if you would find it useful to get in touch with peers in other companies or countries to discuss the current challenges you are facing as a treasurer. 

European Institutions 

European Commission (last updated 26 August) 

• The European Commission provides an overview of some of the most relevant economic support measures taken by Member States. 
• Together with the financial secor the European Commission has developed a set of best practices for the financial sector during the pandemic. 
• The European Commission has adopted a third amendment to extend the scope of the State aid Temporary Framework to support to all micro and small companies. The amendment also provides incentives for private investment alongside State aid.
• Overview of the European Commission's proposed response to mitigating the economic impact of the pandemic.  
• The European Commission has adopted new rules to provide governments with legal certainty when wishing to recapitalise or use subordinated debt to support companies in light of Covid-19 under the EU’s State Temporary Framework.
• The European Commission published a legislative amendment to the EU’s bank capital framework – the Capital Requirements Regulation (CRR) – to ensure harmonised relief measures for the banking sector across the EU and make full use of the flexibility embedded in the CRR framework. The EC also published an interpretative communication on the application of prudential and accounting rules to support bank lending during the Covid-19 crisis
• Resource centre of the European Commission with all measures proposed and adopted so far to support EU companies and Member States. 

Council of the EU (last updated 26 August) 

• Member state Heads of state and government have reached an agreement on the Pandemic recovery facility "Next Generation EU" with a size of EUR 750 billion for the period 2021-2023 as well as on the next EU long-term budget for 2021-2027 with a size of EUR 1.07 trillion. 
• Member States have approved the SURE unemployment support scheme under which Member States can request up to EUR 100bn in support loans to finance temporary unemployment schemes during the crisis. Finalisation of the rules is foreseen by 19 May and they will remain operational until 31 December 2022. 
• The Eurogroup agreed on the terms of use of the Pandemic Crisis Support credit line of the ESM amounting to 2% of GDP of each Member State (as of end 2019).
• EU finance ministers agreed a joint statement on means by which the banking and insurance sectors should sustain support to the economy, urging both banks and insurers to forego dividend payments on a temporary basis to free up lending capacity to corporates and private consumers.
• The Eurogroup in its extended format, which includes all EU finance ministers, has agreed a toolbox of support measures for the EU economy. This includes:
  • Credit facilities from the European Stabililty Mechanism (ESM) with a capacity of €410bn, allowing Member States to borrow at beneficial rates up to 2% of national GDP for Covid-19 relief measures;
  • The proposed SURE unemployment support scheme with a capacity €100bn that will provide loans to Member States to support national unemployment schemes;
  • A guarantee fund from the European Investment Bank with a capacity of €200bn to support lending operations to the economy. 

European Central Bank (last updated 26 August) 

• Overview of all ECB measures to support the Eurozone economy throughout the pandemic. 
• President Christine Lagarde said that financial market volatility had subsided thanks to the Pandemic Emergency Purchase Programme (PEPP). Lagarde indicated that economic recovery in the EU would be constrained and relatively uncertain. Recovery would also hinge on member states reaching an agreement on the European Commission’s proposed Recovery Package. 
• The ECB has published an overview of the impact of its policy response to the Covid-19 pandemic. 
• The ECB has published an interview with Fabio Panetta, a member of the ECB Executive Board, in which he highlights amongst other things that the ECB would stand ready to expand its corporate sector purchase programme to include non-investment grade corporate bonds. 
• Isabel Schnabel, Member of the Governing Board of the ECB, said that the Pandemic Emergency Purchase Programme (PEPP) would not be expanded again in the very near future but could be later if the need arises. 
• The ECB has expanded the envelope size of its PEPP programme by a further €600 billion to an overall size of €1,350 billion and extended the time horizon for the purchase programme until at least June 2021. 
• The ECB has published its first financial stability review for 2020, highlighting the additional vulnerabilities that the pandemic has caused in all segments of the financial system. For corporates the ECB highlighted in particular tightening funding conditions, risks of fund outflows as a result of corporate downgrades, and a worsening in credit conditions as potential consequences. 
• The Governing Council of the ECB decided to launch a new series of longer-term refinancing operations (so-called ‘PELTROs’ - pandemic emergency longer-term refinancing operations) and ease the conditions under which it conducts its existing targeted longer-term refinancing operations (‘TLTROs’). 
• The ECB has annoucned that eligibility crtieria for collateral posted by banks to access its liquidity faciliites would be relaxed to accomodate a situation in which assets may be subjected to rating downgrades. 
• The ECB has publisehd a FAQ document on its commercial sector purchase programme (CSPP). 
• The ECB announced a temporary lowering of capital requirements for market risk to maintain market making activities and market liquidity. 
• The ECB has issued a positive opinion on the temporary reduction of counter-cyclical capital buffers (Tier 1 capital) that has been granted by a range of national competent authorities to banks. 
• ECB has published a consolidated overview of all macroprudential support measures that have been adopted across the euro area by central banks and bank supervisors. 
• Blog post on the ECB's commercial paper purchases by members of the executive board. 
• Expanded asset purchase programme (CSPP) and Pandemic Emergency Purchase Programme (PEPP). As part of this programme the ECB has also committed to purchase commercial papers with an outstanding maturity of more than 28 days (in addition to bonds) of non-financial companies that have an investment grade rating.
• The ECB issued a recommendation asking banks to refrain from distributing dividends (for 2019 & 2020) and buying back shares until at least 1 October 2020.  

