One of the key projects on the agenda of DG FISMA, the department of the EC responsible for EU policy on banking and finance, is the Capital Markets Union (CMU). It is three and a half years since the EC launched the CMU action plan with the aim of creating a single capital market for Europe. Sean Berrigan, Deputy DG FISMA, outlined progress on this initiative and others.

The inefficiencies in trade finance often result from legacy, manual, paper-based processes, as well as a lack of standards and interoperability. This leads to trapped trade data, errors in workflows, and unfinanced trade assets sitting on the balance sheet. Through collaborative efforts, banks and fintechs are looking to create a model for trade finance, which will address these pain points by leveraging technology such as AI. 

Due to incidents in manipulation and declining volumes in the interbank market, a global reform of benchmarks has been launched. The search for more robust reference rates is a work in progress. For corporate treasurers, the task is huge and needs to be addressed as soon as possible. The action plan could begin with a review of the exposure in all currencies to this benchmark issue and a close examination of legacy contracts.

Owing to different legal jurisdictions, new contracts for multiple different banks will have to be signed and different deadlines will have to be renegotiated. Will the banks be up to providing the level of capacity of financial products like they do today? Will continuity of service be possible after Brexit? 

Anne-Catherine, CEO of Novethic, explains why it is important for a corporate treasurer to be sensitive to the increasingly important topic of sustainable finance.