09 July 2015

BIS / Noyer: Views on the Capital Markets Union project

Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Paris Europlace International Financial Forum, Paris, 9 July 2015.

This project indeed echoes many concerns tackled at the Central bank level, in particular how to achieve a better balance in the funding structure of the economy, and improve access to funding for businesses, notably SMEs and infrastructures, while ensuring financial stability. Although this initiative was announced only a year ago, it has soon become topical with the public consultation launched in February by the European Commission.

The Banque de France was committed to answering this public consultation, which constitutes a milestone in the construction of a Capital Markets Union. Let me briefly share with you our vision.

I welcome and support the CMU initiative as a promising avenue for growth. However, I believe that three major pre-requisites have to be met in order to make it a successful endeavor: (i) a clearly defined framework focused on a limited set of operational deliverables, (ii) the right articulation between market-based financing and bank financing, (iii) the necessity to ensure financial stability in the long run.

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The Commission's green paper has identified some areas for longer term work, including the need for further harmonization of insolvency regimes, securities laws and tax regimes. Achieving such goals would imply a very complex and politically sensitive process. This is why, as a first and more realistic step, we suggest starting by a stock-taking exercise whereby investors would have a clearer view of divergences and potential discrepancies between the various EU legislations. It is also worth noting that in the field of financial market infrastructures, Eurosystem initiatives have turned out to be powerful catalysts for harmonization. For instance, significant progress has been made in the standardization of corporate actions through the Target2-Securities project without having to adjust the respective legal frameworks.

Finally, and I know this is a topic where Olivier will be happy to pick up, more regulatory convergence can be achieved without changing the current institutional architecture but via increased cooperation between European Supervisory Authorities (ESAs) and national authorities.

Full speech

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