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May 17, 2018

The EC Vice President Valdis Dombrovskis discussed the ongoing work in the areas of Banking Union and Capital Markets Union, while speaking at the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels. He started with a brief on the recent work done on Banking Union, before moving on to discuss the key dimensions of the Capital Markets Union and the ongoing work toward sustainable finance.

As per Mr. Dombrovskis, with respect to the Capital Markets Union, out of the 13 legislative proposals tabled so far, ten are still waiting to be adopted by co-legislators. Therefore, there is a need to accelerate the work to get these proposals “past the finish line before the next European elections.” Two months ago, EC presented several more proposals to promote EU-wide products, including a new EU license for crowdfunding platforms, common EU rules for covered bonds, and measures to reduce barriers to the cross-border distribution of investment funds. Next week, EC will supplement this list with a legislative proposal to enable the market-led development of sovereign bond-backed securities, or SBBS. With its Call for Evidence, EC had identified measures to simplify rules and reduce the regulatory burden on companies, also incorporating these into the upcoming legislation. Next week, EC will also propose more proportionate rules for small and medium enterprises (SMEs) to list and issue on SME Growth Markets. SMEs are the backbone of the European economy, so the Capital Markets Union cannot be built without them.

In the area of sustainable and green finance, EC will present the first batch of the following four proposals next week:

  • First, EC will start the process of designing an EU-wide classification system for sustainable economic activities. This will also help to define criteria for future EU standards and labels for green financial products, such as green bonds or investment funds.
  • Second, it will propose to outline how those who manage investments on behalf of others should disclose how they incorporate sustainability into their procedures.
  • Third, it will propose to create new categories of benchmarks that give investors greater information on a portfolio's carbon footprint.
  • Finally, EC will propose that investment firms and insurance distributors consider the sustainability preferences of each client when giving investment advice.

He added that the Sustainable Finance Action Plan from March of this year contains six further actions that EC will take between now and the end of this mandate. In particular, EC supports Peter Simon's proposals for a Green Supporting Factor to boost green investments and loans and for better integrating sustainability into the risk management of banks. EC stands ready to provide all necessary support to identify the most prudentially sound way of implementing these proposals, said the EC Vice President.

 

Related Link: Speech

Keywords: Europe, EU, Banking, Securities, Capital Markets Union, Banking Union, Proportionality, Sustainable Finance, SBBS, EC

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