Uniting Europe’s Markets | Davos 2024 | World Economic Forum
well welcome uh everyone who’s here and
uh watching online this session on uh
uniting Europe’s markets and we are
focusing particularly on uniting
Europe’s Capital Market though I think
there’ll be other aspects that we’ll
touch on I mean it’s very striking I was
commenting some of the other speakers I
have a feeling of deja view around this
I’m sure I have done just such a panel
on a on a similar set of challenges
around Capital Market Union at some
point in the last few years you know the
European Union has achieved
extraordinary things in the last 15
years or so but if there’s one major
project that if anything has gone
backwards in that time it is the
development of a truly European Capital
Market you know the free movement of
capital was actually mentioned in the
Treaty of
Rome and the Capital Market Union
project was forly launched it’ll be 10
years ago this July and yet financial
integration in Europe is lower than it
was before the global financial crisis
and the Europe’s Bond markets and
Venture Capital are all dwarfed in scale
um by the US so we’re going to be trying
to kind of tease out I think not just
sort of a moaning about you know why we
haven’t got here but also uh you know
are they what are the key
obstacles where could progress be made
we may also mention whether
whether it should be the top priority
whether actually there are bigger things
to do to do with the single Market um
but anyway we have we have people
sitting on lots of different sides of
this Christine lagard obviously European
Central Bank president Pascal donu EUR
group president and expenditure minister
in Ireland Christian saving uh the
Deutsche Bank CEO uh Roloff B uh who’s
the managing partner for Europe in the
US for sooya and Nadia calino uh the
European investment Bank president so
thank you very much to all of you Madame
legard I must uh start with you uh you
know we have been talking about this for
a really long time yeah why do you think
the progress has been too slow and I
guess also what what for you what would
be the single priority that we could
press on in in the the 10y year
anniversary of this project well good
afternoon to everyone and Stephanie
you’re right it it has been a recurring
topic uh for many of us and esec
especially those of us who work on on
European integration I think uh
jeanclaude junker was the one who Pine
who sort of made that one of his key
project and that was already a long time
ago and a few things have changed uh but
it hasn’t progressed much and as you
said financial integration if anything
has uh been reduced over the course of
the last few
years so why do I think that we should
really mobilize our energies and and why
do I think that all of us around this uh
panel are convinced that we can actually
make progress and you have to not blame
anybody uh not try to nitpick and and
finger point um but ask yourself whether
there is a valid business case and an
opportunity to actually take it
further and then what you need to do is
to look at history and the circumstances
during which very large capital markets
such as the US very large Capital
markets such as the UK why did they
develop and were the circumstances that
justified it at the time that could be
taking place now and that’s what I think
personally so when you look back at the
US the Capital Market developed
massively as a result of the development
of the railroad across the country if
you look at that numbers it was late
19th century but the take of the takeoff
was clearly associated with railroad
development
and there was Bond emissions most of not
all most of it but a large part of which
was subscribed by
foreigners the same happens with the UK
and the municipal Capital Market grew to
about half the size of the government
debt Market I want to make it very uh
specific and it was related to
urbanization and the development of
building roads sewers Gas Works and all
the rest of it so what does that have to
do with our current circumstances plenty
of railroads plenty of Ste sewers uh and
infrastructure but what we have in front
of us now is what I call the
ddddd one of which is
decarbonization one of which is
digitalization and if I’m to believe the
numbers uh provided by the European
commission and I have no reason to doubt
them although they tend to increase over
the course of time it will cost no less
than 620 billion per year to actually
move the green transition further into
the hope of a clean energy environment
and a serious reduction of our CO2
emission and it will cost 120 billion
per year as well to develop the
digitalization that we need so if you
put these two numbers together I’ll
leave it to it do we have the money no
public not enough fiscal space for
that Banks I’m sure that Christian will
say that yes they can carry some of it
but it’s not enough so I contend that
there is actually circum a set of
circumstances that could fully justify
that we go over the many hurdles that we
have faced and that still exist in order
to put in place a capital market and I
would be happy to expand on what we
should do what method we should use
because I have some views on that having
gone through 15 years of trial and
errors fail failing uh to to achieve the
ultimate results and I think that
artificial intelligence can help so
Pascal donu you are head of the Euro
group Christine has has very uh
