November, in addition to marking a month for observing key events in Europe's past that have contributed to the European project, is also a month when policymakers look to finalize next year's priorities. Despite the far from ideal delay to December 1 for the incoming EU Commission of President Ursula von der Leyen (VDL) and the now newly vetted Commissioners taking up their posts, some policy "commitments" have been made as part of the vetting process. These build off VDL's "priority" guidelines that were further refined in various "mission letters" sent to all Commission Vice-Presidents- and Commissioner-designates, effectively setting the 2019-2024 cycle's priorities but also committing the incoming policymakers to deliver on-going legislative procedures, including those linked to the EU's (agreed) budget and future legislative proposals and reviews of existing legislation.

For financial services, these commitments focus on confirming some of the points that VDL iterated in a moving speech, held on the 30th anniversary of the fall of the Berlin Wall. In that policy speech she set out goals on how she plans to make her Commission work for East & West and South & North Europe. She specified how she might deliver on making the EU a global actor on climate change as well as strengthening the EU's economic and industrial policies to support transformation to a more green and digital EU, with a stronger international role for the euro. Those plans are also coupled with commitments, from Vice-President Valdis Dombrovskis, to continue to work on an expanded euro area and restart talks on EU accession with the Western Balkan candidate countries – possibly on the basis of the proposed French-backed plan of a seven-step phased accession path which has been gaining support from key Member States.

All of that makes sense and so does Dombrovskis' commitments on simplifying the EU's Stability and Growth Pact, which also underpins the functioning of the EU's Single Market inasmuch as more focused talk on an EU fiscal policy (along with a Eurozone budget) could help Capital Markets Union 2.0 to move forward. Those statements were also echoed by signs, from the German finance minister, that there may be more support for completing the Banking Union's third pillar – the European Deposit Insurance Scheme − which aims to reassure Europeans that deposits have equal protection regardless of where they are in the EU. Part of this may come about by some comments on resilience that were flagged as part of the ECB's November 2019 Financial Stability Review, including a focus on bank profitability, which also sets out areas of possible supervisory scrutiny.

Dombrovskis, like VDL, is equally committed to completing Basel III's implementation as well as delivering a new EU-wide strategy on combatting financial crime, notably money laundering. The ECB, in its SSM role, has echoed those statements with its own views but also its actions, notably on anti-money laundering. During November the ECB-SSM made use of supervisory tools to close down a financial institution with financial crime concerns. The Consilium also took broader action and adopted a directive that amends the Consumer Rights Directive amongst other laws and modernizes EU law on consumer protection and the enforcement of rights, which does, despite carve-outs, have some impact on certain financial services firms.

Inspiring as these priorities and commitments are, they are not without pitfalls. The changeover, as new individuals fill existing or expanded posts, is not without challenge. This is not least down to the fact that, in addition to having to convince certain Central Eastern European Member States − including the ones providing political support to VDL's candidacy − to sign-up to a range of commitments, the French-German motor has put forward a proposal for a 2020- 2022 "Conference on the Future of Europe" in a concept paper on "EU democratic functioning". This would consider improving the EU election and leadership selection process, which may be debated as early as the December 12-13 EU leaders' summit, which conveniently coincides with the UK's general election. The incumbent UK government is itself refusing to respond to the infringement procedure started by the EU Commission for having failed to nominate a UK Commissioner as required under EU law. The European Parliament confirmed the new VDL Commission as a whole on November 27 and despite a missing UK nominee and the outgoing UK Commissioner leaving his post on November 29.

Meanwhile the ECB and ESMA have expressed their renewed concerns on Brexit preparedness along with Benchmark Regulation readiness and a general view on resilience in the event of an economic slowdown. All of this outlook comes at a time when there has been some confirmed good news on reduction of non-performing exposures across the EU as well as agreement on the so-called "risk reduction" package which aims to improve resilience, in addition to progress on the European Stability Mechanism Treaty and the common backstop for bank resolution and use of precautionary instruments.

We hope you enjoy this month's edition and wish you a safe start to winter and the festive season. Please stay tuned to our Eurozone Hub for further periodic updates, including thematic deep dives on developments from European and national authorities that are likely to have considerable "change the business" but also "change the compliance" impacts, as well as our "Navigating 2020" review of work plans of supervisors and regulators at the EU and national level and what this might mean for affected firms.

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