Washington, D.C. — The EU-U.S. Joint Financial Regulatory Forum took place on December 4-5, 2024, with participants exchanging views on topics of mutual interest as part of their regular financial regulatory dialogue. The dialogue was co-chaired by the U.S. Department of the Treasury and the European Commission.
EU participants included representatives of the European Commission, European Banking Authority (EBA), European Securities and Markets Authority (ESMA), European Insurance and Occupational Pensions Authority (EIOPA), European Central Bank (ECB), and Single Resolution Board (SRB).
U.S. participants included representatives from the U.S. Department of the Treasury and staff from independent regulatory agencies, including the Federal Reserve Board (FRB), Commodity Futures Trading Commission (CFTC), Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), Securities and Exchange Commission (SEC), and Consumer Financial Protection Bureau (CFPB).
The Forum emphasized close, ongoing U.S. and EU cooperation in a range of areas and focused on seven themes: (1) market developments and financial stability; (2) operational resilience and digital finance; (3) the sharing and financial reporting of financial data; (4) anti-money laundering and countering the financing of terrorism (AML/CFT); (5) sustainable finance; (6) banking and insurance; and (7) capital markets. Agency participation varied across themes, with representatives expressing views on issues in their respective areas of responsibility.
Participants started the conversation by focusing on financial stability and market developments. Globally, while inflation has continued to moderate, downside risks to the economic outlook continue to persist amid increased geopolitical tensions. Participants discussed financial stability vulnerabilities. Concerns remain around asset valuations, which remain elevated relative to fundamentals across several asset classes. Participants highlighted the importance of implementing robust prudential regulatory frameworks and supervisory practices as well as effective macroprudential policies. Participants discussed the importance of strong and consistent regulatory standards in particular for internationally active banks. International cooperation and continued dialogue, including in international fora, remain important for discussing appropriate and comparable regulatory standards, monitoring vulnerabilities, and enhancing the resilience of the financial system and its ability to withstand shocks, and preserving the level playing field.
Participants continued their exchange of views on the use of artificial intelligence in financial services, looking at opportunities and challenges, but also implications for regulation, supervision, and financial stability. Both sides expressed interest in continuing the conversation on the topic, including in international fora. EU participants provided an update on the current implementation work under the Digital Operational Resilience Act (DORA). U.S. participants shared updates on the Treasury-FRB Critical Providers Dialogue, and the CFTC provided an update on its approach to operational resilience, including its proposed Operational Resilience Framework for Futures Commission Merchants, Swap Dealers, and Major Swap Participants. EU participants provided an update on the Markets in Crypto-Assets (MiCA) Regulation and shared considerations for the ongoing development of the Digital Euro, as well as underscoring the importance of the Financial Stability Board’s work on issues related to crypto-assets, including stablecoins. U.S. Treasury shared considerations about a possible federal payments framework to include non-bank payment service providers. Participants discussed the importance of international cooperation to harness the benefits of digital financial innovation, while mitigating its risks. Both sides also emphasized the importance of continued coordination of international payments matters, including under the G20 Roadmap for Enhancing Cross-Border Payments.
Participants also touched upon regulatory proposals and recent developments relating to managing consumer financial data within each jurisdiction, specifically the CFPB’s final rule on Personal Financial Data Rights and the European Commission’s proposal for a Regulation on Financial Data Access (FIDA). U.S. participants provided an update regarding ongoing work on the Financial Data Transparency Act.
Both sides exchanged notes on the recent developments in the field of anti-money laundering and combatting the financing of terrorism. U.S. participants provided an update on the ongoing implementation of the Anti-Money Laundering Act of 2020, including the Corporate Transparency Act, as well as the issuance of two final rules to help safeguard the residential real estate, and investment adviser sectors from illicit finance. Participants also discussed the potential illicit finance risk related to stablecoins. EU participants provided an update on work to implement the recently adopted Anti-Money Laundering Package including the establishment of the new Anti-Money Laundering Authority.
Participants discussed their respective work in the area of sustainable finance, including on climate disclosures and other corporate sustainability-related topics. An exchange also took place on recent developments on sustainable finance at international level, including the work of the G20’s Sustainable Finance Working Group, while the EU provided an update on work of the International Platform for Sustainable Finance.
An exchange followed to provide updates on U.S. and EU bank regulatory proposals and developments. Both sides gave an overview on the state of play of their respective rulemakings and regulatory frameworks which would implement the final set of Basel III reforms. Participants highlighted the importance of implementing Basel-based standards to enhance the stability of the financial system. Participants also informed each other of the latest developments in banking resolution matters. EU participants updated about the state of negotiations of the crisis management and deposit insurance framework. This was followed by an exchange on the interactions between U.S. securities laws and open bank bail-in operationalization, where participants took stock of continued engagement since the last Forum and in light of ongoing discussions in relevant international fora, emphasizing the importance of effective resolution frameworks in a cross-border context. Participants continued with an exchange on insurance-related matters, including on insurance recovery and resolution, and macroprudential developments. Participants also exchanged views on recent developments concerning climate-related financial risks assessment and related tools, during which the ECB presented recent developments in climate-related financial risks and their supervision and highlighted the importance of banks taking decisive steps to integrate climate and environmental risks into their strategy, governance and risk management.
On capital markets, EU provided an update on work on the shortening of the settlement cycle in the European Union. The SEC shared observations on the lessons that could be learned and provided an update six months from the U.S. migration to T+1. The SEC provided also an update on their rules on clearing U.S. Treasuries. Discussions continued with an exchange on fund reforms. EU participants provided an update on their macroprudential review in the Non-Bank Financial Institution space. EU participants also touched upon the proposed Savings and Investment Union.
The Forum closed with an update from U.S. participants on the Foreign Account Tax Compliance Act (FATCA).
Participants acknowledged the importance of the Forum in fostering ongoing financial regulatory dialogue between the United States and the European Union and will continue to discuss the scope of the potential implications of respective policies and laws in each other’s jurisdictions. They further acknowledged that regular communication on regulatory and supervisory issues of mutual concern is important to support financial stability, investor protection, market integrity, and a level playing field.
Participants will continue to engage on these topics, as well as on other topics of mutual interest, ahead of the next Forum meeting anticipated in summer 2025.