admirably kind of placed this on the
economics the economic case for Capital
Market Union you’ve stated it as a sort
of priority for the group how are you
going to pursue that in the next year so
if I could give the uh uh political side
of of the coin uh that Christine has
described very clearly uh when she
described the economics of it so
politically as a finance minister
working with other Finance ministers in
the EUR group uh so much of our effort
so much of our Focus has firstly been on
budgetary matters where Finance
ministers spend 95% of their time
looking at how much they’re taxing how
much they’re spending and how much they
are borrowing uh what little time has
has been available uh from dealing with
those waiting matters over the many
difficulties of the last years was then
devoted to banking issues to banking
Union during the global financial crisis
and in the aftermath of the financial
crisis building up and supporting our
institutions and making all of the
changes that were needed the benefits of
which I think we’ve seen in recent years
and I would contend actually that an
opportunity cost and a Justified
opportunity cost has been the political
focus on the need to build and deepen
our Capital markets uh has not been what
it could have been because other
priorities needed time and needed
economic and political Capital the
reason that is now changing is exactly
for the reason uh that Christine has
just outlined there what she summed up
very very clearly is we think about
Capital differently at moments of
economic transition and we are are
clearly at multiple moments of economic
transition exactly at the moment that
Finance ministers need to normalize
budget policy and reduce borrowing and
this has brought to the four the issue
that we are discussing here today in
terms of what change could look like
from a process point of view and I won’t
go into it too much because process
really makes compelling uh content um
they’re already here I mean you know
well still I want to keep the audience
in the room but I’ll still stum it up
quickly um Prime Ministers last March in
the European Council asked Finance
ministers to look at this project we’ve
been engaged in a number of different
processes and looking at us and it’s now
going to conclude in March where we are
going to say to the commission and to
the next Commission in particular these
are the areas that we want you to
consider we want you to act upon and we
believe as a group of Finance ministers
we can make progress on these matters
quickly and just as the president
outlined the different D there D’s of
the changes that are happening I think
there’s an ABC that we need to be aware
of what’s the architecture of capital
markets how can we change us and if we
change it what’s the be of what it can
mean to a business and what’s the see
critically as a politician of what it
can mean to Citizens and that’s the
areas that we want to make further
progress on on top of the gradual and
important change that the commission
have been making and they have been but
we’re all conscious that we have to do
more now and the time ahead so Christian
saing you’re sitting there at Deutsche
Bank does your heart leap when you hear
that this is now going to be a priority
uh do you see I mean is this something
that is ex remotely exciting to you or
actually just not a big deal for your
business well it’s super exciting for me
and and and and I mean if you have
followed me for the last 5 years I think
um I’m I’m one of the biggest um pushers
and fans of the European Capital markets
Union and um for for a couple of reasons
number
one Christine and and and Pascal both
said it I think we are coming into an
era over the next 10 years and and
forget about the banks from a corporate
industry where operating expenditure is
so to say replaced by a pro priority by
capital expenditures the number of
Investments which corporates have to do
in Europe in order to be in the game in
competition from a digital from a
sustainability ESG point of view is
tremendous and and and I think those
companies who are investing will be
successful those companies who are not
following on AI and ESG will not be
there anymore in 10 or 15 years and
therefore the the necessity to invest is
huge
we can’t do it as Christine is saying
even if I would love to do it and I
think by the way um the European banks
have done a tremendous job in cleaning
up being robust healthy sustainable
profitable the numbers Christine just
mentioned are impossible to stem for us
today unfortunately 70% of the financing
of the German middle stunt is done via
bank loans in the US it’s actually 25 or
30% the rest is coming from the capital
markets if you’re now think about how
much investments will be necessary in
the next years the bank balance sheets
as robust as they are will not be
sufficient and we also talked about the
public finances doesn’t work and
therefore we definitely need the
European Capital markets Union and
therefore I’m I’m really I think the one
who is again and again saying we need to
make
progress now two things to this number
one I think we need to do a better job
including the banks explaining why we
need these Capital markets I think that
in particular in Europe in my home
country there is also from the society
point of view still a kind of a distrust
in capital markets and that may go back
to the 2008 financial crisis and we can
