BRUSSELS — European banks and other finance firms should decrease their reliance on American tech companies for digital services, a top national supervisor has said. In an interview with POLITICO, Steven Maijoor, the Dutch central bank’s chair of supervision, said the “small number of suppliers” providing digital services to many European finance companies can pose a “concentration risk.” “If one of those suppliers is not able to supply, you can have major operational problems,” Maijoor said. The intervention comes as Europe’s politicians and industries grapple with the continent’s near-total dependence on U.S. technology for digital services ranging from cloud computing to software. The dominance of American companies has come into sharp focus following a decline in transatlantic relations under U.S. President Donald Trump. While the market for European tech services isn’t nearly as developed as in the U.S. — making it difficult for banks to switch — the continent “should start to try to develop this European environment” for financial stability and the sake of its economic success, Maijoor said. European banks being locked in to contracts with U.S. providers “will ultimately also affect their competitiveness,” Maijoor said. Dutch supervisors recently authored a report on the systemic risks posed by tech dependence in finance. Dutch lender Amsterdam Trade Bank collapsed in 2023 after its parent company was placed on the U.S. sanctions list and its American IT provider withdrew online data storage services, in one of the sharpest examples of the impact on companies that see their tech withdrawn. Similarly a 2024 outage of American cybersecurity company CrowdStrike highlighted the European finance sector’s vulnerabilities to operational risks from tech providers, the EU’s banking watchdog said in a post-mortem on the outage. In his intervention, Maijoor pointed to an EU law governing the operational reliability of banks — the Digital Operational Resilience Act (DORA) — as one factor that may be worsening the problem. Those rules govern finance firms’ outsourcing of IT functions such as cloud provision, and designate a list of “critical” tech service providers subject to extra oversight, including Amazon Web Services, Google Cloud, Microsoft and Oracle. DORA, and other EU financial regulation, may be “inadvertently nudging financial institutions towards the largest digital service suppliers,” which wouldn’t be European, Maijoor said. “If you simply look at quality, reliability, security … there’s a very big chance that you will end up with the largest digital service suppliers from outside Europe,” he said. The bloc could reassess the regulatory approach to beat the risks, Maijoor said. “DORA currently is an oversight approach, which is not as strong in terms of requirements and enforcement options as regular supervision,” he said. The Dutch supervisors are pushing for changes, writing that they are examining whether financial regulation and supervision in the EU creates barriers to choosing European IT providers, and that identified issues “may prompt policy initiatives in the European context.” They are asking EU governments and supervisors “to evaluate whether DORA sufficiently enhances resilience to geopolitical risks and, if not, to consider issuing further guidance,” adding they “see opportunities to strengthen DORA as needed,” including through more enforcement and more explicit requirements around managing geopolitical risks. Europe could also set up a cloud watchdog across industries to mitigate the risks of dependence on U.S. tech service providers, which are “also very important for other parts of the economy like energy and telecoms,” Maijoor said. “Wouldn’t there be a case for supervision more generally of these hyperscalers, cloud service providers, as they are so important for major parts of the economy?” The European Commission declined to respond.

The discussion surrounding the digital euro is strategically important to Europe. On Dec. 12, the EU finance ministers are aiming to agree on a general approach regarding the dossier. This sets out the European Council’s official position and thus represents a major political milestone for the European Council ahead of the trilogue negotiations. We want to be sure that, in this process, the project will be subject to critical analysis that is objective and nuanced and takes account of the long-term interests of Europe and its people. > We do not want the debate to fundamentally call the digital euro into question > but rather to refine the specific details in such a way that opportunities can > be seized. We regard the following points as particularly important: * maintaining European sovereignty at the customer interface; * avoiding a parallel infrastructure that inhibits innovation; and * safeguarding the stability of the financial markets by imposing clear holding limits. We do not want the debate to fundamentally call the digital euro into question but rather to refine the specific details in such a way that opportunities can be seized and, at the same time, risks can be avoided. Opportunities of the digital euro:  1. European resilience and sovereignty in payments processing: as a public-sector means of payment that is accepted across Europe, the digital euro can reduce reliance on non-European card systems and big-tech wallets, provided that a firmly European design is adopted and it is embedded in the existing structures of banks and savings banks and can thus be directly linked to customers’ existing accounts. 2. Supplement to cash and private-sector digital payments: as a central bank digital currency, the digital euro can offer an additional, state-backed payment option, especially when it is held in a digital wallet and can also be used for e-commerce use cases (a compromise proposed by the European Parliament’s main rapporteur for the digital euro, Fernando Navarrete). This would further strengthen people’s freedom of choice in the payment sphere. 3. Catalyst for innovation in the European market: if integrated into banking apps and designed in accordance with the compromises proposed by Navarrete (see point 2), the digital euro can promote innovation in retail payments, support new European payment ecosystems, and simplify cross-border payments. > The burden of investment and the risk resulting from introducing the digital > euro will be disproportionately borne by banks and savings banks. Risks of the current configuration: 1. Risk of creating a gateway for US providers: in the configuration currently planned, the digital euro provides US and other non-European tech and payment companies with access to the customer interface, customer data and payment infrastructure without any of the regulatory obligations and costs that only European providers face. This goes against the objective of digital sovereignty. 2. State parallel infrastructures weaken the market and innovation: the European Central Bank (ECB) is planning not just two new sets of infrastructure but also its own product for end customers (through an app). An administrative body has neither the market experience nor the customer access that banks and payment providers do. At the same time, the ECB is removing the tried-and-tested allocation of roles between the central bank and private sector. Furthermore, the Eurosystem’s digital euro project will tie up urgently required development capacity for many years and thereby further exacerbate Europe’s competitive disadvantage. The burden of investment and the risk resulting from introducing the digital euro will be disproportionately borne by banks and savings banks. In any case, the banks and savings banks have already developed a European market solution, Wero, which is currently coming onto the market. The digital euro needs to strengthen rather than weaken this European-led payment method. 3. Risks for financial stability and lending: without clear holding limits, there is a risk of uncontrolled transfers of deposits from banks and savings banks into holdings of digital euros. Deposits are the backbone of lending; large-scale outflows would weaken both the funding of the real economy – especially small and medium-sized enterprises – and the stability of the system. Holding limits must therefore be based on usual payment needs and be subject to binding regulations. -------------------------------------------------------------------------------- Disclaimer POLITICAL ADVERTISEMENT * The sponsor is Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V. , Schellingstraße 4, 10785 Berlin, Germany * The ultimate controlling entity is Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V. , Schellingstraße 4, 10785 Berlin, Germany More information here.

