19 June 2024

Commissioner McGuinness at the European Financial Integration 2024 joint conference of the European Commission and the European Central Bank

...And talk about Capital Markets Union and Banking Union. Both are essential, and they complement one another. But not just talk about the why we need it, but how we're going to make progress in what appears sometimes to be a very difficult landscape.

We're talking about fundamental issues in the financial system, but also how we advance our agenda on sustainability and digitalisation.

And as is no surprise to everyone in this room, money will matter in advancing the cause of both.

So I want to get down to business straight away.

And talk about Capital Markets Union and Banking Union.

Both are essential, and they complement one another.

But not just talk about the why we need it, but how we're going to make progress in what appears sometimes to be a very difficult landscape.

So on the question of why.

It's already addressed. We need money. We need investments.

And the estimates vary, but the Commission uses a figure of an additional investment of more than €600 billion every single year for the climate transition.

And this is about investing in all of the renewables, the technologies, insulations, you know right down to the basics that our citizens fully understand and know.

But also investing in new clean and green technologies, which will show the fruits when we get the investment in and the products and innovations out.

But if I look beyond the climate transition, we also need private investment in digital technologies, in innovation and of course defence.

Public finance will not be enough to meet these massive investment needs.

And banks of course will play a role – but they don't have the capacity to fill the gap by themselves.

Instead, the funding will need mainly to come from capital markets.

So we need the Capital Markets Union – better known as CMU in the industry, so I may use CMU in the rest of my contribution.

And this is a really big project for the European Union.

When I was a Member of the European Parliament, this was discussed, not advanced hugely, but we made some incremental progress.

It's a project that has direct benefit for citizens because it answers the question that they as, how are we going to fund the climate and digital transformation?

It also addresses the political question of how do we have a transition that leaves no one behind.

And therefore the link between people and this project is key.

The truth though is that we've just come out of a European election campaign in 27 Member States where I didn't hear the words CMU or and I didn't hear Capital Markets Union much discussed.

And it's extraordinary – I fought four European Parliament elections since 2004.

I was never asked about, how was progress on Banking Union and Capital Markets Union?

However, I have been asked, why as a citizen I can't borrow in another Member State.

So I think we need to use the opportunity to speak to citizens, because they will drive change more than it being led just from the top.

So in a way the campaign for the European Parliament was a missed opportunity.

And I hope, and I will be imploring, the incoming Parliament to get fully behind our efforts to make progress on Capital Markets Union.

Because citizens do know that there are barriers when it comes to accessing financial products in the single market.

And therefore we need to address this concern.

Because fragmentation leads to inefficiency, missed opportunities and it is a barrier to maximising the benefits of a single market for capital.

Which frankly is one of the four freedoms that has yet to be fully in place in the European Union.

So here we have a lot of work to do.

But there's also opportunities when we get the work done.

If I look to Banking Union, it helps make sure that account holders know money is protected the same across Member States.

And Banking Union is not only there to protect taxpayer and depositors' money, but also to create a single market for banks to the benefit again of business, citizens and banks themselves.

Because a true Banking Union will lead to more competition, more affordable financing for companies and households, and better financial services.

And meanwhile Capital Markets Union would provide an opportunity to put savings to good use, no matter where you are in the European Union.

And this provides better returns over the long term and helping our citizens prepare for many things, including for retirement.

And the amount of savings – because Europeans are great savers.

It's quite extraordinary the amount of money that rests peacefully but not actively in savings and deposits.

We're talking about €33 trillion.

Not an insignificant sum, but perhaps hard to conceptualise because it is so significant.

And I think if we can effectively mobilise these savings on our capital markets, we can unlock a significant source of investment capital.

And this is key.

I want to emphasise that of course we are not starting from scratch.

There are colleagues in this room from the Commission that have been working on Capital Markets Union long before I've been engaged in it.

And you'll hear from them later.

You can see from the Commission's European Financial Stability and Integration Review what's been done, because that will be presented this morning....

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