criticize it but it doesn’t help we need
to do a better job in explaining why it
is actually necessary for keeping the
wealth and the prosperous situation
which we have in Europe and I think this
is one thing it’s education of the
people why it’s so necessary in order to
get Europe uh competitive and let it
stay
competitive and the next item is and and
I’m sure um our partner to the left will
will talk about
that when we think about European
Capital markets we think about kind of
the deep markets for um whether it’s
Equity insurances whether it’s Bond
inssurance but usually if you get a deep
Capital Market then the sidearms are
coming and what I mean with sidearms is
venture capital private Equity other
people other players are coming to to
the game and this is again necessary in
order to finance new technologies new
emerging Industries which are coming and
therefore I think we also need to see
the capital markets Union not only as
the financing port for traditional
Industries but actually as our chance to
attract new Industries like the tech
industry into Europe we have the talent
we have the we we have the Excellence if
you look at autom uh industrial AI some
German companies European companies are
leading in the world but we also need
then the underlying financing and
therefore my heart is leaping if I hear
that there we
go NAD calino I guess we can add you to
the list of people that also or the
European Investment Bank also can’t
afford to finance all of the things that
have been talked about but what role can
can the European Investment Bank play
yes two thoughts from my side to
complement what already has been shared
and I let me start where you where you
start started yourself which is this
feeling of deja vu now I was responsible
for financial regulation around the the
Euro crisis I left it in 2014 and by the
time we already had the clear diagnosis
that Capital Market Union was a top
priority and that we needed to move as
fast as possible in this direction 10
years later we still discussing you know
and and
um despite the fact that I I always
agree with with Pascal I think that we
can spend years discussing what the ABC
is and maybe it’s going to be more
difficult to reach an agreement on that
uh so my uh approach to this would be
let’s do it let’s start somewhere you
know and find some lwh hunging fruit or
some realistic element on which to start
it can be a market it can be an
instrument I will I will come back to
this in a second but an additional
reason to to Christine’s uh to why we
absolutely need it is that for the
climate transition
we need scale so we have the
Technologies we have wonderful startups
and companies that have developed the
technologies that are going to allow
Europe to succeed to rise up to the
challenge and we will and we can do it
but we need scale and so it’s not only a
matter of capital markets Union it’s
also a market of integration of our
markets and making Europe have the
sufficient scale for this to become
profitable and to become affordable
because as Pascal said these new techn
Oles cannot be only for Rich citizens or
for wealthiest States you know this this
transition needs to reach the whole
world uh and so I think that it is it is
of the essence and it’s urgent that we
actually proceed with this and this
brings me to my second point which is
what can the eiib do and as you know the
EI has uh I think been very successful
in becoming the climate Bank we fixed
ourselves a target of 50% of our
business in climate Finance we
outperformed this uh Target not only in
the bank but as a group together with
the European investment fund actually I
can tell you I mean we will be uh
disclosing the 2023 results next week in
detail but I can already tell you we’ve
made 49 billion EUR in green investment
in 23 up from uh 38 the previous year so
you know the progression is I think
outstanding it is impressive mhm and we
were also Pioneers since 2007 issuing uh
climate awareness bonds you know this is
the this is the Pioneer instrument of of
climate bonds and green bonds uh why
don’t we start there why don’t we try to
find an area a market where we have the
taxonomy Europe is in the lead in
developing these uh new instruments and
green Finance there’s a strong political
commitment to The Climate transition and
I think the eiib should indeed play its
role in being a catalyst uh Dr risking
Investments supporting Financial uh
sector also you know uh taking on new
instruments and trying to explore new
Financial engineering instu instruments
that can allow us to fund the necessary
Investments and mobilizing public and
private Partnerships which I think are
going to be necessary if we are to
succeed which we will thank you R of B
your sort of C sming at the end and um
I’m sure you’re very polite anyway but
you look like you’re being particularly
polite when you sort of have this
feeling that a lot of what people have
just talked about is completely
irrelevant to you I mean this is partly
this project is partly about having more
seoa sort of deeper sources of venture
capital as well as other sorts of
financing in Europe and I don’t get the
sense that any of this would sort of
fundamentally change the way you think
about Europe but maybe am I completely
wrong there uh that’s mixed firstly
thank thank you very much for having me
here I feel it’s an honor to be uh
invited here today you know it’s a qu we
