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It's good to be here. Looking back on the six months since our last structured dialogue, I am struck by how much we have done. Not just in terms of taking forward existing legislation but also in developing a new agenda on the capital markets union and, more recently, on strengthening the Banking Union.
In all of it, I have tried to strike a balance between growth and financial stability. At the back of my mind the whole time is a concern about a lack of jobs and a desire to support Europe's SMEs. To be proportionate in what I do. To try to give businesses more stability and more regulatory certainty. And never to lose sight of the interests of consumers.
I will pick out some of the highlights of recent months, but I am very aware of the hard, detailed work that members of this Committee do, day in, day out, which doesn’t hit the headlines. That is the reason why ECON has such a high reputation. I consider myself fortunate not just for the support you offer, but for the challenge you bring. Thank you.
We had a good discussion in October on the Capital Markets Union Action Plan. At its most simple, the goal of CMU is to connect savings more effectively with growth. The Action Plan sets out a whole range of measures, broad in their sweep and ambitious in their scope. As I promised, we have lost no time in getting off to the quickest possible start. You are impatient. And so am I.
As you know, to free up capacity in the banking sector and increase lending to the wider economy we've tabled a package of measures to re-launch simple transparent and standardised securitisation. The Luxembourg Presidency has made a very quick start and is on track to agree a general approach in Council by Christmas. This is the kind of pace we need and I am sure that in this Committee you will pick up the baton and want to take things forward rapidly.
We have proposed an amendment to Solvency II legislation to support infrastructure investment by defining it as an asset class and reducing associated capital ratios by about a third. This will allow the insurance sector to invest more of the 10 trillion euro it manages into European infrastructure. We put forward a delegated act making this targeted change in September.
In line with the case made by members of this committee, and Mr. Balz in particular, we have launched a call for evidence on the cumulative impact of rules in the financial sector. I want to check whether the legislation we had put in place at speed during the crisis has had any unintended consequences, without putting into question the architecture that has clearly made our system more resilient. The call for evidence runs until the end of the year.
Just this morning, I launched a proposal to overhaul the Prospectus Directive. We're proposing a simpler, faster and cheaper regime that will make prospectuses more useful and help more companies unlock the investment they need to grow on capital markets.
We’re increasing the amount of capital you can raise on EU markets without a prospectus from 100 000 to 500 000 euro. We’re creating a special regime for smaller companies that will allow SMEs to produce simpler and cheaper prospectuses. We’re streamlining the process for companies raising capital for the second or third time. And we're acting to halve approval times for larger companies that frequently tap the markets by creating a frequent issuer regime.
I’m looking forward to working with you on this proposal to help support those who power growth in Europe.
Next will be a Green Paper on Retail Financial Services which we are on track to publish before Christmas. I want us to look at financial services from the perspective of the consumer – how we can give them some more tangible benefits from the single market. And of course, retail investors lie at the heart of what we want to do with the CMU. We need a system built on transparency, competition and choice, one that makes full use of digital technology. The Green Paper I hope will give new life to that debate.
In parallel to the CMU, we have continued full steam ahead with our work to strengthen the Banking Union and bear down on risk.
We're keeping up the pressure on all Member States to implement the legislation that they have already agreed upon: to transpose the Bank Recovery and Resolution Directive and the Deposit Guarantee Scheme Directive, and ratify the Inter-Governmental Agreement that determines contributions to the Single Resolution Fund. I am pleased to be able to announce that a sufficient number of Member States have now ratified the IGA to enable the SRB to begin its work, on time, on 1 January 2016.
Last week we put forward a proposal to create a European Deposit Insurance Scheme: EDIS. This is the third leg of the Banking Union that will sit alongside the single supervisor and the single resolution authority. It is part of a much bigger series of measures, set out in the Five Presidents' Report, and championed by President Juncker, to deepen Economic and Monetary Union.
The proposal is to move from the current system of national deposit guarantee schemes to a scheme that will underwrite deposits across the whole Banking Union. Deposits are already guaranteed up to 100,000 euro if a bank goes bust. The European-wide scheme we propose will mean that banks will be better protected if there are larger local shocks.
We have set out a step-by-step approach, at every stage of which individual depositors will continue to get the same level of protection as now – 100,000 euro. First we want to introduce a re-insurance system in 2017 that will run for three years. And then gradually build up the fund on the basis of co-insurance, until it is fully mutualised by 2024.
It will be cost neutral for the banking sector - contributions intoEDIS will be deducted from what banks are due to pay into their national Deposit Guarantee Schemes.
We have built in strong safeguards against moral hazard and we’ve also set out a series of other measures to reduce risk. So, you won't get any money out of EDIS unless you have first paid your full contribution to your national DGS. During the re-insurance phase - the first three years – you wouldn't be able to get any money out of EDIS until all the money in your national DGS has been paid out.
It's a balanced package, which offers something for something, not something for nothing. No one pretends this will be easy, but I do believe that the only way forward is to work on risk reduction and risk sharing hand in hand. This is what this package offers.
On the same day our EDIS proposal was published, I was delighted we were also able to conclude negotiations on new rules governing financial benchmarks. These new rules will reduce the risk of manipulation by ensuring that benchmark providers in the EU have prior authorisation and are subject to proper supervision. They will help rebuild confidence in financial markets across the European Union. I am pleased to again have the chance thank Cora van Nieuwenhuizen and the shadow rapporteurs for their work on this file.
Last month, we agreed the Securitisation Financing Transactions Regulation – SFTR – which I see as a central part our response to increase the safety and transparency of financial markets. It will help us manage risk in the shadow-banking sector, in line with Financial Stability Board recommendations endorsed by the G20. Here I am grateful for the work done by Mr. Soru and the shadow rapporteurs to get this file agreed.
In the midst of all this, we have not lost sight of consumer protection that is central to a thriving retail sector. Political agreements have been reached on two important files since our last dialogue in March.
The Insurance Distribution Directive that was agreed last week under the stewardship of Mr Langen will increase transparency in the insurance market, and make sure those selling insurance understand the products they’re offering and that those buying insurance products have the information they need to make informed decisions.
The revised Payment Services Directive, PSD2, taken through Parliament by Mr Tajani, increased consumer protection in the field of digital payments, including in the case of the loss or theft of a payment card. And it strengthened the security standards that need to be implemented by all payment service providers. As digital technology advances in leaps and bounds, we need to ensure consumers can benefit while remaining protected.
The big-ticket items have not stopped us from taking forward important work on a whole battery of Level 2 measures. As you know, this is a formidable task. This year, 38 level 2 measures have already been adopted. We expect to adopt 23 more before the end of the year. I want to keep this momentum going.
This is just a snapshot of the work we’re taking forward across my portfolio. Overall, my message is that we’re making rapid progress with an ambitious agenda. I believe we’re striking a good balance between maintaining financial stability, and supporting growth, investment and jobs across Europe.
Now is the time to quicken the pace, to drive forward this work and deliver tangible results to Europe’s citizens. I am looking forward to continuing to discuss with you how we do this today, and in the months ahead.
