17 May 2018

European Parliament: Speech by Vice-President Dombrovskis on Banking Union and Capital Markets Union

The Vice- President of the European Commission gave a speech at the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in which he outlined progress in the works to complete the banking union towards a full European Capital Markets Union.

The first step must be to finally reach agreement on the November 2016 Banking Package, to further reduce risks in our banking sector. I hope that likewise the work in this house will be soon concluded by Gunnar Hökmark and Peter Simon. Time is of the essence, as further delays might jeopardise our objective to reach political agreement before next year's elections.

Then, we need a common backstop for the Single Resolution Fund. This would reinforce confidence in the banking system and therefore actually make it less likely to be called on.

We also need clarity on a European Deposit Insurance Scheme. I am looking forward to the work of Esther De Lange and the shadow rapporteurs on developing possible compromises.

In March, we adopted a package on non-performing loans. They are one of the top risks in Europe's banking system today, even if their level has already been reduced significantly since the crisis. Our package combines several elements to help banks work out current high levels of NPLs, and prevent their accumulation in the future. I hope that work on substance on these proposals can soon start in this Committee.

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Let me now move to the Capital Markets Union. Together, we already made some achievements: on venture capital, on prospectuses, and on securitisation.

But out of 13 legislative proposals tabled so far, ten are still waiting to be adopted by co-legislators. So we need to accelerate our work to get those proposals past the finish line before the next European elections. The rapidly approaching exit of the United Kingdom from the single market only increases this urgency.

In particular, I would ask you to focus on three main dimensions of CMU:

First, we want consumers and investors to benefit fully from the single market thanks to EU-wide financial products.

One important example is last June's proposal on the Pan-European personal Pensions Product, or PEPP. I would like to thank rapporteur Sophie in’t Veld and the shadow rapporteurs for their commitment so far. And I count on you to get a Committee position on the file still before the summer break.

Just two months ago, we 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.

We also put forward a proposal to ensure that all Europeans can make cross-border payments in euros for the same price as a domestic payment. Our aim is to adopt each of these proposals within the current term, so I hope for your support to start work very quickly.  And from the Commission side, we are happy to provide any assistance needed.

Next week, we will supplement this list with a legislative proposal to enable the market-led development of sovereign bond-backed securities, or SBBS.  These securities could support further integration and diversification within Europe's financial sector, while also helping to weaken the bank-sovereign loop. Since these securities would be issued by market participants, they would not involve any mutualisation of risks and losses. And our proposal will not involve any changes in the regulatory treatment of sovereign debt either. 

The second dimension of focus is more consistent supervision of EU capital markets, so that rules are harmonised in practice, and not just on paper.

Here I would like to congratulate Danuta Hübner on the smooth adoption of the report on our proposal to strengthen the supervision of Central Counterparties. This is a welcome example of Parliament being ahead of the Council and showing Member States the way for compromise. And I am counting on the Parliament to play this leading role also in other files, as we are approaching the end of the legislature.

At the same time, this committee also adopted Werner Langen's report on the REFIT of EMIR. And earlier this year it approved Kay Swinburne and Jakob von Weizsäcker's report on CCP recovery and resolution. So I would like to thank all the rapporteurs for their hard work on these files.

We should also keep this momentum when looking at supervisory coordination in other areas, as with our proposal to review the functioning of the European Supervisory Authorities. We need to better equip the ESAs to promote supervisory convergence and to address new challenges. The Parliament has itself noted how important this is to underpin the development of the Capital Markets Union. So I am looking forward to your draft report, and I count on the co-rapporteurs to stick to the planned schedule, so we can reach a deal next year.

This brings me to the third focus, which is to remove barriers to deeper capital markets through clearer and simpler rules for companies.

With our Call for Evidence, we identified measures to simplify rules and reduce the regulatory burden on companies. And ever since, this has been incorporated into upcoming legislation. For example, next week, we will propose more proportionate rules for 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. [...]

Full speech

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