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02/10/2013 - Cost-benefit analysis of the FCA's Detailed Proposals for a new Consumer Credit Regime

The Financial Conduct Authority published its detailed proposals for the new Consumer Credit Regime.  The FCA intends the proposed regime to provide stronger protection and improved outcomes for consumers. Europe Economics analysed the costs, benefits and behavioural changes anticipated to result from the implementation of the new regime.  This follows on from our previous work - published on 6th March earlier this year - assessing the FCA's initial proposals for the new regime.

02/07/2013 - Europe Economics has written a report for Mastercard on the economic impact of interchange fee regulation in the UK

This report was commissioned by MasterCard from Europe Economics, and was produced in conjunction with Professor Sheri Markose of the University of Essex. The study assesses the impacts of introducing interchange fee (IF) regulation charged by card issuers to acquirers in the UK.

01/05/2013 - Europe Economics provided advice to the CAA on the use of LRIC estimates in assessing the competitive price level and the existence of market power

Europe Economics provided advice to the CAA on the use of long-run incremental cost (LRIC) estimates in assessing the competitive price level and the existence of market power, in December 2012.  The CAA has published our work as part of its ‘Minded To’ report for the Stansted Market Power Assessment.   Our work is also referenced in the CAA’s initial proposals for economic regulation at Stansted.   Our work on LRIC is also referenced in the CAA’s initial proposals for economics regulation for Gatwick Airport.  This document includes GAL’s comments on our work and our response.

02/04/2013 - The liquidity of gold under proposed EBA liquidity tests: An analysis for the World Gold Council

Europe Economics was recently commissioned by the World Gold Council to investigate the performance of gold relative to other asset classes on liquidity measures to be used by the European Banking Authority (EBA) in determining assets eligible for the Liquidity Coverage Ratio (LCR) as part of the Capital Requirements Directive (CRD-IV).  CRD-IV is the implementation of Basel III recommendations at the EU level.  We lay out a theory of liquidity, critique the EBA’s proposed analysis in light of our theory, and offer some quantitative measures of theoretical aspects of liquidity not covered by the EBA.  We find that gold performs very well on the “correlation of price with need to sell” measure of liquidity and comparably to equities and fixed income on relative spread measures.  We also discuss why we believe gold would perform very well on the “diversity of asset holders” aspect of liquidity.  Taken as a whole, our research argues that to ignore certain key aspects of liquidity currently not covered by the proposed EBA assessment would bias the assessment against gold and potentially render the LCR inadequate in assuring liquidity in times of financial stress.

06/03/2013 - Transfer of the Consumer Credit Regime: Costs and Firm Behaviour

The UK Government intends to transfer responsibility for the regulation of consumer credit from the Office of Fair Trading to the Financial Conduct Authority. Europe Economics has worked in collaboration with Policis to understand the implications of the new regime.  This report contains Europe Economics’ analysis of the impacts on the incremental costs of compliance and the impact of these cost changes on expected firm behaviour.