Graham Bishop launches a bold plan to explain how and why the current system of financial services regulation has come into existence across the EU.
Graham starts with brief comments on the origins of the European Union, and finish with some equally brief thoughts about what he can see in his crystal ball for the next decade.
However, there are some cloudy bits in the crystal ball because the EU faces the biggest threat to its functioning during its whole life:
Security:Russia on eastern border; Ukraine/Crimea
Refugees/migrants:Russia seems to be at the root of the sudden surge – threatening the concept of the `free movement of people’ inevitably impacts the free movement of goods – the Single Market
Euro:well past the worst (except Greece but little risk of real contagion). But we need the benefits of painfully gained competitiveness to show through – to calm the political atmosphere.
· All underlines that the EU is essentially a political project to underpin the peace and security of its citizens so they can do their daily business unhindered by tariff barriers, border controls and “health & Safety” style requirements that are really nothing but protectionist barriers.
· Much achieved in last 3 decades since we moved to `qualified’ majority voting on the technical standards that embody the “non-tariff barriers”. But the beneficiaries of protectionism are tenacious in defending their vested interests – as you would expect!
· I believe strongly that “Fin Tech” will open up new opportunities to export financial services across borders but I also have no doubts ancient laws will be unearthed by the incumbents to impede incoming trade.
· The Singe Market will not be complete in the next decade or probably the one after... It is only the collective political will to create a truly competitive, single market that will make it happen. If that political will is lost, so is the Single Market and in reality a European Union that is an effective force.
· The nerve is being tested as never before. I believe it will hold.
Split remarks into four sections:
II: The Great Crash: Driving Current Developments
III: The EU Response unfolds
IV: The Crystal Ball: Opportunities to 2025
The Background section swiftly cover the origins of the European Union- dating from 1945 that created the political will to draw the states of Europe together in peace - and a prosperity created by bonds of trade between them. The abolition of tariff barriers made it clear that more was needed to have the famous `four freedoms’: free movement of people, goods, services and capital. Our industry is focussed on the last two. This section also covers how the current governance system came into being.
The Great Crash: In the `90s and early `00s, “the market rules” was the accepted wisdom. The capitalist impulse swept away the old statist ideas of national champions – to the enormous benefit of Europe. But it turned out that too many leading players had a moral compass that pointed solely to the lining of their own pockets – at the expense of customers, taxpayers and society. But the ethical failure was not just in the private sector and not just in Europe. So the response had to be on a global scale --- to match globalised markets… and it happened on an unprecedented scale.
The third section covers the EU’s response – as part of the global response. On the one hand, there was a tsunami of new regulations but – on the other hand - these had to be designed to integrate the European financial system so one state could not be played off against another. So now we have Banking Union (or much of it); we are starting down the road to Capital Markets Union (CMU) and – largely unseen – we have a de facto Consumers Union.
For the final section: Looking into the crystal ball for say the next decade? The European Union (and especially the Eurozone) – has set out a clear vision and road map. It is called the “Five Presidents’ Report”. The UK does not “do” political visions… but ignoring it will not stop it happening. There is a European Union and there is a euro – despite the disbelief of the British establishment at the time.
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© Graham Bishop
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