Minister’s Brief

Recommendations

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i. Risk Reduction Workstream The Ad Hoc group are examining how to mitigate potential risks within Banking Union such as the utilisation of Options and National Discretions allowed under CRR/CRD IV. The Capital Requirements package contains a number of Options and National Discretions (ONDs). The ECB’s have drafted a Regulation and Guide addressing approx. 120 ONDs granted to supervisors, falling under the ECB’s direct competence. More recently, the EU Commission have has identified a preliminary list of ONDs for possible action and has invited the views on Member states on this list. FSD 2 feeds into this discussion through the Commission Expert Group on Banking and through the AHWG on competing Banking Union. This issue was discussed at the Eurogroup Working Group on 7 April. The ECB informed the meeting that its Regulation (EU) 2016/445 on the exercise of 120 supervisory ONDs was adopted on 14 March 2016. ii. Regulatory treatment of Sovereign Exposures The issue of the prudential treatment of sovereign debt has come to the fore both at an international level via the Basel Committee and at the European level. At a European level, the exemptions provided under CRD IV/CRR for sovereign debt holdings with regard to risk weightings and Large Exposure Limits has been a topic of debate. A High Level Working Group of the EFC on the Regulatory Treatment of Sovereign Debt Exposures (HLWG) has been established which is examining the impact of these exemptions and is considering if the regulatory environment has led to an excessive investment in sovereign debt with a corresponding risk to financial stability. The group produced a draft report on 1 April and Ministers participated in an initial discussion of the issue at the informal Ecofin on 22 April. Bank Structural Reform This proposal aims to address the “too-big-to-fail" banks, as it will make such banks more resolvable by separating proprietary trading (i.e. banks trading on their own account) and other high-risk trading activity from normal retail activity. This separation would only be mandatory for those banks with significant trading activities. Council negotiations have concluded, with agreement reached on 19 June 2015. The European Parliament is still considering its position and when it has finalised this it will go to trilogue. The Central Bank has advised that our domestic banks are unlikely to come within the scope of this proposal. A number of IFSC branches and subsidiaries in Ireland may however be impacted by the proposal because they belong to an international group that is likely to come within scope. Single Resolution Mechanism - Member State Credit Line to the Single Resolution Board: Ecofin Ministers agreed in December 2013 that in the early years of the Single Resolution Mechanism, participating Member States should put in place a system by which bridge Page 92 of 184
financing would be available to cover any funding shortfalls that might arise. It was also agreed that such arrangements should be in place by the time the Single Resolution Fund became operational (i.e. 1 January 2016). The bridge financing negotiations were completed in November 2015 and were endorsed by Ecofin in December. The outcome was that Member States agreed to enter into a loan facility agreement with the Single Resolution Board to provide a maximum aggregate amount of €55bn. Ireland’s share of this loan facility agreement (credit line) is €1.815bn. As the arrangements were agreed so late in the year, there was no time to legislate to have the credit line in place by 1 January 2016. Efforts were made to have this matter enacted before the Government called the General Election, and in this regard permission was obtained to draft the necessary Bill (The Single Resolution Board (Loan Facility Agreement) Bill 2016) and to subsequently publish it, but this is as far as we progressed this matter. The Single Resolution Board and the EU Commission will have an expectation that this Bill will be enacted as quickly as possible after a new Government takes office. Backstop to the Single Resolution Fund There is a political commitment to introduce such a backstop by the end of the transition period to full mutualisation of the Single Resolution Mechanism (by 2024). This is necessary in order to provide certainty as to where money would come from in the event that the Single Resolution Fund had insufficient resources. We are strongly of the view that such negotiations should start sooner rather than later and that every effort should be made to have this backstop in place well in advance of the completion of the transition period. We favour the use of the ESM as the backstop. Capital Markets Union (CMU) - The CMU package was published on 30 September 2015 and comprised the following: o Action Plan on Capital Markets Union o Securitisation proposal together with a proposal to amend the Capital Requirements Regulation Council General Approach on the securitisation proposal was achieved in December 2015. In Parliament, rapporteurs were appointed for the file, earlier this year. It is unlikely that trilogues will commence before June. o Solvency II amended legislation Page 93 of 184
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Minister’s Brief 2016 s Page 1 of
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3.2.1.1 Policies on Mortgage Arrear
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1. Introduction For the purposes of
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2.1 Economic and Fiscal Directorate
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2.2 Finance and Banking Directorate
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3. Detailed Briefing Page 11 of 184
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3.1.2 Economic Division Description
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Detail: Economic Outlook Pr
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3.1.2.2 Microeconomic analysis unde
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changes in the relevant tax base) a
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3.1.2.3 Economic coordination inclu
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3.1.2.4 Budgetary/fiscal policy, go
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Assessment of compliance with SGP o
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was a deviation from the fiscal rul
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tax, followed by personal income ta
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Tax Strategy Group - What Does It D
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Detail: Income Tax Policy Income Ta
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Credit in 2014 - that credit was of
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INCOME TAX INCENTIVES Agri-Taxation
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Marine taxation In Budget 2016, a r
Page 41 and 42: Detail: Indirect Tax Policy Tax Hea
Page 43 and 44: outcomes, then it was proportionate
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Page 47 and 48: 3.1.3.4 Finance Bill co-ordination,
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Page 56 and 57: fully in line with the new OECD req
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Page 76 and 77: available is €1.8 million. Initia
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Page 81: deemed necessary, it may be prefera
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Page 112: sheet continues to contract, albeit
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epresented and an Industry Advisory
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3.2.4.1 Management of FoI and PQ pr
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3.2.4.1 Liaison with the Attorney G
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3.2.4.2 Management of the Accountan
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Future Developments The vote accoun
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3.2.5 International Financial Insti
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Key Points: International Monetary
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with the delegation led by Second S
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assistance to the developing world.
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In addition to capital contribution
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would be the Minister for Finance o
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3.3 Corporate Page 165 of 184
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supported by OPW and a number of ex
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3.3.2. Corporate Affairs Descriptio
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member, the Department has a Busine
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ability of both electronic files an
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3.3.3. Human Resources Division Des
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Detail: 1. Organisational Structure
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effectively to improve and deliver
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The Department is currently reviewi
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Erosion of income tax base did not
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Minister’s Brief

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