Eurogroup: reactions to the French appeal on the Capital Markets Union

At the informal Eurogroup on Friday, February 23 in Ghent, Flanders, the main players promptly reacted to the call made by the French Economic MinisterBruno Le Maire on the need to proceed voluntarily towards the Capital Markets Union.

Three proposals were made: voluntary EU supervision exercised by ESMA, the launch of a voluntary EU savings product, and common 'voluntary securitization'.

EU Lagging Behind the United States and China

In support of his call, the French Minister emphasized in Ghent that the Union needs substantial resources to grow in the coming years, being significantly behind the United States and China in terms of competitiveness in access to business financing and market liquidity. Despite the regulatory efforts, capital markets within the Union are not yet fully integrated.

President Donohoe's Caution

According to the President of the EurogroupPascal Donohoe, speaking at a press conference, it is "urgent to act" to complete the Capital Markets Union "and I believe this is a broad part of the puzzle we need to solve regarding how Europe can find the investments it needs to maintain its place in the world. I will discuss with Bruno Le Maire in the next two weeks the specific issues he raised to see if we can identify the way forward on these topics."

Lindner: Moving Forward with All 27 on Board

Le Maire's proposal in Ghent on Friday caused friction with another European superpower, Germany, as the counterpart Economic MinisterChristian Lindner hastened to declare that progress should be made, indeed, but with all 27 on board.

Lagarde and Gentiloni: "Ambitious" Ambition Needed with "Urgency" for the Capital Markets Union

The President of the ECBChristine Lagarde at a press conference in Ghent emphasized, outlining the capitals required for integration in the coming years, the need for "ambitious" ambition needed with "urgency" for the Capital Markets Union.

According to Christine Lagarde, "800 billion per year will be needed in Europe from 2031 to meet the commitment of 90 percent reduction by 2040." "75 billion per year will be needed if all European countries maintain the Nato commitment of 2% of GDP in defense." "And 250 billion euros, about 1.8% of European GDP, is the net financial outflow leaving Europe to go to the rest of the world, mainly to the market of the United States."

In line with Le Maire's initiative, the EU Commissioner for the EconomyPaolo Gentiloni also expressed his support. "It is urgently necessary to be ambitious in advancing the Capital Markets Union in the next political cycle and to address the main challenges with ambitious actions. This is where I see the role of the Commission: in presenting sufficiently ambitious proposals and in contributing to achieving the unity that has been lacking so far," said the Commissioner.

Antonio De Chiara @euroeconomie.it