back Founders that build early stage
companies uh and over the years we’ve
backed Apple Oracle Cisco uh Nvidia
Google PayPal YouTube Instagram WhatsApp
the list goes on so the companies we
back today account for 27% of the NASDAQ
when they were private companies so we
operate in a very different part of the
universe and candidly I’m kind of
daunted with the challenge that you face
because we deploy small amounts of money
in Founders who have a dream to build
for the future but I feel that in our
business Money Follows the opportunities
and so we’ve been active in Europe for
over a decade uh I remember in 2010 May
2010 I was introduced to a young company
in Copenhagen called Unity there were 30
people in the company and I hopped on a
plane and I flew to Copenhagen
immediately and we made an investment in
that company and today it’s a global
winner they have two billion in Revenue
it’s a big public company uh we did that
with uipath in Romania so from my point
of view there’s a a tremendous amount of
opportunity in Europe and we’ve we now
have people on the ground in Europe
looking for opportunities last year 11
of our 44 Investments were in Europe uh
we have a fantastic investment in a
company called robco in Germany uh
building robotic Solutions Penny Lane is
a software company in Paris we have an
early stage AI company called dust
that’s also based in Paris so I see
tremendous opportunity from the bottom
up with Founders who want to build for
the future and hopefully that becomes a
driver of economic growth but is Europe
just to get back is is Europe already a
single Market as far as you’re concerned
I mean is that what what are the do you
face any obstacles from our narrow point
of view from a capital Market point of
view it really is the same because we
can hop on a plane and go anywhere and
make an investment the challenges are
more from an operating point of view
where you know what the founders tell us
is they want easy access to deep pools
of talent so Penny Lane wants to
concentrate all the best talent it can
in Paris from wherever uh they want
predictable and consistent regulations
and they obviously want a large Market
opportunity but I’ll say the other thing
that’s changed about European Founders
by the way part of the reason we’re so
enthusiastic about being here is that
they have Global Ambitions I’ll be
honest when I first traveled to Europe
20 years ago I felt that Founders here
were aiming for small exits they they
were happy with an acquisition and now
they really dream
big your phrase Money Follows
opportunity rather than um the other way
around did I get the way around yes uh
it just makes you want I mean does are
we focusing on the wrong things I don’t
know who want wants to take it up on but
you know
Pascal should we be thinking more
concretely about the opportunities in
the broader economy and let the money
come to it but that’s what we are doing
and I completely agree with the analysis
you’ve just offered there regarding the
Outlook uh for European
entrepreneurs if I look at how we are
doing with our share of patents in
different very important parts of the
global economy and if I look at the
entrepreneurs that I meet in Ireland
alone uh their ambition their inov ation
You’ be very familiar with stripe course
you’ve invested in at the seat stage we
were the first invest you one of the
first supporters and now globally
successful company with
peers uh nowhere near that scale yet but
many peers who are as ambitious in
Ireland H and all over Europe to do that
all over again but it’s precisely
because now the appetite is there in the
European economy for that kind of
innovation with lead is able to do it
the question then becomes how can Europe
itself play a role in providing the
savings and the capital to contribute to
that and obviously ultimately to benefit
from it as well and uh to build on your
point it’s about making sure the money
is there to follow the opportunity and
not just which while of course we hugely
welcome it uh money coming in from other
parts of the world which played the role
in European companies growing to the
scale they are so it’s because of that
practical opportunity and need that
we’re all now devoting time to how we
can make it happen God knows it will
take time but in Europe uh we do move
slowly at times but we move carefully
over years and look back at the huge
progress we’ve made and that’s what we
need to do here now except occasionally
in the middle of a crisis where you move
really dramatically in a single night
and and of course what’s particularly
challenging about this uh opportunity
rather than a crisis is it’s an
opportunity
that moves gradually and then you look
at the huge change that’s happened in
the European economy that other parts of
the world have helped play a role in
funding and uh we just want to add to
that by European savings playing a role
So Christine lagard concretely what are
the steps that could be taken in
potentially a shorter time frame without
putting the whole edifice in
place I would argue that we don’t have
time to be slow this this time around
because the climate transition I is an
imperative and has to move fast so can
we Pascal is right we tend to move
slowly but surely accept and I think we
are in an accept case where it’s not a
crisis but it’s massive investment that
is needed so I I have a a slightly
