Brussels has been working on the Capital Markets Union for years, but not much has happened so far. The bosses are now getting involved because of urgently needed money for Europe’s change.
Plans to merge European capital and financial markets could be making progress after years without much progress. As can be seen from a draft final declaration of a summit of EU heads of state and government in Brussels on Wednesday and this Thursday, the development of cross-border investment and savings products is to be accelerated, among other things.
The background to the capital markets union plans is, among other things, that around 300 billion euros in savings of European citizens are diverted abroad every year – primarily to the USA. This emerges from a special report by former Italian Prime Minister Enrico Letta, which will be discussed at the summit. The EU wants more small investors to invest in the local financial markets so that more capital is available for the green and digital transformation.
Letta’s report goes on to say that all energy must be put into providing financial support for the transformation. The first priority must be to mobilize more money from private individuals and companies. According to the report, there are 33 trillion euros in private savings in the EU – mostly in cash and deposits. “However, this wealth is not being used to its full extent to meet the EU’s strategic needs,” it continued.
According to the draft final declaration, the general financial knowledge of citizens should also be strengthened. The hope is that those who have more knowledge and know-how are more likely to invest. A survey by the EU Commission last summer showed that only one in two people in the EU had average financial knowledge. The survey also revealed a gender gap between men and women.
It was unclear until Thursday whether the 27 EU countries could agree on a common position on two main points of contention. This involves plans for the harmonization of national rules for corporate insolvencies and improved central supervision of the capital markets in the EU. France, for example, wants a stronger role for the European Securities and Markets Authority (ESMA), based in Paris. In his report, Letta also advocates a gradual expansion of the authority’s powers. Chancellor Olaf Scholz (SPD) recently appeared willing to compromise on this issue after Germany’s previous reluctance, while Federal Finance Minister Christian Lindner is considered an opponent.
Source: Stern
