Financial Services Ireland (FSI) Annual Lunch
It's a pleasure to be here today.
Thank you for those remarks. Particularly around women in finance.
Because two things really matter to me.
One is the diversity issue because even when it comes to knowledge about finance, women are far behind men, and don't talk about money in the way that men do.
And that needs to change.
And also, the visibility of women in finance.
It's definitely better, we're getting there.
But it's strange that as long as the European Union has existed and in the European Commission, and somebody looking after finance, I'm the first women to hold that brief.
That's interesting. I'm sure somebody will do an analysis on it.
I could talk about many things, and I had great conversations about fraud – it's everywhere, sustainable finance, cybersecurity, AI.
But my message is quite focused. It's focused because the posters are up, as you can see all over Dublin and elsewhere.
So a new European Parliament will be elected in early June.
There will be a new European Commission installed towards the end of the year.
And I think it's a good time to reflect on what's been happening up to now over the life of this Commission and what's likely to come.
It's safe to say that this Commission has gone through a period of crisis management almost from day one.
We had Covid, we've had the ongoing illegal invasion of Ukraine by Russia and we have the horrible ongoing humanitarian crisis in Gaza, which on a day-by-day basis is horrific – the loss of innocent lives there.
And Europe's involved in all of this, but I think on a wider level the world is involved in all of this.
The world has become a more difficult, more fragmented place because of those crises, and indeed others as well.
We face in Europe supply chain disruptions, an energy crisis, a cost-of-living crisis.
And we are concerned that growth in Europe is sluggish, and that Europe's competitiveness needs to be improved significantly.
And that needs enormous investment to deal with those deep challenges that lie ahead.
Many of you know that Mario Draghi who is to produce a report on EU competitiveness that will come after European elections.
But he has already said that in order for Europe to meet these green and digital transitions we will need to invest €500 billion a year to get there, and where will that money come from?
He also warns that the three pillars the EU has relied on – energy from Russia, exports from China, and the US defence apparatus – are no longer as solid as before.
That has implications for Europe and it has implications for Ireland.
And again, Draghi rightly stresses that private investment will have to cover most of this investment gap identified, because public money will simply not be enough.
The single market is at the core of what makes Europe tick – so it's four freedoms we talk about: free movement of people, goods, services and capital.
But the truth is, today, we have three freedoms that kind of work better than most, and one that is not working at all, and that is the free movement of capital.
It's still an aspiration. It's not a reality.
We do need to complete Banking Union and Capital Markets Union.
I know one or two of you in the room are a bit frightened about that, but this is the harsh message and this is the reality.
Because up to date, and quite frankly, we have a lot of lip service paid to Capital Markets Union and Banking Union, and that has to change.
If you look at what the single market delivers now, and that's without its full completion, there's an additional 8-9 percent to GDP because we have the single market.
Europe's single market accounts for 15 percent of global GDP.
And our companies benefit from lower trading costs, competition and innovation.
The Single European Payments Area allows for payments in euro across the single market.
This is really good for citizens and businesses, especially those who are innovating in the field of payments, and there's huge innovation in that space.
The recently adopted Instant Payments Regulation will make instant payments the norm.
Again, good for consumers, for businesses and for payment innovators who want to harness the benefits of the single market and scale up right across the EU.
Under these new rules, as you know, the charges for instant credit transfers, if any, cannot be higher than a standard credit transfer in euro.
Now we actually had to legislate for instant payments because the market was not delivering, even though the technology to allow for such payments has existed for some time.
So, sometimes you do have to nudge the market into action.
It will take a great deal more than a nudge, including nudging Member States, to complete the Banking Union and Capital Markets Union.
Today, capital markets are fragmented. Our banking structures are very national. In fact, in my view more national than they were before the crisis.
So we have some work to do.
Companies in Europe get most of their financing from banks.
And banks will continue to play an important role, particularly for SMEs.
Europe has many, many young, innovative companies.
And they have some very promising business models and huge growth potential.
And they are key drivers for growth and competitiveness.
On average, these companies see higher investment levels than older companies, they foster innovation and generate spill-over effects that benefit wider society.
So we do have a lot of very exciting start-ups in Europe – comparable to the US.
And here is the big but, and I think this is a real dilemma and something Europe has to tackle.
We lag behind when it comes to the supporting the scale-up and growth of these companies.
The EU has a significantly lower number of technology scale-ups than the US or indeed China.
A major barrier is the difficult financing conditions that these companies face in Europe.
For most young, innovative companies, bank loans are not the best option – indeed if they're an option at all.
Banks might not lend to them if they don't often have established revenue streams and they have little tangible collateral.
So they need equity capital.
And again, the EU lags behind on venture capital.
Our promising start-ups end up being owned or co-owned by funds outside the EU.
This reliance on foreign venture capital makes it more likely that these EU companies will list on non-EU stock markets or indeed be bought by non-EU entities.
Ultimately, entire EU companies relocate away from Europe – taking growth and jobs with them when they move.
