Online keynote speech by Commissioner Albuquerque at the European Capital Markets Forum – Warsaw Stock
European Capital Markets Forum – Warsaw Stock Exchange
Good morning, everyone.
I am very grateful for the opportunity to speak to you today.
Unfortunately, not in person this time, though I am pleased to contribute to the discussion remotely.
A big thanks to the Warsaw Stock Exchange for the invitation.
This is a pivotal year for Poland and the wider European community, as the Polish Council Presidency is now in full flow.
I am encouraged by the momentum and energy that this Presidency has generated, and I'm sure that the results achieved will be quite significant.
It would be remiss of me not to mention the geopolitical context that we are facing, with war close to our borders.
Security and defence are understandably critical priorities for this Presidency, as well as strengthening European Competitiveness, and I believe financial services have a vital role to play in supporting these goals.
As we work to incentivise private investment, I see even greater opportunities to strengthen our collective resilience in the future.
But there are steps we need to take to get there.
Last summer, Commission President Von der Leyen shared her vision for a Savings and Investments Union. This vision is centred on building household wealth and supporting European innovation.
I share this vision.
And indeed, I will soon come forward with a communication on the Savings and Investments Union.
This will include areas that have a clear link to boosting competitiveness of the EU economy.
For example: mobilising savings more effectively, making more investments available for EU companies, fostering greater market integration, and increasing the efficiency and consistency of supervision while reducing the burden on companies.
Within the Commission we are actively working on the issues we need to address. Time is of the essence.
Mainstreaming burden reduction must underpin any strategy to revive growth and competitiveness
This is a fundamental consideration for us.
Burden reduction is critical to unlocking competitiveness, along with decisive action in other fronts.
At the end of February, the Commission expects to present a first proposal on simplification and burden reduction (the so called “omnibus proposal”).
The proposal will cover certain rules in corporate reporting, mainly related to sustainability policy.
But it will not be limited to this.
We are looking into all angles, from adjustments to scope, postponements and other simplification measures. It includes looking at issues around value chain reporting and around sector-specific standards.
This exercise includes as well looking at other simplification tools, those that we can deploy without EU legislation – and in particular, those that the Member States can deliver themselves.
All measures proposed will bring real alleviations, while keeping the underlying policy objectives intact.
However, while we pursue a burden reduction agenda, we will not risk financial stability, and we will not roll back on investor protection.
That balance between reducing burdens and safeguarding stability is essential as we look to the bigger picture of the Savings and Investments Union.
And my view of this project is quite simple: I want European savers to earn a fair return on their savings.
And I want European businesses and innovators to have the funding they need to drive our economy forward. But we're not there yet.
We continue to face long-standing challenges. Among the most obvious is the fact that tax and insolvency regimes vary greatly between member states.
Which highlights how progress can only be achieved by working together.
We need unity, and we need action. I am glad to see more political momentum behind the project.
It gives us the opportunity to reset, and to refocus, to build on what we have achieved and make it grow.
We need to take this opportunity, all of us, the Commission, Member States, the European Parliament, and Industry.
Time is against us, and Europe's investment needs are only increasing.
Let me now outline where we need to see progress.
Firstly, across Europe, we have varying implementation of the same rules.
This prevents us from having a True single market for capital. And this has to change.
I realise that some areas are more difficult to harmonise than others. For example, civil, company, and labour laws.
But this makes it all the more important that we make progress where we can.
The potential for further alignment and efficiency gains is still significant in the financial space.
The varying implementation of rules across Europe makes it much more difficult for firms to operate across borders.
Our Single Market is key to European competitiveness, but it is not yet fully developed.
We need to keep building momentum to ensure that we are getting the most out of it.
This will allow our companies, especially small and medium sized companies, to scale up and to benefit from a larger market.
Essentially, our collective focus must be to make doing business easier and faster in Europe.
As well as a more integrated Single Market, we also need deeper and more liquid financial markets.
Liquidity is the lifeblood of any financial market. Without it, investors will be less confident, companies will face higher costs of capital, and all participants will experience less reliable pricing of assets and higher volatility in the market.
All too often these days, exciting investment opportunities are leaving Europe. Increasingly, companies are opting to list on foreign exchanges.
Similarly, European investors are increasingly drawn to other markets with more attractive dynamics and higher returns.
And that is understandable, and their access to good investment opportunities should be unfettered. But it also leads to liquidity on EU markets drying up. And that presents a collective challenge for us all.
Last summer, in her Political Guidelines, the Commission President highlighted a striking figure: every year, 300 billion euros in savings flow out of Europe and into foreign markets.
