VP of EC on Working Toward Resilient and Integrated Financial Sector
During the structured dialog with the ECON Committee, the EC Vice President (VP) Valdis Dombrovskis discussed planned and ongoing work to make the financial sector in Europe more resilient and integrated. He also discussed the three key objectives of completing the Banking Union, including the framework for the banking sector; accelerating the building of a Capital Markets Union; and embracing new forms of finance, including fintech and sustainable finance.
Mr. Dombrovskis highlighted that the third pillar of the Banking Union—that is, European Deposit Insurance Scheme (EDIS)—is still missing. He noted, "We also need to accelerate the trend of reducing non-performing loans, and prevent the stock from building up again. Next spring, we will present a package of measures on this basis. Among other things, it will include a blueprint for national asset management companies, and possible prudential backstop measures for new loans that turn bad." Alongside the work for a safer banking sector, it must be ensured that rules governing derivatives markets are fit for purpose. Central counterparties, or CCPs, are now a systemic part of the financial sector and their importance is growing. Hence, three self-standing proposals have been presented on the derivatives markets to strengthen financial stability while avoiding undue fragmentation and costs.
With regard to the Capital Markets Union, he stated, "The Commission is working at full speed to create the right conditions for more funding to flow to the real economy. Brexit means the rest of the EU economy needs advanced capital markets more than ever." He also suggested working together to integrate the EU capital markets. One particular focus is to give consumers greater choice and better access to retail financial services, such as the proposal on pan-European personal pension product or PEPP; cross-border payment fees; and proposal (for early next year) to address obstacles to cross-border distribution of funds. Supervision is another focus area, with respect to which targeted changes to the tasks, governance, and funding of ESAs have been proposed. It needs to be ensured that ESAs are equipped to better promote supervisory convergence and to address new challenges and risks. In line with the principle of subsidiarity, expansion of direct EU supervision to certain targeted areas is also being proposed.
Finally, he examined the upcoming challenges and opportunities, such as the emergence of financial technology and sustainable finance. When it comes to financial technology, Europe is well-placed to become a global leader. This will require consistent regulation and appropriate supervision for fintechs to scale up across the single market. EC is working on a Fintech Action Plan for early next year. He concluded that a complete Banking Union, along with the Capital Markets Union, will help build the resilient and integrated financial system that citizens and businesses need.
Related Link: Speech
Keywords: Europe, EU, Banking, Securities, CCP, Banking Union, Capital Markets Union, EDIS, Fintech, Sustainable Finance, NPL, EC
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