HOW BELGIUM BECAME RUSSIA’S MOST VALUABLE ASSET Belgian Prime Minister Bart De Wever is unmoved in his opposition to a raid on Moscow’s funds held in a Brussels bank for a loan to Ukraine.  By TIM ROSS, GREGORIO SORGI, HANS VON DER BURCHARD and NICHOLAS VINOCUR in Brussels Illustration by Natália Delgado/POLITICO It became clear that something had gone wrong by the time the langoustines were served for lunch.  The European Union’s leaders arrived on Oct. 23 for a summit in rain-soaked Brussels to welcome Ukraine’s President Volodymyr Zelenskyy with a gift he sorely needed: a huge loan of some €140 billion backed by Russian assets frozen in a Belgian bank. It would be enough to keep his besieged country in the fight against Russia’s invading forces for at least the next two years.  The assorted prime ministers and presidents were so convinced by their plan for the loan that they were already arguing among themselves over how the money should be spent. France wanted Ukraine to buy weapons made in Europe. Finland, among others, argued that Zelenskyy should be free to procure whatever kit he needed from wherever he could find it.  But when the discussion broke up for lunch without agreement on raiding the Russian cash, reality dawned: Modest Belgium, a country of 12 million people, was not going to allow the so-called reparations loan to happen at all.  The fatal blow came from Bart De Wever. The bespectacled 54-year-old Belgian prime minister cuts an eccentric figure at the EU summit table, with his penchant for round-collared shirts, Roman history and witty one-liners. This time he was deadly serious, and dug in.  He told his peers that the risk of retaliation by the Russians for expropriating their sovereign assets was too great to contemplate. In the event that Moscow won a legal challenge against Belgium or Euroclear, the Brussels depository holding the assets, they would be on the hook to repay the entire amount, on their own. “That’s completely insane,” he said.  As afternoon stretched into evening, and dinner came and went, De Wever demanded the summit’s final conclusions be rewritten, repeatedly, to remove any mention of using Moscow’s assets to send cash to Kyiv.   Bart De Wever attends the European Council summit, in Brussels, Belgium, on Oct. 23, 2025. | Dursun Aydemir/Anadolu via Getty Images The Belgian blockade knocked the wind out of Ukraine’s European alliance at a critical moment. If the leaders had agreed to move ahead at speed with the loan plan at the October summit, it would have sent a powerful signal to Vladimir Putin about Ukraine’s long-term strength and Europe’s robust commitment to defend itself. Instead, Zelenskyy and Europe were weakened by the divisions when Donald Trump, still hoping for a Nobel Peace Prize, reopened his push for peace talks with Putin allies. The situation in Brussels remains stuck, even with the outcome of the almost-four-year-long war approaching a pivotal moment. Ukraine is sliding closer toward the financial precipice, Trump wants Zelenskyy to sign a lopsided deal with Putin — triggering alarm across Europe — and yet De Wever is still saying no. “The Russians must be having the best time,” said one EU official close to negotiations. The bloc’s leaders still aim to agree on a final plan for how to stop Ukraine running out of money when they meet for their next regular Brussels summit on Dec. 18.  But as the clock ticks down, one key problem remains: Can the EU’s most senior officials — European Commission President Ursula von der Leyen and António Costa, the president of the European Council — persuade De Wever to change his mind? So far the signs are not good. “I’m not impressed yet, let me put it that way,” De Wever said in televised remarks as the Commission released its draft legal texts on Wednesday. “We are not going to put risks involving hundreds of billions … on Belgian shoulders. Not today, not tomorrow, never.” In interviews, more than 20 officials, politicians and diplomats, many speaking privately to discuss sensitive matters, described to POLITICO how European attempts to fund the defense of Ukraine descended into disarray and paralysis, snagged on political dysfunction and personality clashes at the highest levels. The potential consequences for Europe — as Trump seeks to force a peace treaty on Ukraine — could hardly be more severe. SPOOKING THE HORSES  According to several of those close to the discussions, the reparations loan proposal started to hit trouble when tension began to build between De Wever and his neighbor, the new German chancellor, Friedrich Merz. A Flemish nationalist, De Wever came to power just this past February after months of tortuous coalition negotiations — a classic scenario in Belgian politics. Three weeks later, Germany voted in a national election to hand Merz, a center-right conservative, the leadership of Europe’s most powerful economy.  Like De Wever, Merz can be impulsive in a way that is liable to unsettle allies. “He shoots from the hip,” one Western diplomat said. On the night he won, he called on Europe to work for full “independence” from the United States and warned NATO it may soon be history.  Amid delays and continuing failure to agree on a way forward, bad-tempered briefings have been aimed at Bart De Wever, and increasingly at Ursula von der Leyen, too, in recent weeks. | Nicolas Tucat/Getty Images In September, the German chancellor stuck his neck out again. It was time, he said, for Europe to raid its bank vaults in order to exploit immobilized Russian assets to help Ukraine. With his outburst, Merz apparently spooked the Belgians, who were at the time in sensitive private talks with EU officials trying to iron out their worries. Several officials said Merz went rogue in putting the policy into the public domain so forcefully and so early — before De Wever had signed up.  Five days later, von der Leyen discussed it herself, though she was careful to try to reassure anyone who might have concerns: “There is no seizing of the assets.” Instead, she argued, the assets would just be used to provide a sort of advance payment from Moscow for war reparations it would inevitably owe. The money would only be returned to Russia in the unlikely event that the Kremlin agreed to compensate Kyiv for the destruction in Ukraine.  The idea gained rapid momentum. “It’s important to move forward in the process because it’s about making sure that there is funding to meet the budgetary and military needs for Ukraine, and it’s also a moral issue about making Russia pay for the damage that it has caused,” Jessica Rosencrantz, Sweden’s EU affairs minister, told POLITICO. “In that sense, using the frozen Russian assets is the logical and moral choice to make.” THE SPIDER’S WEB  Most of the work of a European Council summit is already done long before the bloc’s leaders arrive at the futuristic “space egg” Europa building for handshakes and photos. Ambassadors from the bloc’s 27 member countries gather to discuss what the summit will achieve — and to thrash out the precise wording of the plans — during the weeks leading up to each meeting.  Ahead of the October summit, Belgium’s ambassador to the EU, Peter Moors, had been sending signals to his colleagues that making progress on plans to use Russia’s frozen assets would be fine. The problem, according to four officials familiar with the matter, was that Moors wasn’t speaking directly to De Wever, and all the decisions about Russian assets rested with the prime minister.  While others inside the Belgian government knew that the prime minister was implacably opposed to ransacking Euroclear, one of his country’s most valuable and important financial institutions, the diplomat negotiating the summit deal a few hundred meters up the road apparently did not.  That meant nobody in the EU machinery really understood just how serious De Wever’s opposition was going to be until he arrived on summit day with steam coming out of his ears.  Moors is well respected among his peers and within the Belgian government. He is seen as effective, experienced and competent, having had a long career in diplomacy and politics. Before he took on the role of ambassador to the EU, he was known as the “spider in the web” of Belgian foreign policy.  Several officials said Friedrich Merz went rogue in putting the policy into the public domain so forcefully and so early — before Bart De Wever had signed up. | Tobias Schwartz/Getty Images The trouble, it seems, may have been political. He was the chief of staff to De Wever’s rival and predecessor as prime minister, Alexander De Croo, and comes from a party that lost power in last year’s election and now serves in opposition. It’s hardly uncommon in politics for such distinctions to affect who gets left out of the loop.  