We need to provide better financing conditions for EU companies, and we need to foster European competitiveness.
I want to focus on a report, just last month, from former Italian Prime Minister Enrico Letta.
He published the report on the future of the single market – many of you will be aware of it.
And again, nothing starkly new, but importantly he said that the importance of the single market for capital to finance the EU's strategic goals.
And some statistics.
There is around €33 trillion of private savings in the EU, held in currency and deposits.
Every year €300 billion of household savings are diverted abroad, mainly to the US economy.
His report recommended a Savings and Investment Union based on fully integrated financial services within the single market.
With pan-EU investment products, consolidation of the banking sector, and more harmonised rules.
Very ambitious, but important.
We've done a lot of work already in the Commission.
And many of you will be familiar with what we have already proposed and indeed what's coming through the process.
What's positive is that our leaders, at the highest levels are focused now on how we can finance these transitions, green and digital.
So they're focused on Capital Markets Union.
Under the leadership of Minister Paschal Donohue, head of the Eurogroup, he has done a lot of work there on focusing minds on how we make tangible progress on CMU.
Because very often the conversation is ‘we can't do that' or ‘we can't do it now,' or ‘we can't do it yet,' or ‘they can do it but we can't'.
Europe will not make progress unless we change that narrative and do it very quickly.
So we have done things like the European Single Access Point, the consolidated tape, the new Listing Act – all designed to make access to capital markets easier and to ease the burden for businesses large and small.
But very importantly, Capital Markets Union is not just about companies.
It is also about giving each and every one of us, citizens of Europe, an opportunity to make their money work for them.
Because as I mentioned in those figures, a lot of money just sits on deposit in accounts and isn't earning what it could if it were invested in ways that deliver returns.
So we want to make the EU an attractive place for people to invest their savings in the long-term.
And some will know just last year we adopted the Retail Investment Strategy – it was a difficult birth, but we eventually delivered the strategy.
The idea was to encourage more retail investment and help citizens invest for their future.
The truth is, despite our sophistication in Europe, when it comes to financial literacy skills, young and old, men, and women, don't have strong financial literacy skills.
And indeed, within that group, women and younger people are particularly low when it comes to knowing how money works and how it can work for them.
So we worked with the OECD. We rolled out two frameworks around financial competence.
And we're encouraging Member States, and they are taking this up.
And I've been really encouraged that the finance ministers – next week we'll see conclusions coming forward around this very topic of financial literacy, also taking into account digital skills.
Because ever more finance is and will be digital.
As I've said, we've done an awful lot within the Commission to try and advance Capital Markets Union.
But I will be very honest, it is really disappointing to see how low the level of ambition is of Member States when it comes to negotiating pieces of legislation.
One I mention is the harmonising key areas of insolvency proceedings. This is unfinished business.
Today we have 27 different sets of insolvency laws: not easy for anyone to navigate.
And it has been consistently pointed that this is a big barrier to a more integrated EU capital market.
Now a year and half ago, I was on a podium announcing this proposal to harmonise targeted areas of insolvency proceedings, including simplifying proceedings for micro-enterprises and more harmonised procedures for all companies.
And again, what? We are still waiting on the Member States and the European Parliament to adopt their positions and to come to an agreement on this proposal.
I live in hope for the next mandate.
That those who will be elected and those who are appointed – both the Commission and those elected to Parliament – will seize this opportunity and not find more reasons to delay.
Because the delay is also far too long.
I won't even go into withholding tax – you mentioned that already.
This is another area where we have proposals and more needs to be done.
As we need to do more on pensions, and I know that there is auto-enrolment coming to Ireland very soon.
And it's also an opportunity to have a conversation around pensions.
For a younger generation who may have to contribute more if they don't start early.
These are conversations that we need to have in every office, in every factory, in every home – so that money becomes central, not so much for money's sake, but for the sake of the security of families and of society.
And one of the points I always make, in almost every speech, is that when we have people that are more savvy with money, that helps people that are disadvantaged with money, because they often have less to go around.
And they need indeed more skills. And their families would benefit from it, and society would be the better of it.
So you as a gathering in financial services can contribute enormously to society, by encouraging us all to upskill when it comes to finance.
And I know many of you are already very engaged in that, and that needs to continue.
We have done work a pan-European product, so we have the Pan-European Personal Pension, the PEPP.
It just hasn't lived up to our expectations and it does need to be revisited.
But more generally, there is renewed political momentum and that will lead to an opening for the next Commission to find new and further ways to channel EU households' savings into investments.
It is possible to do it, and we may have the conversations around the table around this, but it does need positive political leadership and strong action.
A topic that came up in my hearing way back in 2020 was securitisation.
I think we need to start talking about securitisation again.
This would allow the freeing up of bank balance sheets – allowing them lend more to companies and households.
And this offers another asset to investors to invest in.
A single market for capital needs another thing: single supervision.
This will not be pleasing to the ears of some in the room, but it is my absolute conviction.