European Securities and Markets Authority - ESMA (last updated 26 August) 

• ESMA maintained the decision to lower the transparency threshold for net short positions in shares from 0.2% of the issued share capital of a listed company to 0.1%.
• ESMA clarified how it expects issuers to reflect the impact of the pandemic in their half-yearly financial report and management reports. 
• ESMA published a thematic report on Collateralised Loan Obligation (CLOs) credit ratings in the EU. It highlights the new risks posed by the COVID-19 crisis on the ratings of CLO instruments, with ESMA indicating it would closely monitor CRAs’ assessment of CLOs. 
• ESMA has issued a public statement on forbearance regarding the deadlines for publishing financial reports applicable to listed issuers under the Transparency Directive. 
• Public statement on the implementation of the Securities Financing Transactions Regulation (SFTR), providing further clarification on its decision to delay SFTR reporting.
• Public statement on the accounting implications of Covid-19 on the calculation of expected credit losses in accordance with IFRS9. 

European Systemic Risk Board - ESRB (last updated 26 August) 

• The ESRB published a latest set of policy measurs, including a framework for assessing  the financial stability implications of all national covid-related support measures, a recommendation on the distribution of dividend payments by financial institutions, potential tools to adjust insurers capital requirements.  
• The ESRB carried out an assessment of liquidity and overall conditions in corporate bond and commercial paper markets since the outbreak of the pandemic and identified significant pressures over March and April, with some easing as a result of capital relief for banks and the monetary policy response of the ECB. Pressure could re-emerge in the short-term as a result of rating downgrades across the corporate segment. 

European Banking Authority - EBA (last updated 26 August) 

• The EBA released a statement, calling on banks to take account of the impact of Covid-19 in their resolution planning. 
• The EBA released three statements clarifying the measures taken and its expectations in the EU banking sector, calling for the national authorities to also support the financial institution’s efforts in the crisis in the following areas: Supervisory reporting, Dividend distribution, share buybacks and variable remuneration, Actions to mitigate financial crime. 

International Institutions

Financial Stability Board - FSB (last updated 26 August) 

• FSB Chair Quarles spoke about the impact of Covid-19 on financial stability, highlighting that previous crisis reforms had so far proven successful, but that authorities and institutons should expect an increase in non-performing loans in the coming months. 
• The FSB has published a statement on the impact of the pandemic on Libor transition, highlighting the continued expectation that market participants should work towards a phasing out of Libor at the end of 2021. 
• The FSB has delivered an inital financial stability assessment to G20 finance ministers, highlighting distressed and deterorating credit market and liquidity conditions, but that post-2009 crisis reforms have resulted in functional derivatives markets and maintained bank lending to date. The assessment also highlights that a number of public policy measures have helped to ease liquidity and funding constraints across many member jurisdictions, but that the long-term impact of the worsening economic outlook has yet to materialse. 

Bank for International Settlements - BIS (last updated 26 August) 

• The BIS has published a report on the impact of Covid-19 on trade credit and trade finance, highlighting that the pandemic has laid bare vulnerabilities in trade credit chains, but also pointing out that the extension of US Dollar swap lines between major central banks has cushioned the impact somewhat. 

Basel Committee for Banking Supervision - BCBS (last updated 26 August) 

• BCBS issued a statement emphasising the importance that pre-crisis capital buffers have played in preserving banks' lending capacity and urges those buffers to be gradually rebuilt. The statement also underlines the importance of implementing the final Basel III standard and for banks to stick with the current benchmark rate reform transition deadlines. 
• BCBS has proposed to delay the implementation deadline of the final set of Basel III standards (‘Basel IV’) by one year, to 1 January 2023. 
• BCBS and IOSCO have announced the deferral of final implementation phases of the margin requirements for non-centrally cleared derivatives.
• Technical guidance on extraordinary measures introduced by jurisdictions in the Covid-19 crisis related to the treatment of loans and payment moratoria.

OECD (last updated 26 August) 

• The OECD has published a policy paper on how to build back economies post-covid in a more sustainable and resilient manner. 
• OECD global policy tracker of measures taken across all economic sectors to provide relief and support. 

Financial Action Task Force - FATF (last updated 26 August) 

• The FATF published a report on COVID-19-related Money Laundering and Terrorist Financing Risks and Policy Responses
• The FATF issued a statement on financial crime in times of Covid-19 earlier this week asking obliged entities and regulators to remain vigilant.