Avalanche and EU Capital Markets Union from a Nordic perspective - PowerPoint PPT Presentation

EU Financial Services Regulatory Avalanche and EU Capital Markets Union from a Nordic perspective Annual ICMA-NCMF Joint Seminar: Bond Markets - new products, new challenges 22 January 2015, Helsinki

Nordic traditions (” less is more ”)  Law obedient culture since medieval ages  Bottom-up democratic heritage (” ting ”)  No history of political or military dictatorship  Egalitarian culture and mutual trust  Private law general clauses - pacta sunt servanda - market-developed best practices  Transparent and accountable authorities  Quality over quantity and speed in law-making  -> Nordics could certainly live with less rules Osasto pp.kk.vvvv Financial Markets Department / Ilkka Harju Finland 22.01.2015 2

CMU motivations  Insufficient risk sharing across borders & sub- optimal capital allocation  Cross-border capital flows before crisis intermediated through wholesale banking based on debt instruments (sudden stops and financial fragmentation)  Low diversity of funding opportunities  High transaction costs for cross-border funding  Liquidity provider of last resort in capital markets  European structural reform agenda  Funding needs of high-growth firms  UK question is in a central position Osasto pp.kk.vvvv Financial Markets Department / Ilkka Harju Finland 22.01.2015 3

CMU asymmetry with Banking Union Banking Union: - Banks, Stability - Centralize control, Euro area - Crisis response Capital Markets Union: - Non-bank finance, Growth - Develop markets, EU28 - Post-crisis agenda ---> Shadow Banking seen partly in positive light? Osasto pp.kk.vvvv Financial Markets Department / Ilkka Harju Finland 22.01.2015 4

Actually, non-bank finance Multiple market segments  Equity and credit  Securities and specialized intermediaries  Venture capital, private equity, public equity  IPOs, corporate bonds, debt securitization, loan funds  Leasing, consumer finance… Osasto pp.kk.vvvv Financial Markets Department / Ilkka Harju Finland 22.01.2015 5

Objectives (hopefully …) Develop and increase:  Financial system and stability of EU28  Sustainable economic growth  Cross-border issuance and long-term investment  Financing needs of SMEs and start-ups  Competition between different financing sources  Liquidity and transparency in the capital markets  Competitiveness of EU as a place to invest  Investment of European capital outside the EU  Inward flows from third countries Decrease: Obstacles to market access + Thresholds of growth market capital + Dependence on bank financing Osasto pp.kk.vvvv Financial Markets Department / Ilkka Harju Finland 22.01.2015 6

Nordic ” shopping list ”  CMU to cover EU28 as a whole, not only eurozone  Efficiency of financial markets in all Member States  SME and start-up financing is dominantly local in nature  Fair, non-discriminatory level playing field for access to capital  Analysis needed of urgency and of significance of impact  Impartial, objective, methodologically consistent and reliable data  International comparative competitiveness surveys (WEF)  Deregulation, where possible / Double reporting requirements  Unnecessary regulatory burden / Principle of proportionality  Commission law making processes / Consultations Osasto pp.kk.vvvv Financial Markets Department / Ilkka Harju Finland 22.01.2015 7

CMU – next steps  Preparation of Commission Green Paper (underway, February)  Consultation of stakeholders (Q1/2015)  High-level conference based on consultation (June 2015)  Publication of CMU Action Plan (September) Osasto pp.kk.vvvv Financial Markets Department / Ilkka Harju Finland 22.01.2015 8