provocative view probably but that’s
because I have tried to help you know
using the bottomup approach trying to uh
pick the low hanging fruit move one
little initiative at the time in the
hope that it will eventually
work I I recently I gave a speech a
speech in Frankfurt and being in
Frankfurt I advocated that we needed to
uh use a conscient shift and move from
this bottomup approach that we we have
adopted for the last 15 years to a
top-down approach and for that I I have
I have three practical suggestions
that’s what youve asked me to focus on
the first one is to have a single set of
rules rules that would apply to the
capital markets across the European
Union so that the regulatory authorities
and I’ll come to that in a second
applies the same rules throughout the
European Union the second that we need
you know why is the US market strong
it’s notably because the SEC is pretty
powerful and can actually Implement and
deliver on the single set of rules
throughout the United States well if we
had an esma or we can call it a
different name if we’re not happy with
the name but that had the similar
Authority as SE it would certainly also
make a dent in that very slow and
gradual process and third I think the uh
infrastructure uh the the trade
infrastructure providers uh it’s one
area where we do a lot better than the
US in the US they have five times more
venture Capital than we do we have 20 20
trade infrastructure providers when the
US has
won this is not a good idea we need to
have a much more Consolidated trade
infrastructure mechanism in place and
where I say and then I I will not take
any any more minute of your time
Stephanie when I say that artificial
intelligence can help I believe that
it’s not a question of eliminating the
marketplace that Frankfurt Paris Madrid
Milan and Dublin can constitute
eventually but to bring them under one
single mechanism one single set of rules
one single regulator and we have been
able to do that in banking supervision
with the SSM where the local authorities
in the various member states still enjoy
a level of control and authority and
conduct joint supervision with the SSM
it is Du doable without destroying the
turf and the territories that are
fiercely defended in many corners of
Europe well talking okay so starting
with Dublin maybe uh what has the Euro
group talked about Madame leg’s
excellent proposals are you going to
sign up uh we have we we will be talking
about them in our February and March
meetings this it’s November she said
this talk about could you not have just
had a phone call after she well we we we
we talk all the time but actually the
reason for why we’ve been doing this is
we’ve actually been bringing into our
Euro group meetings businesses who
depend on private Capital to get their
view of what’s happening in Europe so
we’ve been bringing in the private
sector we’ve been bringing in so-called
Market participants to hear what they
think so what do you think you’re going
to say when you meet so I think there
are elements of what Christine talked
about uh that are definitely going to be
considered may play a role in us uh in
where we end up if I was to pick out the
two things that has surprised me the
most and what I’ve learned the most from
all of the discussions that we’ve been
in I’ve been really interested in how
the development of national pension
systems in different countries have
played such a decisive role in
increasing the volume of capital that is
available to invest within
companies and uh we’re starting doing
that in Ireland but there are other
countries now that are well down the
path that can relate to development of
their pension systems now to economic
growth and investment and that’s been a
very interesting Insight that has came
out across a variety of different
countries uh the second issue that has
been I think new to the debate so far is
it’s not just about the integration
across Capital markets it’s the fact
that many countries want to grow the
depth of their own national capital
markets at the moment and recognize that
the really
underdeveloped um and by doing that and
looking at how we can integrate as we do
it it again creates stability to add
volume and just in you know in reference
to Ireland while of course I’m speaking
as president of the EUR group here
rather than as a member of the Irish
government of course we’re always eager
to look at ways in which the single
Market can be deepened and complet us
because we want to play a role then and
playing that in that Arena um uh to grow
financial services and and allow them to
invest into the real
economy Christian I guess I’d be
interested in what you think the
reaction in Germany might be to to to
these proposals but actually also you’ve
often you know in these conversations we
often talk about bemoaning the lack of a
European banking champion and I just
wondered whether there’s an you know if
you think of all the obstacles to having
a big European banking Champion is it
the kind of things that we’re talking
about or is it something a bit more kind
of cultural
well I I would say I mean this is even a
little bit different from from the
European Capital markets but I get back
to your point on the on the European
banking Champion by the way I think you
can’t create a banking Champion uh just
by forcing um the institutions to do
that that that the market needs to want
it and you need to have certain