This outflow represents a missed opportunity to support Europe's industries and drive growth and jobs at home.
I aim to make European capital markets more attractive, more efficient, and more competitive, while always safeguarding investors.
A first step will be to develop a more diverse and vibrant financial ecosystem.
We need to grow our investor base, and I will be exploring all opportunities.
Among other areas, I will be looking to increase the attractiveness of risk capital and to scale up investment funds and institutional investors.
We will also be looking at opportunities to bring more retail investors into the market.
This includes a greater emphasis on financial education, with the aim to adopt an equity (and educated risk taking) investment culture in Europe.
We also have to think about the functionality of the market. And we will be looking to deepen the integration, interoperability, and consolidation of financial market infrastructure.
Post-trading is crucially important to a well-functioning market, and we have to make sure that these processes are running efficiently.
As our markets develop, we will need to ensure that investment can flow seamlessly throughout the Union.
The Commission President has made it clear: this mandate will have a strong focus on competitiveness and investment.
To achieve these goals, in line with our green, digital, and social commitments, we must unlock the financing needed to make them a reality.
This requires more private capital, and that capital must be able to flow seamlessly across borders.
Our innovators should not be forced to look outside Europe for financing.
They should be able to find what they need to grow at home.
However, differences in regulatory requirements, taxation, and market practices do create barriers to internal market cross-border investment.
Many ideas have been put forward recently to create a truly integrated market for capital in Europe. Including: unifying supervision to ensure a level playing field; upgrading our securitisation framework to facilitate more efficient investment; improving pension schemes to help achieve better returns and to provide a stable source of long-term capital; and simplifying the retail investment experience to make it easier for individuals to participate in the market.
Let me be clear: this is not solely an EU-level exercise.
Many of the issues we face, such as pensions, are deeply rooted in the social fabric of our Member States.
To make meaningful progress, we will need the full buy-in and expertise of Member States to ensure any adjustments truly succeed.
And meaningful results can be expected only when Member States are prepared to act in a coordinated manner.
Let me take a moment to focus on the fragmentation that exists within EU financial market infrastructure.
The European Securities and Markets Authority has looked at such fragmentation with its recent report on cross border settlement.
The report reveals that most Central Securities Depositories, or CSDs as they are known, have minimal involvement in cross-border transactions.
However, there are some good examples out there of improvement and coordination.
For example, I am aware of an initiative of the Warsaw Stock Exchange and other exchanges in the region building links between their CSDs to enable dual listings and bring about more integration.
For me, this is a step in the right direction.
More harmonisation and interoperability within the system of our capital market infrastructures could unlock significant synergies and efficiency gains.
Removing the barriers to cross border investment would give investors more attractive investment opportunities…
…and would ensure that European companies have the financing they need to grow and succeed.
And these are the two main goals when it comes to the Savings and Investments Union.
The way to get there, and encompassing some of my earlier points, is the need for more financial market integration.
This is essential for European capital markets, and it is essential for Europe.
More financial integration will: give us more free flowing capital, make our markets more efficient, reduce costs, and enhance our European competitiveness.
We have to take as broad a view as possible of financial market integration.
Over the next five years we will strive to achieve a more connected capital and banking market, as well as more integration within financial markets and within financial market infrastructures.
I have spent a lot of time now discussing what the Savings and Investments is, but I should also briefly mention what it is not.
This project is not about creating one big centralised market.
It's important to mention that the Savings and Investments Union is not mutually exclusive to a vibrant local, regional, or national market.
On the contrary, in fact.
To be able to compete on the global scale, we have to first get things right locally.
A thriving EU financial ecosystem includes flourishing local markets.
And progress can and should be achieved in both simultaneously.
Proportionality and subsidiarity will be embedded into our Savings and Investments Union.
However, coordination between Member States will be key to ensure that national progress does not hold back progress elsewhere.
Success at the local and EU level would give us the necessary scale to compete globally, to the benefit of both citizens and businesses.
Of course, taking steps to achieve our goals will require political courage.
And I have no illusions about the challenge this will pose, both from a technical and political point of view.
But we are at a pivotal moment in Europe's history, and I am convinced that this is the way forward.
I encourage you today to be bold and ambitious in your discussions.
Ask the difficult questions.
Challenge each other.
These are opportunities to spark new ideas and to find common ground.
A stronger, secure and more connected Europe will require joined-up thinking and a shared vision of our potential.
There is no time to waste, we have to move forward.
Thank you, and I look forward to meeting you in person when I visit your wonderful country.