14 June 2022

ECON: Opening remarks by Commissioner McGuinness at the ECON Committee Structured Dialogue

...the number of files that are open - so we have close to 20 active files under negotiation - ranging from measures to develop capital markets union, anti-money laundering, and sustainable finance.

In addition to those active files, there's a number of reviews of legislation underway and we have several proposals under preparation.

Because we want to deliver on our work programme.

The truth of course, is that today everything is overshadowed by the Russian invasion of Ukraine.

When we held our dialogue in December last, I mean so many things have changed. Our focus, in December, was on the recovery from Covid and the role of the financial system and capital markets in that recovery.

Throughout Covid, Europe and Member States took very big decisions to address the Covid crisis – we have Next Generation EU, targeted government supports for business and citizens.

And this committee worked hard and fast to pass measures aimed at easing potential problems in the financial system.

Again, our banks and the financial system continued to provide liquidity and services despite lockdowns.

So in December, I think there were reasons for optimism as we looked to the future.

Sadly, that optimism is tinged with huge uncertainty because of the invasion on February 24th.

We know that inflation is now a reality;

Interest rates are also expected to increase.

The global financial system is undergoing change - not least as a result of digitalisation, but also due to this war.

Our continuing work to build a stronger, more resilient Europe is vital.

And tackling our vulnerabilities is also essential.

On sanctions and impacts, we have worked with international partners – including the US, Japan, the UK and Canada.

We have sanctioned 1,100 individuals and 100 entities.

We have imposed import bans on Russian coal and oil.

We have imposed a ban on transactions involving the Russian central bank's international reserves…

…and taken measures to cut off Russian institutions from some of our financial market infrastructures.

By cutting off 10 major Russian and 4 Belarussian banks from SWIFT, this was a bold step impairing the ability of those banks to interact internationally.

That said, we are also mindful of the need for keeping the right balance, so in particular:

ensuring that legitimate transactions can continue,

and mitigating the impact on some third countries and their ability to connect to the global financial system.

I think it's fair to say that the global financial landscape will change.

We might see fragmentation of the financial landscape at the global level;

As well as the fragmentation of the international political and economic community.

This fragmentation is not good news for those who believe in globally open, integrated and competitive markets.

Financial activities, global savings, risk-taking and cross-border financial services are likely to be impacted.

And as you know, global instability has increased.

The war is directly affecting commodity markets – energy and food.

This is something that we're monitoring very closely.

We are witnessing a sharp rise in global food prices. This is compounded by increases in agriculture production costs, not least fertilisers.

Now, the recent price spike in global commodities, food commodities, is a direct consequence of the war.

Because Putin is weaponising food. He is bombarding grain storage facilities in Ukraine, blockading Ukrainian ports and stealing grain from Ukraine.

I want to stress here that the European Union does not target grain or other food exports with our sanctions.

We are very mindful of the importance of Ukraine as the breadbasket of Europe. But of course, it's more than just Europe – it's really important for the Middle East and North Africa.

There is a campaign of disinformation being waged by Russia – pointing the finger to Europe as being the cause of global hunger.

I want to stress here that we are determined and are doing everything we can to get grain out of Ukraine to global markets and to support food insecure countries.

On the energy side, I think this goes without saying – we really do have to increase investments in renewable energy production.

That's why I want to thank this committee for your work on the Climate Delegated Act which is now law, and which prioritises absolutely investments in renewables.

And you know that the Commission had a communication – we also need to look at issues like planning and licensing.

The other issues around energy that need to be done is to address energy efficiency.

This requires investment and also finding alternative supplies of gas and oil.

Despite all of those big challenges that I've just outlined, our financial sector has remained resilient.

Our direct EU exposures to Russia were small before the invasion, and they have considerably fallen since.

The market reactions we are seeing are due to heightened uncertainty, expectations of lower growth and volatile commodity markets.

Over the past decade we have built up a robust and well-functioning financial sector.

In a climate of uncertainty, we are particularly vigilant and following market developments closely, together with ESMA.

And all the while, we continue our work on the green and digital transition.

Financing that transition and ensuring that it is just, is our shared responsibility...

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