The other complicating factor was Belgium’s political dysfunction. As De Wever himself put it, he had been locked in negotiations with his compatriots trying to agree a national budget for weeks with no deal in sight.  “I’ve been negotiating for weeks to find €10 billion,” De Wever said on the way into the EU summit. A scenario in which Belgium would have to repay Russia more than 10 times that amount would therefore be unthinkable, he added.  As the summit broke up with only a vague agreement for leaders to look again at financing Ukraine, officials were left scratching their heads and wondering what had gone wrong.  AMERICA FIRST   The question of what to do with hundreds of billions of dollars worth of Russian assets locked in Western accounts had been hanging over Ukraine’s allies since the funds were sanctioned at the start of the war in February 2022. Now, though, it’s not just the Europeans who have their eyes on the cash.  The American side has quietly but firmly let Brussels know they have their own plans for the funds. When EU Sanctions Envoy David O’Sullivan traveled to Washington during the summer, U.S. officials told him bluntly they wanted to hand the assets back to Russia once a peace deal was done, according to two senior diplomats.  Trump is increasingly impatient for Kyiv and Moscow to agree to a full peace treaty. True to their word, the Americans’ original 28-point blueprint for an agreement included proposals for unfreezing the Russian assets and using them for a joint Ukraine reconstruction effort, under which the U.S. would take 50 percent of the profits.  The concept provoked outrage in European capitals, where one shocked official suggested Trump’s peace envoy Steve Witkoff should see “a psychiatrist.” If nothing else, Trump’s desire for a speedy deal with Putin — and his apparent designs for the frozen assets — lit a fire under the EU’s negotiations with De Wever.  WASTED TIME   Many EU governments are sympathetic toward the Belgian leader. Officials and politicians know just how difficult it is for any government to contemplate a step like this one, which could theoretically open them up to punishingly expensive legal action. De Wever is worried the stability of the euro itself could be undermined if a raid on Euroclear forced investors to think again about placing their assets in European banks.  In recent weeks, von der Leyen’s most senior aide, Björn Seibert, among others, invested time in trying to understand Belgium’s objections and to find creative ways to overcome them. Moors and other ambassadors have discussed the issues endlessly, during their regular meetings with each other and the Commission.  But as the nights draw in, the mood is darkening. Amid delays and continuing failure to agree on a way forward, bad-tempered briefings have been aimed at De Wever, and increasingly also at von der Leyen in recent weeks. She has held off the decisive step of publishing the draft legal texts that would enable the assets to be used for the reparations loan. These documents are what all sides need to enact, alter or reject the plan. “We have wasted a lot of time,” Jonatan Vseviov, secretary-general of the Estonian foreign ministry, told POLITICO. “Our focus has been solely on the Commission president, asking her to present the proposal. Nobody else can table the proposal.” He said it would have been “better” if the Commission had produced the legal texts setting out the details of the loan earlier than Wednesday, when they were eventually released. “We have wasted a lot of time,” Jonatan Vseviov, secretary-general of the Estonian foreign ministry, told POLITICO. | Ali Balikci/Getty Images “We all have a responsibility” to speed up now, another diplomat said, while a third noted that even Belgium had been imploring the Commission to publish the legal plans in recent weeks. An EU official said everyone should calm down and noted that De Wever still needed to get off his ledge. Another diplomat said Belgium “cannot expect all their wishes to be granted in full.” WINTER IS HERE Merz is particularly agitated. He worries that it will be his country’s taxpayers who have to step in unless the assets loan goes ahead. “I see the need to do this as increasingly urgent,” the German leader told reporters on Friday. “Ukraine needs our support. Russian attacks are intensifying. Winter is approaching — or rather, we are already in winter.” De Wever, in the words of one diplomat, is still “pleading” for other options to remain in play. Two alternative ideas are in the air. The first would ask EU national governments to dig into their own coffers to send cash grants to Kyiv, a prospect most involved think is unrealistic given the parlous state of the budgets of many European nations.  The other idea is to fund a loan to Kyiv via joint EU borrowing, something frugal countries dislike because it would pile up debt to be repaid by future generations of taxpayers. “We are not keen on that,” one diplomat said. “The principle of saying Russia needs to pay for the damage is right.”  Some combination of these ideas might be inevitable, especially if the reparations loan is not finalized in time to meet Ukraine’s funding needs. In that case, a bridging loan will be required as an emergency “plan B”.  In a letter to von der Leyen on Nov. 27, De Wever underlined his opposition, describing the reparations loan proposal as “fundamentally wrong.”  “I am fully cognizant of the need to find ways to continue financial support to Ukraine,” De Wever wrote in his letter to von der Leyen. “My point has always been that there are alternative ways to put our money where our mouth is. When we talk about having skin in the game, we have to accept that it will be our skin in the game.”  “Who would advise the prime minister to write such a letter?” one exasperated diplomat said, dismayed at De Wever’s apparent insensitivity. “He talks about having ‘skin in the game.’ What about Ukraine?” RUSSIAN DRONES  Despite frustrating his allies, De Wever still has support from within his own government for the hard-line stance he’s taking. His position has been reinforced by Euroclear itself, which issued its own warnings. In a sign of how critical the subject is for Belgium, Euroclear’s bosses deal directly with De Wever’s office, bypassing the finance ministry.  Some also fear the threat to Belgium’s physical security. Mysterious drones disrupted air traffic at Brussels Airport last month and were spotted over Belgian military bases, suspected of spying on fighter jets and ammunition stores. The concern is that they may be part of Putin’s hybrid assault on Europe, and that Belgium would be at heightened risk if De Wever approved the use of Moscow’s assets.  Another major hurdle to progress on the loan is Hungary. Russia’s assets are only frozen because all the EU’s leaders — including Putin’s friend Viktor Orbán — have agreed every six months to extend the sanctions immobilizing the funds. Should Orbán change his mind, Russia could suddenly be free to lay claim to those assets again, putting Belgium in trouble.  In the end, the task may just be too big even for the Commission’s highly qualified lawyers. It’s far from certain that a legal fix even exists that could duck Hungary’s veto and Russian retaliation, keep Belgium happy, and avoid the need for European taxpayer money to be committed up front.  Mysterious drones disrupted air traffic at Brussels Airport last month and were spotted over Belgian military bases, suspected of spying on fighter jets and ammunition stores. | Nicolas Tucat/Getty Images As the next crunch European Council summit on Dec. 18 gets closer, European officials are feeling the pressure. “This is not an accounting exercise,” Estonia’s Vseviov said. “We are preparing the most consequential of all European Councils … We are trying to ensure that Europe gets a seat at the table where history is being made.” For the EU, one essential question remains — and it’s one that is always there, in every crisis that crosses the desks of the diplomats and officials working in Brussels: Can a union of 27 diverse, fractious, complex countries, each with its own domestic struggles, political rivalries and ambitious leaders, unite to meet the moment when it truly matters?  In the words of one diplomat, “It’s anyone’s guess.” Jacopo Barigazzi, Camille Gijs, Bjarke Smith-Meyer and Hanne Cokelaere contributed to this report.

