One of the main axes for the next legislative mandate in Europe will revolve around how to boost competitiveness. The report by former Italian Prime Minister Enrico Letta advocated ending the capital markets union in an evolution of the project that came to be called the savings and investment union. In an attempt not to lose the race against China and the United States, the Italian assures that there is “impulse” to complete this integration between the Twenty-Seven, and the president of Banco Santander, Ana Botín, proposes starting with the mutualization of community debt.
“We have never had this momentum in the last fifteen years,” Letta said in his speech at the International Banking Conference 2024 organized by Banco Santander. He considers that governments, at this point, should not be an obstacle. Although the most difficult part of the integration, that of the euro, has already been completed, the Italian indicated. He has thus listed as direct repercussions of not completing the project the lack of jobs, growth or financing ending in the US market.
The first step to complete market integration, according to the president of the entity, Ana Botín, is the mutualization of the debt. “The single capital market… we all want it, but let’s be realistic, when is it going to happen? I’ve been doing this for a long time, I’ve heard speeches and many ideas and it hasn’t come together. Mutualization is a very simple way”he has indicated.
Botín has highlighted the “debt overload” carried by the governments of the Member States and has considered that such mutualization can be articulated as a stimulus for the capital market union project. Although, ultimately, the underlying problem is a “lack of political commitment.”
Competitiveness will be the main issue addressed by EU leaders next week in Budapest, Financial Services Commissioner Mairead McGuiness has put on the table. A meeting from which he hopes that the Heads of State and Government will provide their Finance Ministers with guidelines that establish “objectives” and not “limitations” to advance the free movement of capital in the EU and access to liquidity.
The basic problem and one of the challenges to be solved was explained by the president of the European Investment Bank, Nadia Calviño: in Europe there are a large number of innovative companies, however, the fragmentation of the market makes access to financing difficult. Reason why these companies They go to another more integrated market: the United States. In this sense, McGuiness has urged the leaders of the Member States to commit to the initiative and advance on some of the points that keep the banking union or the capital markets union aground, such as insolvency systems and the single system of supervision, respectively.
“We have a productivity problem in Europe compared to the United States. It’s simple, in our debates we think that China is one and the United States is one and that Europe is one. But no. In energy, telecommunications, financial services or defense we are not one, we are 27,” the Italian stressed. “We must say it clearly: our national sovereignties are making the United States and China happier because we lose jobs and savings. “The difference in the defense industry is incredible because of the fragmentation.”
In this effort, Letta and McGuiness have opted to reduce bureaucracy. In fact, the Italian proposes, to avoid national interpretation of European legislation (which generates more fragmentation), that regulations be used instead of directives. As part of his report he also suggests creating a twenty-eighth legislation that applies at European levelso that companies can choose whether to accept the national or community one as suits them.
In this sense, Botín has also defended what is one of his traditional requests, the reduction of the administrative burden and legislative harmonization within the EU, to reduce the burden of regulation affecting the financial sector.
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