preconditions by the way in this regard
the capital markets Union is not the
pre-dominant precondition it’s actually
the banking Union which needs to be
finalized um for us if if we think about
um uh more consolidation in Europe uh
one of the precondition is that from a
regulation point of view um uh from a
framework point of view we we actually
finalized the last bit of the banking
Union um I think that is one very
important point I think there is another
point and I’m really glad about the
argument which came that next to the
capital markets Union the first step in
order to make it better is to develop
the national capital markets and and I
can say it from a German point of view
the German Capital markets is actually
not as deep as the Swedish ones as um
some other Scandinavians ones and
actually we can we could learn a lot
from from these countries in order to
develop the national capital markets as
a first step actually to get to a
capital markets Union so I think we also
need to make the The Plea also to the
politicians that they should not only
focus on the capital markets Union but
also work on the domestic scheme that’s
number one number two a very pragmatic
first step to bridge into Capital
markets Union even if everybody who has
to say a lot and has the power to do
something it will take another three
four five years to get there where we
want to we need secularization we need
to actually Bridge the time to create
capacity and therefore the uh um The
Proposal done by Bruno L and and
Christian Lindner to think about making
secretz in Europe simpler to think about
what kind of regulations can we also
make a bit more light compared to the US
ones that would help a lot actually to
free up our Banking balance sheets in
order to give new capacity into the
economy so one of the proposals we are
doing from a European banking
Association is always saying we know how
difficult it is to get to the capital
markets Union but let’s think about the
pragmatic steps to there secretar
isation could do a lot we have
one1 of the volume of the US volume in
secularization in
Europe and that is simply not enough in
order to create the capacity on the
Banking balance sheets Rola I wanted to
ask you because you know in different
ways we’re talking about whether there
are also other aspects of the European
environment which could be just as
affect just could affect the
opportunities as much as some of the
things that we’re discussing you’re
obviously um very involved with AI and
open Ai and and other parts of that
Community um something like the EU AI
safety act which has obviously been a
big focus of attention in Europe and
elsewhere is that going to be good or
bad from the from this does it look like
it will be good or bad for startups and
investment in AI in
Europe not yet I think regulation is
necessary with any powerful technology
you know any technology can be used for
good or bad I think generally regulation
is uh especially advised at an
application layer to make sure that you
don’t have discriminatory lending
practices for example or that it isn’t
misused in healthare so I think at the
application layer and there are lots of
very good regulations for that already I
would say be careful I might what I know
about regulation but I’d be careful in
the early stages to make sure that we
don’t accidentally snuff out the
Innovation because there’s tremendous
Innovation Happening Here in Europe
based on our analysis Europe has a much
higher density of AI talent in the
United States and the number of Masters
and pH master’s degree and PhD
uh AI researchers in Europe is far
greater than what we have and a company
like mistol in France is a fabulous
example fabulous Founders coming up with
wonderful Innovation they’re far more
Capital efficient than some of the
competitors in in the United States I
would hate to um smother a young company
that’s blossoming like that but is are
you worried that they the act as as
written or as as as designed will do as
written the ACT is has no problem
whatsoever I just think in general it’s
the same same conversation we’re having
in the United States is it’s such an
emerging technology there’s a risk that
one accidentally prevents Innovation
that we have not yet seen and you know
it may be better sometimes to follow
very quickly with abuse that one sees
rather than imagining all the things can
go wrong and preventing something from
flourishing so that’s the the only
observation I mean this has the
potential maybe in general this week at
Davos I’ve heard a lot of people Express
concern about the risks of AI and I’m
much more focused on the potential of AI
to really transform Society I I listen
to companies every week across every
single industry and I see transformation
in education in health care in
productivity in security everywhere
there is opportunity for greater
productivity so I think we should
harness
that Nadia Calin I was going to ask you
I mean f further to that but just
generally thinking about I mean there is
a sense I think of all the things that
the Europe that Europe is facing and all
the challenges for the European economy
and how countries adjust to their models
and things like
a lot plethora of new National subsidies
for different Industries thinking about
competing with China and elsewhere is it
just that this is not necessarily the
biggest problem the biggest obstacle
facing Europe do you think that there