LONDON — The U.K. government is going all-out to get Brits putting their money in stocks and shares. The timing could definitely be better. Lead policymakers and City of London analysts are increasingly warning of an artificial intelligence-fueled correction in equities just as the U.K.’s top finance minister prepares a major new policy to push Britain’s savers into the stock market. Chancellor Rachel Reeves has made upping retail participation in stocks and shares a high priority, launching a campaign earlier this year to unite financial firms in an advertising blitz extolling the benefits of investing. At next month’s budget, she’s expected to push changes to the tax system that would encourage investors to swap their steady, tax-free cash savings products for a stocks and shares ISA. With AI stocks soaring, it’s caused some raised eyebrows in the City. AI stocks in the U.S. account for roughly 44 percent of the S&P 500 market capitalization, and Nvidia just became the first company in history to become worth $5 trillion. The meteoric rise in has led some experts to warn there’s only one way out: The bubble will burst. “It would, unfortunately, be poetic timing if a major correction arrives just as the government is trying to get more people into investing,” said Chris Beauchamp, chief market analyst at IG. ATLANTIC INFLUENCE This week, City broker Panmure Liberum found that 38 percent of the U.S. stock market’s value is based in a “speculative component” that AI companies will continue to build out data centers and spend billions more on chips — by no means a sure bet. “While this capital spending could deliver substantial productivity gains that might eventually spread to the broader market, there is still no clear evidence that this is happening and is difficult to forecast the size of an eventual impact,” said Panmure analyst Susana Cruz in a research note. The “Magnificent Seven” group of tech giant composed around 20 percent of the S&P 500 at the end of 2022, but now make up more than a third of it, having tripled in size over just three years. The American index’s price-to-book ratio (meaning a company’s market cap compared to assets and liabilities) is at an all-time high, with 19 of the 20 valuation metrics tracked by Bank of America more expensive than the historical average. Despite the vast valuations, an infamous MIT study published earlier this year found that 95 percent of companies using generative AI were getting zero return. In early October, the Bank of England’s committee which monitors risks to financial stability warned of a “sudden correction” in markets, saying that “equity valuations appear stretched” as valuation metrics reached levels comparable to the peak of the dotcom bubble that unfolded in the early millennium, when the Nasdaq fell 77 percent from its peak, wiping trillions of the stock market. It took 15 years for the index to recover. The U.K. central bank’s warning came a month after global body, the Bank for International Settlements, issued a similar caution. Kristalina Georgieva, head of the International Monetary Fund, has also drawn comparisons with the dotcom bubble. Even Jamie Dimon, chief executive of U.S. banking giant JP Morgan, has said he’s seriously worried about a market correction. Over most periods investment beats cash, as long as individuals are willing to lock their money away for several years. Savers could have doubled their money over the last decade by putting their cash in the stock market rather than keeping it in a savings account, according to Schroders. Nvidia is up 13 percent this month alone — rather than an index fund which tracks hundreds of stocks, they stand to lose a lot of money if things go sour. | Jung Yeon-Je/Getty Images “No one can time the market, definitely not a bulky institution like the government,” Oliver Tipping, analyst at investment bank Peel Hunt, said. “Big picture, the government is right to try to stimulate more retail investment.” But if an individual decides to put their hard-earned savings into stocks they perceive as doing particularly well — Nvidia, for example, is up 13 percent this month alone — rather than an index fund which tracks hundreds of stocks, they stand to lose a lot of money if things go sour. “If you think about your average Joe, they’re not going to go into a safe index fund, they’ll put all of their money in Nvidia or Facebook and could get in at the wrong time,” one financial analyst, granted anonymity to speak freely, said.  Yet even an index fund, like a global equities tracker, is made up of close to 20 percent of the “Magnificent Seven” companies, due to the massive size of the American stock market compared to the rest of the world. While these funds have suffered significant drops in the past — U.S. President Donald Trump’s threat of tariffs in April caused a drop of 10 percent in a week — they have then recovered over a period of months or years. That’s good news for investors willing to wait for the market to correct any possible downturn — but if retail investors panic and withdraw their funds at the first sign of a loss, they could end up with less money than they put in, possibly wiping out emergency savings. “There is clearly a risk here that government is pushing people to invest when maybe they don’t have enough of a cash buffer in order to do that, that you’re going to be setting up problems for the long term, and it’ll be interesting to see who’s on the hook for paying that compensation,” said Debbie Enver, head of external affairs at the Building Societies Association. ONCE BITTEN, TWICE SHY City analysts also express concern that investors entering the stock market for the first time could be forever turned off from shifting their cash over to equities if an immediate correction is nigh. Only 8 percent of wealth held by U.K. adults is in stocks and funds, four times lower than in the U.S., according to data from asset manager Aberdeen. “There is no doubt that the government would find it much harder to drive retail investment in a period of financial turbulence,” added Chris Rudden, head of investment consultants at Moneyfarm. “Appetite to invest is linked to strong recent market performance. If there was to be a bubble that bursts in the coming few months, then it could make their job impossible.” IG’s Beauchamp argued that the government would need to pursue a broader education plan “to help people through the inevitable pullback” and prevent them from avoiding the stock market permanently. “How you do that without scaring people witless is a Herculean task,” he added. Laith Khalaf, head of investment analysis at AJ Bell, suggested investment platforms could encourage regular incremental savings in the stock market, known as dollar cost averaging, rather than throwing one lump sum in, which he said “mitigates the risk of a big market downdraft.” One solution that appears to be under consideration by Reeves as part of the autumn budget is to introduce a minimum U.K. stock shareholding in ISAs — which she could argue would protect British savers from a U.S. downturn and pump more money into local companies. This too is not without risk. The FTSE 100 derives nearly 30 percent of its revenue from the U.S., according to the London Stock Exchange, and U.K. markets are generally incredibly sensitive to macroeconomic shifts across the Atlantic. The FTSE 100 derives nearly 30 percent of its revenue from the U.S., according to the London Stock Exchange. | Jeff Moore/Getty Images Meanwhile, if an AI-induced stock bubble isn’t enough cause for concern, worries of trouble in the private credit sector exploded this month after the collapse of sub-prime auto lender Tricolor and car parts supplier First Brands left some U.S. banks with significant losses, causing a spillover onto public markets. BoE governor Bailey recently drew similarities between risks in the asset class and the 2008 global financial crisis, saying it was an “open question” if the event was “a canary in the coal mine” for a market meltdown. If one domino falls, they all could — and that would leave Britain’s chancellor in a real bind.