We can't really have a single market with 27 different supervisors.
You need single supervision. Whether it comes all at once, or is staged, we can have that conversation.
And I definitely support the comments of the President of the ECB, Christine Lagarde, in that respect where she has called for EU-level supervision.
So, where do Banking Union and Capital Markets Union link? Where do they complement each other?
They're both very difficult to make progress on, but they're both very much central to Europe's ambition and success in the decades ahead.
And frankly, if we don't grasp these now, we will just be more and more sluggish, our competitiveness will be impacted.
So I don't think we have a choice.
We have to grasp the nettle that might be difficult for some.
Both these projects address fragmentation in the single market for financial services.
And again, during the mandate of this Commission, we have advanced – now the word slowly needs to be said – slowly, very slowly towards completing the Banking Union.
And I'll give you one statistic.
One of the pieces of legislation, the European Deposit Insurance Scheme, was proposed by the European Commission back in 2015, when I was still an MEP.
And guess when we got the vote in the ECON committee? It was last month.
But that's good. I mean I really salute those in the ECON committee who pushed this to give something to work on.
But it gives you an example of what people say we need and what people are willing to do in order for us to get there don't always meet in the middle.
So we made some progress on Banking Union.
We've also a proposal on revising the crisis management and deposit insurance framework.
About what we do, and making sure all banks are covered in resolution. And this is to protect taxpayers and financial stability. There are negotiations ongoing.
So I think those things will, I hope, with the new Parliament and Commission, continue to be negotiated – and quickly rather than slowly.
And I think with a complete Banking Union it will help us develop this truly integrated EU capital market.
These two, as I said, go absolutely hand-in-hand.
But one thing just before I finish, because I haven't mentioned the issue of financial stability.
Just to bring you up to speed, while we're working on all these really important initiatives, we don't lose sight of financial stability.
So this month, the Commission will launch a public consultation on macro-prudential tools for non-bank financial intermediation – the NBFIs.
The consultation will include questions on potential ways to increase the resilience of EU money market funds.
In July last year we published a report.
Generally, we found that EU money market funds were successful in withstanding these episodes of market stress. So that's a plus.
But the report also identified some vulnerabilities that might warrant further attention.
Again, this will be a job for the next Commission to decide on.
So we are in a very fast-changing, with digitalisation and indeed geopolitics, context.
Some of the old reliables that Europe always thought would be there are gone.
There's much more uncertainty and that will lead to greater instability.
And therefore the strength of the financial system must be central to all our work.
The single market is Europe's strongest asset.
I know Ibec believe in that very passionately and I look forward to seeing your manifesto.
So we do need to make sure that the work we have seen through and to come allows the financial sector to respond to all of these evolving needs.
So that your sector can support a thriving single market, where innovation happens and ultimately, where we secure the EU's global competitiveness.
I mentioned at the outset European Parliament elections.
It's the first time in twenty years my posters have not been on the poles, how glorious is that?
Bit of nostalgia for it but wish everyone well who's standing for election.
But I recall – and maybe some of you have heard this already at other previous events – that in the four European election campaigns I fought and I won, nobody ever asked me about Banking Union and Capital Markets Union.
Strange that. One wonders why.
But I think maybe that's the kernel of our problem.
We failed to make these topics central to the lives of citizens and businesses.
Because of the jargon.
And I use a lot of jargon myself. But I also use very plain language when I'm speaking.
But what they do ask – what businesses and citizens say to me is, “why can't I borrow money, in Belgium, or in France, or in Italy? Why is it so difficult?”
Why indeed? And the answer is because we haven't had enough political commitment to finalise Banking Union and Capital Markets Union.
So I hope some of you ask that question when you're out and about engaging candidates, what they're going to do about CMU and Banking Union.
Some of you may not want us to advance in the way we're going but I'm sure I'll hear about that regardless.
And who knows maybe in the 2029 European election campaign we will be talking about what we did to achieve free movement of capital.
That we completed the four freedoms – Banking Union and Capital Markets Union – and in 2029 we are enjoying all the benefits that flow from that.
I don't want to contemplate the EU in 2029, if we are still talking about CMU and Banking Union.
And I would urge you as leaders in this space to get to grips with it, to identify where you have concerns, and try and lead politicians and others beyond narrow national interests.
Now I know national interests are really important. But they can't really stop progress.
And we have to find ways of encouraging Member States to see beyond the here and now.
And to work to create something stronger, something better.
That allows us invest in all of these more sustainable ways of economic sustainability, finance sustainability and environment delivery.
And we all have a part to play in that.
So that's what you can say to those canvassing for your vote. And you can say that I said that I sent you.
Thank you very much, enjoy the rest of your day.
| Zařazeno | po 13.05.2024 16:05:00 |
|---|---|
| Zdroj | Evropská komise en |
| Originál | ec.europa.eu/commission/presscorner/api/documents?reference=SPEECH/24/2574&language=en |
| lang | en |
| guid | /SPEECH/24/2574/ |