are other things en rco Lea as actually
singled out other things that are going
wrong with the single Market should we
focus on
those well it’s very difficult to see
because there’s so many challenges that
we’re confronted with right now and they
have to do indeed with the climate
change it has they have to do with
Technologies and and asymmetries of
information also you know from a
perspective of a regulator I was until
December actually responsible for the AI
act under the Spanish presidency and
leading the negotiations that that drove
and that allowed us to have this
agreement on the ACT and I know how
difficult it is to react to something as
complex as an artificial intelligence
and react promptly in a manner that
really avoids that the risks materialize
you know and there is a a symmetry
between the expertise and the knowledge
of the companies that are running and
and creating the algorithms and any
supervisor you know if there’s a
symmetry when we’re talking about
financial supervision imagine when we’re
talking about AI supervision you know
from the public sector and there is a
duty to protect citizens so there are so
many uh things going on what I and and I
I I would like to uh think I was very
taken by this idea that we need to make
Europe the land of opportunity you know
which is a which is a very inspiring
thought and I think in many in many
instances and despite the challenges and
the limitations and the absence of an
internal Market in banking in capital
markets in in energy in so many areas
actually the EU has become the standard
Setter in data protection and when we
adopted the gdpr I remember people
saying this is going to be the end of
the world as we know it and no
innovation and actually it has become
the standard I think we uh can become
the uh global standard on the taxonomy
and that’s green Investments and green
bonds so there are many areas where
Europe can and and will I think lead
processes um and and just to to wrap up
on on where Christine was I think it’s a
no-brainer that we would need a single
rule book a single supervisor and you
know that that would be uh that’s
exactly what we thought in 2014 that is
what a capital Market Union from a from
a regulatory point of view you would
look like and you would have to focus on
and because we have not been able to
reach that there have been many
different initiatives and bottom up and
and smaller changes or not so small like
the anti-money laundering regulation
which we also making progress on but we
don’t really uh um manage to close the
ABC that Pascal was was mentioning so
that I think is leading me as a very to
a more pragmatic approach in the sense
of thinking okay let’s focus on
securitization or green bonds or climate
Finance or uh artificial intelligence uh
financing or scaling up of startups and
let’s build from the reality on the
ground in parallel to trying to make
progress on building a regulatory
framework that that reflects these
single Capital markets that we should
have and that probably that approach is
necessary in many other areas because
indeed there are many shortcomings and
there is a difficulty to reaching uh
unanimous or qualified majority
agreements in Europe in in many core
areas uh maybe because of the maturity
of our markets and the maturity of our
economies which makes it more difficult
to build from scratch you know uh maybe
than in in some other areas of the world
where maybe the it’s easier to lip frog
or to build uh new paradigms um starting
on a on a w wide sheet of paper but one
of the things we haven’t mentioned
there’s only a few minutes left but we
haven’t mentioned what has happened
since 2014 is Europe has actually lost
its deepest most mature Capital Market
in the UK London now I can understand
yes London not the
UK uh sooya where is your European
headquarters
London so you talked you talked about
having a European team on the ground but
they all then come home to London is
that about right but they’re French
German Swiss they ROM
they spend all their time on the ground
in Europe okay can I go back to the
institutional investment yeah briefly
but I I do want to sort of make a
challenge around just one observation in
the United States most of the risk
Capital that finances Venture and growth
stage companies comes from endowments
foundations nonprofits Pension funds and
it is interesting that even in the UK
it’s more likely for a Canadian pension
fund to invest in late stage than UK
Pension funds because the rules have
made it very hard for them so I don’t
know what the phenomenon is in Europe
but it’s just interesting to me I don’t
know if that kind of a private risk
Capital Market exists here I just don’t
know but it is what we have in the
United States and that is actually
something that that the British
government are also trying to focus on
and it’s a very clear Gap but I just
wonder I know you’re all going to say
I’m mad but I mean isn’t there if it’s
going to be so slow to have the full
European approach to developing a
capital Market Union would there be a
way that you could at least have make
progress by reconnecting in some way
even in a even in a very partial way to
the to the very well-developed deep
Capital Market that Europe already has
in London is that not even worth
thinking
about taking advantage of the strength
that already exists rather than trying
to create things out of scratch Pascal