BRUSSELS — Global finance regulators’ failure to impose sufficient rules on cryptocurrency could threaten the world’s financial stability, global risk body the Financial Stability Board has warned. Reviewing the rollout of a global framework for crypto rules, the FSB said there are “significant gaps and inconsistencies” in implementing the rules, which could “pose risks to financial stability and to the development of a resilient digital asset ecosystem.” On the regulation of stablecoins, which are virtual currencies pegged to real-world assets, the FSB said regulation is “lagging.” Because of the international, decentralized nature of financial technologies like crypto, having gaps in global rules is an issue as providers can go wherever the rules are the most lax, which “complicates oversight,” the review said. It added that global cooperation on regulating the currencies is “fragmented, inconsistent, and insufficient” to address their global nature. The FSB also flagged gaps in oversight of crypto service providers, saying supervision of “potentially higher risk activities, such as borrowing, lending, and margin trading, is often lacking” and enforcement can “lag behind regulatory development.” The review recommended that governments implement the global crypto framework fully. It also said they should “conduct an assessment of the scale and nature of cross-border crypto-asset activities into and out of their jurisdictions” at the “appropriate time.” Earlier this week, FSB chair Andrew Bailey warned G20 finance ministers and central bank governors that stablecoins are a potential area of vulnerability for the financial system.

Quit stressing about climate change — it’ll all be fine. That was the message from two of U.S. President Donald Trump’s top government appointees during a trip to Brussels last week. Trump’s Energy Secretary Chris Wright and finance cop Paul Atkins each dismissed the EU’s comparatively stringent approach to climate regulation during their visits, with the former saying the danger posed by global warming was “overhyped.” It comes as the EU faces increasing pressure to wind back its climate ambitions to compete with countries with looser standards, such as the U.S. and China. Atkins, whom Trump appointed to head U.S. finance watchdog the Securities and Exchange Commission earlier this year, said global warming posed no serious threat to financial stability, and insisted it was not the place of financial regulators to police the climate-related policies of businesses. “We’re not here to be environmental police or social police or whatever. That’s not our job,” he told POLITICO. That position contradicts the European Central Bank’s stance that climate change poses real risks to the financial system. As for whether he believes in the science of climate change, Atkins said: “It doesn’t matter what I believe.” Since moving into the White House in January, Trump has unleashed a barrage of domestic anti-green reforms, from winding back his predecessor Joe Biden’s massive tax breaks for low-carbon technology to withdrawing the U.S. from the Paris climate agreement. Last week, the U.S. Environmental Protection Agency announced plans to stop measuring the emissions of some of the U.S.’s top polluters, including coal plants, steel mills and oil refineries. Trump has also openly waged war on wind power, a key tool in weaning the world off fossil fuel-generated electricity. Wright, a former oil man, did not deny the existence of climate change, but said its effects had been exaggerated. “[T]oday your chance of dying from [an] extreme weather event is the lowest we have in recorded history, and 20 percent of kids record nightmares about climate change,” Wright said at a press conference on Friday, without citing the source of these statistics. “So we have got people very afraid of something that’s a real issue, but we overhyped it,” he said. He urged countries to stop subsidizing renewable energy because it was having little impact on emissions, but was costly for industry. In the U.K. earlier in the week he told the BBC artificial intelligence would help solve climate change by cracking the problem of harnessing nuclear fusion to generate electricity in a decade or so. The EU has among the most stringent stringent climate rules in the world, but is under pressure to wind these back, both internally and from other countries like the U.S. European industry is struggling with high energy costs and intense competition from China, and business groups and politicians from the center to the far right have argued green rules add additional costs that industry cannot afford. EU lawmakers are currently reviewing a proposal to slash rules requiring companies to report on their impacts on the environment, and member countries are struggling to reach an agreement on the EU’s 2040 emissions target.

