11 June 2012

Barnier: Financial regulation, growth, competitiveness, integration - Europe at a crossroads

The European framework for the prevention and management of banking crises is an integral part of the proposed ‘banking union’, on which we started work two-and-a-half years ago.

The aim is simple: to increase financial integration in the European Union with a view to strengthening the safeguards and the guarantee enjoyed by the people of Europe. In practice this involves several instruments:

• more integrated European supervision. We began to develop this with the three European supervisory authorities, which have been operational since 1 January 2011;
• common rules for all European banks. The idea is not to refuse to take national characteristics into account but to ensure that there is a core of common rules and that flexibility is used within a coordinated European framework;
• and a European system for protecting depositors: national deposit guarantee schemes (up to €100,000) already exist in all Member States. We need to pool these systems and form a network in order to strengthen the guarantees offered to all Europeans.

In the short term, we are in the process of putting in place a balanced policy mix comprising three components:

• budgetary consolidation;
• structural reforms at national level, with for example labour market reforms in several countries, and also at European level, thanks to modernisation of our internal market. The Single Market Act, adopted by the Commission in April 2011, sets out around 50 proposals to make life easier for our 500 million consumers and 23 million companies. Examples include simplification of the public procurement rules, especially for SMEs, and the creation of the unitary European patent, which would lead to a seven-fold reduction in the cost of protecting innovation in Europe. All of these measures should enter into force by the end of 2012. And we are already working on new measures for the autumn.
• the third component is activation of drivers for growth. There is an emerging consensus on increasing the financial capacity of the European Investment Bank, which lent €61 billion and supported 120,000 SMEs in 2011. We have also just launched the pilot phase of the project bond initiative with a view to financing transport, energy and telecommunications infrastructure. For 2012 and 2013, we will raise €230 million, which, thanks to the leverage of the EIB and the private sector, should allow up to €4.6 billion to be invested.

In the medium term, we need to create an effective competitiveness strategy for Europe.

If we want to counter the decline of industry, we need a European industrial strategy and a European vision. 60 years after the beginnings of European integration, which started with the pooling of coal and steel, it is time to think about new common investments, which should be targeted this time at information technologies, biotechnologies, transport and clean energy. To this end, we need to create the right conditions for innovation. I have already mentioned the unitary European patent. In December 2011, I also proposed the creation of a European framework for venture capital funds which invest in innovative SMEs.

Full speech

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