The President of the European Central Bank (ECB), Christine Lagarde, urged the European Union on Tuesday 29 June to launch “a ‘green’ capital markets union” to finance the ecological and digital transitions.
We need to match the Next Generation EU post-pandemic Recovery Plan with “a truly green European capital market that transcends national borders”, Ms Lagarde told the Brussels Economic Forum.
Noting the capacity of the non-banking industry to innovate in the creation of financial instruments, she recalled that 60% of ‘green’ bonds, both senior and unsecured, had been issued in the EU in 2020, a market that has grown eightfold since 2015. The former IMF Director also noted that the euro is the most widely used international currency in sustainable finance, accounting for 50% of all ‘green’ bonds issued last year.
While finalising the Capital Markets Union (CMU) will take time, Ms Lagarde believes that building a ‘green’ CMU will be quicker because of the pan-European scale already practiced for this market segment. To accelerate this process, she called for European supervision of sustainable finance products through standardisation, harmonisation of tax treatment of these products, and convergence of national insolvency regimes.
At the beginning of July, the Commission is expected to propose the definition of a voluntary European standard on ‘green’ bonds (see EUROPE 12745/8). (Original version in French by Mathieu Bion)