LONDON — Thought writing a 10,000-word dissertation was tricky? Try managing Britain’s embattled university sector.  As students pack their bags, sort their kitchenware and prepare for the time of their lives at campuses across the U.K., university officials face the headache of keeping their struggling institutions economically viable — all while politicians take potshots at them. “The underlying financial settlement for universities is not really sustainable,” warned Universities UK International Director Jamie Arrowsmith, an organization representing 141 universities.  International students provide significant income to the sector by paying considerably higher tuition fees than domestic students. However, Labour’s bid to slash migration levels means international students are in the firing line. It’s a stark contrast from Tony Blair’s New Labour government in the 2000s, which was “actively encouraging the growth of the international student population,” according to Labour peer and former Universities Minister Margaret Hodge. She recalled writing to Blair espousing how this expansion would increase the U.K.’s soft power: “If you wanted to create good diplomatic connections and promote peace across the world, those student relationships paid off fantastically.” A string of policy changes has left institutions searching elsewhere for cash, as Prime Minister Keir Starmer focuses on disadvantaged British youngsters. A white paper due this fall will outline specific higher education reforms, including calls for universities to contribute more to economic growth. The sector warns it could all be undermined if the government keeps discouraging overseas students from coming to Britain. PULLING UP THE LADDER  Britain’s universities have an enviable reputation. The QS World University Rankings in June put 17 U.K. universities in the top 100, while a London Economics report calculated higher education contributed more than £265 billion in the 2021/22 academic year. It’s little wonder students across the globe want to study here. Anxious about populist parties like Reform UK, Tory and Labour governments have seen fewer foreign students as a way to get numbers down. | Richard Baker / In Pictures via Getty Images But while international students starting in 2021/22 brought net economic benefits of £37.4 billion, they’re also counted in immigration figures — and that’s a headache for the government. Anxious about populist parties like Reform UK, Tory and Labour administration have seen fewer foreign students as a way to get numbers down.  They were banned from bringing family members on all but post-graduate research routes back in January 2024. That decision by then-Conservative PM Rishi Sunak followed 135,788 visas being granted to dependents of foreign students in 2022, nearly nine times the 2019 figure. Arrowsmith said he understood why the policy was introduced, but warned it had hit “the U.K.’s attractiveness” to prospective foreign students, particularly when “other countries have had more open and welcoming policies over the last three to four years.” Home Office figures in October 2024 showed the effect — with an 89 percent drop in visa applications for dependents between July to September 2023 and the same period in 2024. Tory peer and former Universities Minister, David Willetts, said he understood concerns about dependents, but thought it should be made clearer to voters that students are only temporary migrants. “My constituents, when I was an MP, who worried about migration, were worried about [people] coming to Britain to settle, to use the NHS,” he said. “They weren’t worried about a Chinese student doing physics for a couple of years.” Fellow Tory peer and former Universities Minister Jo Johnson concurred, saying people were more concerned with illegal immigration. “They’re a very special category of immigration that’s more akin to tourism or temporary visitors.”  Now, Labour is wearing Conservative clothing.  The Home Office marked the new academic term this week by directly contacting tens of thousands of foreign students, warning them not to outstay their visas and telling them they “must leave”  if they have “no legal right to remain.”  The immigration white paper published this May also planned to reduce the graduate visa — where international students can remain in the U.K. after finishing their qualification — from two years to 18 months in most cases. Ministers have also mooted a levy on fees universities receive from foreign students to reinvest in domestic training. A graduation student sits outside Senate House at Cambridge University. | Joe Giddens/PA Images via Getty Images Johnson, however, said the Treasury didn’t like raising money for a specific purpose, meaning the Department for Education “may be being rather optimistic” in assuming revenue would go towards skills.  Hodge was similarly sceptical: “If it were linked to encouraging international students, but recognizing there might be a cost to public services, I think I’d feel more comfortable,” she said. “At the moment, I’m not sure that it’s anything else other than raising more money.” The moves have also upset the main higher education union. “Unfortunately, the government remains wedded to a funding model that leaves international students propping up U.K. higher education,” said University and College Union (UCU) General Secretary Jo Grady in a statement to POLITICO. She added: “Their fees are essential to the financial stability of the sector, so it is economically illiterate that Labour has refused to lift the Tories’ visa restrictions.”  STRAPPED FOR CASH Though Education Secretary Bridget Phillipson insisted the government will “always welcome international students where they meet the requirements to study,” some have taken the hint — and given the U.K. a pass.  In 2023/24, 732,285 overseas students studied at U.K. higher education providers, a 4 percent drop from the 2022/23 record high and the first fall since 2012/13. The number of student visas granted also fell from its record in 2022 of 484,000 by 5 percent in 2023 and 14 percent in 2024. The drop-off was particularly acute among EU students. After Brexit, European students weren’t eligible for home student status, meaning they paid international fees and couldn’t acquire a student loan.  This led to a 50 percent drop in accepted applicants for U.K. undergraduate study from EU countries in 2021/22, which continued to fall the following two years.  Universities still need to pay their bills.  In 2022/23, U.K. higher education providers had an income of £50 billion, of which 52 percent came from tuition fees — international students paid 43 percent of that figure.  The decline “has … been increasingly difficult,” said Arrowsmith, stressing “one of the main sources of funding that was helping to mitigate the reduction in resource is … no longer quite as stable.”  Education Secretary Bridget Phillipson insisted the government will “always welcome international students where they meet the requirements to study.” | Andy Rain/EPA While international fees rose without any cap, domestic tuition fees were frozen from 2017 until this fall at £9,250. Despite rising to £9,535, the hike in employers’ national insurance contributions hampered extra savings — forcing universities to tighten their purse strings. A Universities UK survey of 60 institutions in May found 49 percent closed courses to reduce costs, up from 24 percent in spring 2024. In the same month, the Office for Students, which regulates higher education, forecast a third consecutive year of financial decline in 2024/25.  “Inflation has been particularly high,” argued Arrowsmith, “That really exacerbated the situation,” particularly when there were “increased expectations” on academic research. It’s little surprise the House of Commons’ Education Committee is investigating potential insolvency within higher education institutions.  The Department for Education reiterated that the independence of universities meant they must ensure sustainable business models. But Willetts and Hodge disagreed on whether increasing domestic fees would improve the situation. Willetts “would love to see a healthy, proper increase in the fees” to put universities “in a stronger position” rather than relying on overseas students. However, Hodge said the “incredibly expensive” university experience was “almost getting to the cost of going to bloody Eton” and the debt was “putting working-class kids off.” OUT OF THE IVORY TOWERS  To show young people university isn’t their only option, the government launched Skills England and funded a growth and skills levy supporting apprenticeships.  But universities don’t think this should come at the expense of international students. And it seems the public agrees. British Future research found 54 percent of people thought international students enhanced the reputation of U.K. universities overseas, while 61 percent thought the government should increase or keep the amount of overseas students the same. Domestic students were supportive, too. “British students appreciated the opportunity of studying with students from other countries,” said Willetts. “It enriched the experience.” Education wonks believe focusing too much on domestic skills could come back to bite ministers — and excessive policy changes prevents what international students, and employers, want most of all: clarity. “They need certainty and stability if they’re going to make decisions,” argued Arrowsmith, stressing frequent alterations under different administrations made “prospective students think twice [about Britain] as a destination.”  The UCU echoed this and felt Britain should be open for business.  “We are also calling on universities to join us in the fight for a more open border policy that will protect the sector, help contribute tens of billions of pounds to the economy, enrich our society and bolster the U.K.’s global standing,” said Grady. A government spokesperson said: “We recognize the valuable contributions which genuine international students make to the economy and the university sector and we want them to continue to come to the U.K.” But they argued: “We are simply tightening the rules so those wishing to stay in the U.K. must find a graduate-level job within 18 months, which is fair for both students and to British workers and taxpayers.”

