The International Regulatory Strategy Group (IRSG) has set out its key areas of focus in financial services as the UK takes over the presidency of the G7 from the USA this month.
The recovery from the COVID-19 pandemic, climate change and digital agenda will all be central to the UK’s presidency, including at the 47th G7 Summit in Cornwall’s Carbis Bay later this year (June 11-13). The IRSG underlines the importance for the UK of demonstrating global leadership on these vital issues by fostering international cooperation.
With this in mind, the IRSG, which is co-sponsored by the City of London Corporation and TheCityUK, advocates four areas of focus for the UK:
- Global regulatory coherence for pandemic recovery: As international economies shift gear towards pandemic recovery, the IRSG considers it vital for the UK and its G7 partners to work together. Joint coordinated action and global regulatory coherence is needed to minimise potential future fragmentation and protectionist policies in the wake of the pandemic. This should cover recapitalisation of the corporate sector, as well as pushing back against localisation on issues such as capital, liquidity and data.
- Leadership on climate agenda ahead of COP26: With the UK assuming the G7 presidency in January 2021 and co-hosting alongside Italy the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow on 1 – 12 November 2021, the IRSG sees this as an opportune moment to achieve real progress on the climate agenda through strong leadership on sustainable finance. This should involve mobilising green finance, improving climate-related risk reporting and disclosures and promoting carbon markets.
- Digital policy continuity, including on digital taxation: Following progress during recent presidencies, the IRSG supports continuity on G7 policy on digital taxation through an agreement on the OECD’s digital taxation framework. It also calls for a global data standard, work to promote digital capabilities in RegTech, SupTech and cyber. It supports the development of a global regulatory solution to tackle systemic risk challenges arising from concentration of outsourcing to large technology vendors.
- Alignment with G20 global policy priorities: It will be important for the UK’s presidency to align with the G20’s wider objectives, but also on specific objectives for financial services. The IRSG would urge close co-operation with the Italian G20 Presidency as well as continuity on key themes following the recent Saudi G20 presidency, particularly promoting sustainable and inclusive pandemic recovery, fostering private sector participation in infrastructure investment, smooth transition away from LIBOR, addressing capital flow volatility, and promoting digital financial inclusion.
Deputy Chair of the IRSG, Catherine McGuinness said:
“The UK has begun a new chapter outside of the EU. Its presidency of the G7 and hosting of COP26 in 2021 are key opportunities to mark that new beginning by showing continued international leadership, as the global economy looks to meet the challenges of the post-pandemic recovery, climate change and digitisation.
“The international community must steer clear of protectionism and market fragmentation. The UK – as a champion of free and open trade – should seek to build a consensus over the free movement of data and capital, and promote global regulatory cooperation.”