you’re just looking at me very
cooly
uh I’m not talking about letting them in
or anything I’m just saying you know is
there a way because they were the
greatest force behind some of this from
in the in the old days well I mean the
United London uh has been an anchor of
uh the availability of global capital
and uh I don’t think was ever uh likely
uh that their exit from the European
Union as much as I regret that happening
uh was going to have a very very instant
effect on their scale and what they can
do uh but for me I don’t uh respectfully
accept the premise that is inevitable
that progress that we’re going to make
on Capital markets in the time ahead
will be slow I don’t accept that
premise uh Finance ministers at the
moment and prime ministers are deeply
seized with the reality that we have to
fund so much
change and the taxpayer and European
institutions on their own can only
Supply a fraction of that resource a
large fraction but a fraction and the
gravity of that is very very clear to us
there may well be and the private sector
dictates It Anyway forms of cooperation
that will continue to take place uh with
the with London and with the United
Kingdom uh but the reality is that the
European Union needs to uh reorganize
and deepen our Capital markets to fund
things that Europeans want to see happen
and I’ll just end with a with a
prediction um tomorrow afternoon no uh
I’ll be out of my constituency in Dublin
Central meeting constituents I won’t
meet a single constituent that would be
demanding deeper Capital markets off me
but I’ll meet lots of constituents who
are going to be who are deeply concerned
about a lot of the changes we’ve talked
about feel in their bones the challenge
that we have to grow and maintain living
standards in the year ahead year ahead
while at the same time seen the
Brilliance of lots of European companies
and
entrepreneurs and the they want answers
regarding How We join up all those dots
and a big part of that answer is the
theme that we’re all exploring here this
afternoon should we add that many of
these successful companies that Pascal
is referring to actually go and get
their financing out in the
US which we’ve heard a demonstration of
this afternoon that is exactly the case
so what’s the final we just have you
know we have one minute left the in a
year’s time since we’re not going slowly
anymore um what is the sort of most
concrete form of progress that you would
hope realistically hope to have achieved
on this I well Pascal but also the the
others would would like to see so I I’ll
kick off with the pension Biff actually
in my single biggest learning
particularly from looking at the Nordic
economies is the way they have um uh uh
presented so they developed amazing Auto
enrollment pension systems with the
objective of maintaining income
sufficiency for their society in decades
to come they have done it in a way that
has delivered an amazing economic
benefit to how they can invest in their
own future and if I was to pick one
thing uh that I think can change the
direction is uh more countries within
the European Union doing something which
they want to do anyway to look after
citizens later in life but doing it then
in a way that deepens the volume of
capital for investment in what we’re
talking about Christian I think a relief
to the secularization rules because it
would be an immediate relief to the
economy and and to the banks and for you
practically to have on this panel an
industry leader um who actually says
that they are not getting the financing
which they need so if we finally explain
to the people that Capital markets is
not a Wish by the Banks but it’s a
necessity for the economy and this is
represented by the industry leaders um
then I think we are a step ahead Nadia I
think that one year from now the EI will
continue to be one of the drivers of the
green financing uh framework in Europe
we will continue to outperform our
targets above 50% of green investment in
our top top total numbers and uh you
know I I have launched a project to try
to see how we can can be more of a
catalyst on the liability side you know
and also to look into this green Bond
and how to interact with financial
markets in a manner which makes our
green Finance markets uh you know quite
relevant when it comes to Innovation and
and climate change and climate action
throughout the world and uh Roloff you
said that you you were daunted you not
you don’t envy them their task but
respectfully would what would you say
they should put top of their list
concretely what I want to do is I want
to find the best Founders in Europe in
the next 12 months and make sure that we
help them build Global Business Leaders
that’s what I want to do Christine leard
you get the last word you get to pick
your your top that it is not topic for
another panel next
year and we have an action list and we
have securitization under under way
thank you fantastic thank you great
thank you thank you very
much
At a time when European economies face higher borrowing costs and strained public budgets, financial integration in Europe remains lower than before the global financial crisis and Europe’s capital markets are less developed than those of other advanced economies.
Completing Europe’s single market could help on both counts, but why does the political will to do so remain elusive?
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