The European Union needs to close a loophole in its legislation governing stablecoins or risk importing a major risk to financial stability, European Central Bank President Christine Lagarde said on Wednesday. In opening remarks to the European Systemic Risk Board’s annual conference, Lagarde urged legislators to improve its current regulation on digital currencies to address risks posed by so-called multi-issuance schemes, under which an EU entity and a non-EU entity jointly issue fungible stablecoins. “In the event of a run, investors would naturally prefer to redeem in the jurisdiction with the strongest safeguards, which is likely to be the EU,” Lagarde said. The EU’s Markets in Crypto-Assets Regulation (MiCAR) requires immediate and cost-free redemption at par, which is not the case in the United States. “But the reserves held in the EU may not be sufficient to meet such concentrated demand,” Lagarde cautioned, adding that new stablecoins create very familiar liquidity management risks. “That is why we must take concrete steps now,” Lagarde said. “European legislation should ensure that such schemes cannot operate in the EU unless supported by robust equivalence regimes in other jurisdictions and safeguards relating to the transfer of assets between the EU and non-EU entities … We know the dangers. And we do not need to wait for a crisis to prevent them.” Outsiders have also warned of the risks latent in the current setup. In a recent op-ed, London Business School Professor Richard Portes said: “This is like allowing depositors in a bank outside the bloc to redeem their deposits held in the third country through its EU subsidiary. This would mean the European supervisors of an EU subsidiary of a large global banking group would be responsible for the solvency and liquidity of the entire group.”

PARIS — President Emmanuel Macron’s allies don’t seem to have any good answers as to what happens after the almost certain fall of the government of Prime Minister François Bayrou in the Sept. 8 parliamentary vote of confidence. The names of Armed Forces Minister Sébastien Lecornu and Justice Minister Gérald Darmanin are emerging in the chatter as potential successors to the poisoned chalice of the premiership, but what would a new recruit really solve? A new PM will be ensnared in exactly the same quagmire. French politics will still be too internally riven to pass vital deficit-slashing reforms, despite Bayrou’s Cassandra-like warnings that France could be headed toward a Greek-style debt crisis if it sits on its hands and doesn’t implement an unpopular €43.8 billion budget squeeze. So how about another snap election? If Macron calls one, the political landscape could still be mired in exactly the same impasse — but the blame after a vote would more obviously fall on him rather than on his prime minister. And all that time, the financial markets will be running out of patience regarding France’s ability to put its books in order. All in all, a state of shock grips elected officials, aides and advisers from the various parties that support France’s minority government. “It’s a tough blow for the president,” said one minister’s political adviser who, like others in this piece, was granted anonymity to speak candidly about the political chaos. They noted that a day of mass protests, potentially shutting the country down, was in the offing only two days after Bayrou’s expected exit. “A political crisis on Sept. 8, a social crisis on Sept. 10. That’s a regime crisis, isn’t it?” NEW MAN FOR THE MATIGNON Macron’s centrists seem to be clutching at straws. The first signals coming out of the Elysée Palace seemed to indicate the president is not considering dissolving parliament and going for another election. Instead, Macron is thought to be considering tapping the young, center-right Lecornu to lead the government. Someone close to Macron said Justice Minister Darmanin, who has long eyed the premiership, is also a candidate, but doesn’t want to inherit what appears to be a suicide mission. Bother Lecornu and Darmanin originally hailed from the conservative Les Républicains party and have been with Macron since 2017. Lecornu is closer to the president, and Macron almost nominated him before Bayrou imposed himself as premier. He’s seen as more biddable, while Darmanin is highly ambitious and more independent-minded. They noted that a day of mass protests, potentially shutting the country down, was in the offing only two days after Francois Bayrou’s expected exit. | Pool Photo by Thibaud Moritz via EPA An individual close to Lecornu said the 39-year-old privately boasts of enjoying a privileged relationship with Marine Le Pen’s far-right National Rally, while at the same time insisting he could lead a coalition government of both the right and the left.  But will that relationship with the National Rally help him succeed in the bloody budget arena where both Bayrou and former Prime Minister Michel Barnier failed? Many centrists say no: Nothing indicates that either Le Pen or the socialists have any intention of supporting him any more than they did Bayrou. “There is no scenario, no new casting choice that can resolve the crisis,” the ministerial adviser said. For the conservative Les Républicains supporting Bayrou’s minority government, the suggestion of Lecornu is yet another example of an unfailingly optimistic president who refuses to accept defeat. Macron himself reportedly tried to downplay the crisis at Wednesday’s weekly meeting of the Council of Ministers. “He can’t help trying to regain control,” said a dejected member of Les Républicains. “It’s his natural inclination.” Even a technocratic government of experts to solve the budget mess — a rather Italian-sounding fix — would need to navigate a splintered National Assembly filled with lawmakers looking head to key municipal elections next year and the presidential election in 2027. UNAPPETIZING ELECTION Sending the French back to the ballot box, however, also carries its own set of risks for a president worried about his legacy. It was, after all, the surprise snap vote following European elections last summer that shunted France into its current deadlock and irrevocably damaged Macron’s reputation. Polling shows voters could easily deliver another hung parliament in any election in the coming weeks or months. “The worst for him is a dissolution that doesn’t work, because then he’s the one who gets the boot,” another ministerial adviser said. Someone close to Emmanuel Macron said Justice Minister Darmanin, who has long eyed the premiership, is also a candidate, but doesn’t want to inherit what appears to be a suicide mission. | Mohammed Badra/EPA That doesn’t mean it’s impossible, however. Before Monday, Macron had repeatedly ruled out calling new elections before the end of his term, but the Elysée insists he will not deprive himself of a constitutional power . “Mystery is part of the presidential strategy,” said a close associate of Macron. BAYROU FOR PRESIDENT Bayrou’s camp, meanwhile, remains stunned by the speed at which his fate was sealed by opposition lawmakers — especially the far right — and is struggling to convince people the situation is under control. One individual in the prime minister’s entourage said he hoped Le Pen and the National Rally would reconsider their position after 48 hours. The hope was that Bayrou’s team could do the dirty work of balancing France’s books before 2027 while also avoiding the danger of a legislative election in which Le Pen would be barred from running due to her embezzlement conviction. Bayrou for now appears to be waging a battle in the court of public opinion, giving a flurry of speeches and interviews in the hope of leaving the Matignon Palace, the prime ministerial residence, with his head held high.  It has the air of a campaign strategy for 2027, and Bayrou has long aspired to the Elysée. “At least he will have earned his stripes as a presidential candidate,” one Macron supporter said.

