In his report on the future of European competitiveness, published on Monday 9 September (see other news), the former President of the European Central Bank, Mario Draghi, calls on the European Union to establish a genuine Capital Markets Union (CMU) to stimulate large-scale private and public investment.
Although the European Commission has already launched a number of measures aimed at making the CMU a reality, and a certain “political momentum” has emerged in recent months (see EUROPE 13474/11) (see EUROPE 13409/3), Mario Draghi highlights three main obstacles that still stand in the way: the absence of a single authority to regulate securities markets, divergences in tax and insolvency regimes, and the under-utilisation of long-term pension funds.
“In 2022, the level of pension assets in the EU was only 32% of GDP while in the US total assets amounted to 142% of GDP and in the UK to 100%”, points out Mr Draghi, illustrating the heavy dependence of European households on public social security systems.
He also points out that the concentration of these pension assets in a limited number of Member States - principally the Netherlands, Denmark and Sweden - considerably limits the EU’s ability to direct savings towards long-term productive investment. To overcome this obstacle, Mr Draghi is recommending the development of private pension schemes in all Member States in order to better channel funds into the financial markets.
The former Italian Prime Minister also insists on the need to transform the European Securities and Markets Authority (ESMA) into a truly single regulator, on the model of the US Securities and Exchange Commission (SEC). “An essential step in transforming ESMA is to modify its governance and decision-making processes along the same lines as those of the ECB’s Governing Council, detaching them as far as possible from the national interests of the EU Member States”, Mr Draghi recommends.
Finally, he calls for a revival of the securitisation market in order to increase banks’ financing capacity, and invites the European Commission to propose a review of prudential requirements for securitised assets. He also suggests the creation of a dedicated platform, supported by the public sector, to stimulate this market and facilitate access to finance.
See the report: https://aeur.eu/f/dcw (Original version in French by Bernard Denuit)