The financial world is barreling toward a lobbying civil war in Washington. Cryptocurrency companies are increasingly coming to blows with banks and other Wall Street firms over Republican-led efforts to enact new rules for digital assets, creating a clash between powerful lobbying groups that is poised to come to a head next month when Congress returns from its August recess. The crypto industry has notched a series of lobbying victories since President Donald Trump returned to office earlier this year, including the first-ever legislative overhaul of digital asset regulations. Now, with Republicans on Capitol Hill preparing to pass a second, larger bill aimed at boosting the crypto market, Wall Street groups are starting to pump the brakes, warning that some crypto-friendly reforms could upend their businesses and threaten financial stability. The worry for some banks is that lenders could face deposit flight, with customers fleeing to more loosely-regulated crypto products. But the fight isn’t confined to Capitol Hill. It’s also spilling into more obscure corners of financial policy. For example, bank groups are trying to slow a push by crypto firms to secure national banking licenses. At the same time, crypto executives are lobbying the White House to preserve a ban on banks charging fees for access to customer data. Meanwhile, some traditional financial firms are warning Wall Street regulators about efforts to make stock trading look more like crypto. “Change is hard, and people — especially entrenched, successful people in organizations — are always going to shudder a little bit at the thought of a sea change,” said Dan Zinn, general counsel at OTC Markets, which operates stock trading systems. “It is absolutely waking everybody up, whether that is through a little bit of fear or a little bit of excitement.” The clash highlights how the lobbying dynamics on financial policy issues have shifted vastly in recent months as Washington has moved to embrace the crypto sector. The fervor on the right for embracing the crypto industry, which has poured hundreds of millions of dollars into Washington influence efforts in recent years, has in some cases outweighed the interests of traditional financial firms, which normally align with much of the GOP’s financial policy agenda. The lobbying fight has kicked into high gear this month as bank trade associations have called on lawmakers to retroactively amend through forthcoming legislation an already-signed crypto law that Congress adopted in July, sparking pushback from the crypto industry. (House Republicans are also pushing for retroactive changes to the measure after they opted to accept the Senate’s version of the bill.) Bankers have long been seen as skeptical of crypto. Leading industry figures including JPMorgan Chase CEO Jamie Dimon previously derided digital assets and their Washington agenda has long differed from the goals of digital asset firms. “This is a turf war that’s been going on for years, and frankly prevented us from passing any regulatory clarity up until now,” said Rep. Warren Davidson, an Ohio Republican who sits on the House Financial Services Committee and has been a longtime ally to the crypto industry. But for months, the leading trade associations representing the banking industry offered only tepid public criticism of fast-moving GOP legislation that aimed at giving regulatory legitimacy to digital assets. After Trump signed into law a major bill last month creating new rules for so-called stablecoins, a type of cryptocurrency that is pegged to the value of the dollar, they have become more vocal. Groups like the American Bankers Association are now pressing senators to make changes to the stablecoin law when they take up a second, larger crypto market structure bill next month. They want to block all crypto companies from paying yield to customers who hold stablecoins and repeal a section of the law that they say allows state-chartered uninsured depository institutions to operate nationwide without proper supervision. The concerns are especially pronounced for smaller banks, which say they could suffer from customers pulling their money out and parking it instead in crypto products like stablecoins. “It feels like there’s a move to replace us,” said Christopher Williston, president and CEO of the Independent Bankers Association of Texas, the only major bank group that came out against the stablecoin bill outright. The stablecoin bill, known as the GENIUS Act, is “a fundamental threat to bank deposits” for small lenders, Williston said, adding that the new law feels like “the thousand-and-first cut” for community banks “after 15 years of regulatory burden” imposed by reforms that followed the 2008 financial crisis. Crypto firms, which had lobbied for years for a stablecoin bill, insist the matter is settled. The GENIUS Act “is settled law,” said Summer Mersinger, CEO of the Blockchain Association, a leading industry trade group. “There was robust debate on the Hill, and the way this bill came out was a compromise from policymakers. So we really shouldn’t be trying to go back and reopen that.” Paige Pidano Paridon, executive vice president at the Bank Policy Institute, which represents large banks, said the group wanted to work collaboratively with the crypto industry to develop “clear, fair rules.” This isn’t bank vs. crypto — it’s about working together to create rules of the road that apply equally to everyone while protecting consumers and the financial system,” she said. “America’s financial system is built on trust and when your average consumer can’t distinguish between what’s safe and what’s not, risk increases, and American competitiveness suffers.” At the Securities and Exchange Commission, legacy financial players have been advocating for the Wall Street regulator to proceed cautiously as the agency considers the crypto industry’s pleas to “tokenize” U.S. stocks. Tokenization refers to the process of putting such assets onto the same blockchain technology that underpins crypto tokens like bitcoin and ether. Proponents argue tokenization will help make trading stocks faster and cheaper around the world. Yet, some like the Securities Industry and Financial Markets Association and Citadel Securities, the trading behemoth owned by GOP megadonor Ken Griffin, argue that tokenized stocks should follow the same rules as the thousands of conventional shares that trade today. Lobbyists expect the tokenization fight will play a role in the upcoming debate on Capitol Hill over a market structure bill, which would divvy up crypto oversight between market regulators. Senate Republicans have vowed to pass such a bill this fall. To be sure, the banking industry has hardly lost its influence in Washington, where the big bank CEOs still win Oval Office meetings and lenders are benefiting from Republicans’ sweeping deregulatory agenda. And some in the traditional financial industry are leaning into the promise of crypto. But, at the same time, the banking industry is navigating a political landscape that was shaped by the rush of campaign cash that crypto executives poured into the last election — and are again promising for the coming midterms. Crypto is a top policy priority for the White House and Trump, whose family is invested in various crypto ventures. Those dynamics make the industry a formidable force. At the Consumer Financial Protection Bureau, crypto executives successfully lobbied the Trump administration to back down from its effort to join with big banks to nullify a Biden-era “open banking” rule governing consumer data-sharing. The policy prohibits banks from charging for access to that data, which fintechs and crypto companies use to power their services and make it easier for customers to set up accounts and move money. After crypto executives teamed up with fintechs to intervene, the CFPB is now going back to the drawing table on the rule — instead of gutting it entirely. “Banks are still respected,” Davidson said, adding that Republicans have worked with the industry to roll back some post-2008 regulations. “But frankly, there are other aspects that banks have really enjoyed, benefits that have shielded them in a lot of ways from the market.”