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So this is a real opportunity, which I thank you for, as I am able to speak to you directly.
For me it’s a clear sign that, despite Brexit, the European Union and the United Kingdom continue to share many common goals.
Sustainability is at the heart of all of our policy discussions. And I was very glad to hear part of your previous very important debate on nature and biodiversity. And these are shared concerns, shared challenges, and also issues that we need to work together on and globally as well.
In the green agenda and beyond that, the European Union remains an open financial market.
We want to build up our own capacities for the sake of our own strength and resilience.
And this will also help us better participate at a global level, as a market that is attractive for outside investors. And it will also allow EU companies to be competitive beyond our borders.
And the European Union remains committed to international cooperation.
If you look to what the European Union is, in my view, it is a successful example of countries working together on a daily basis – and we reflect that commitment to multilateralism at a global level, including on sustainable finance.
But of course the EU-UK relationship has been impact, as we all know. We have been through a fragmenting event this year.
It is interesting that I speak to you on the eve of tomorrow’s fifth anniversary of the United Kingdom referendum to leave the European Union.
Before that, over nearly 50 years of integration, the United Kingdom joined European partners in dismantling barriers to trade, brick by brick.
The United Kingdom decided to build those walls back up again.
But I emphasise that despite Brexit, the EU wants a good relationship with the UK as a close neighbour and partner.
We spent the last few years negotiating the United Kingdom withdrawal from the European Union and establishing our new relationship.
It was a difficult journey leading to hard-fought agreement.
Our relationship must be built on trust. And I would stress that without trust, we are nowhere.
And full implementation of the TCA and the Withdrawal Agreement, including the Northern Ireland Protocol, are prerequisites for that trust.
We negotiated the deals together – we agreed them together – we signed them together – and with the ink barely dry, it is both parties’ responsibility to implement what was agreed in good faith.
When I look to financial services, there was a significant regime change on January 1st of this year. EU passports ceased to be valid out of London. The EU regulatory ecosystem no longer applies in the United Kingdom.
The United Kingdom wanted to be outside the European Union; and that means losing the benefits that European Union membership offered and offers.
The choice to “take back control” has consequences.
The City of London is now outside the EU, and no longer accountable to EU supervisors and regulators.
Financial markets were ready for this change and we didn’t see any volatility or disruption on Brexit day of January 1st or indeed subsequently.
A Memorandum of Understanding on financial services regulatory cooperation between the EU and the UK was agreed at a technical level. The intention is to set up a joint EU-UK Forum on financial services regulatory dialogue.
This Forum, once established, will be a place to talk about issues in the financial sector.
It will provide an opportunity to talk about our common goals, not least the sustainability agenda and the post-COVID recovery.
Of course both sides will maintain regulatory autonomy and independence.
But financial services are not isolated from the wider political relationship between the European Union and the United Kingdom.
For now, we are waiting for the United Kingdom to choose between the two paths that my colleague Vice-President Maroš Šefčovič described in detail last week.
So the first path is deciding to work together, with the United Kingdom abiding by its obligations and engaging in good faith.
The second path - if the United Kingdom continues to act on a unilateral basis.
Now of course we hope that the United Kingdom will choose the first, more appropriate and sustainable path. And that will help us cooperate across sectors, including in financial services.
Once the MoU is formally concluded, we will have to consider whether we can resume our financial services equivalence assessments.
When we do resume our assessments, we would do so gradually, and on a case-by-case basis, taking into account the UK’s regulatory intentions and of course the EU’s interest.
Again, trust will be paramount here, as it is across all aspects of the EU’s relationship with the UK.
I want to talk a little now about the open strategic autonomy agenda of the European Union.
The EU remains committed to an open global economy, international financial markets, and the rules-based multilateral order.
And that’s the message that we have consistently passed on to our global partners – recently, as you know, in the G7 as well as in the EU-Canada Summit and the EU-US Brussels Summit.
Our view is that the EU and the world are best served by an international economic and financial system based on openness and fair competition.
But we should not be naïve.
Brexit has led to fragmentation and it has laid bare some of the vulnerabilities in our financial system linked to the dependence on market infrastructures outside the European Union.
The EU needs to reinforce its capacity to deal with new risks and responsibilities that follow from the UK’s exit from the EU. And that’s important to safeguard economic and financial stability in the European Union and across the globe.
Where possible, we want to limit the concentration of critical infrastructures located outside of the EU.
Disruption or divergence elsewhere can have systemic effects in the European Union with potential spill-overs to the wider economy. So this is a question of financial stability, and financial stability is at the heart of my role as Commissioner.
Our goal is not to move or steal business away from London but rather to build our own infrastructures, and that’s an important nuance.
I want to stress that the drive towards “Open Strategic Autonomy”, as we refer to the our strategy, does not mean navel-gazing or protectionism.
It is not a zero-sum game where someone’s gain must be someone else’s loss.
But to continue enjoying the benefits of our openness, we have to make our economic and financial system stronger and more resilient and protect ourselves from unfair practices by those pursuing unilateral goals.
And this will help maintain the European Union’s openness to our global partners.
Now part of building up our strength and resilience is by working hard on integration. We want to develop a deep and efficient single market for capital – the Capital Markets Union.
At the moment we have 27 national capital markets that are neither fully developed nor fully integrated.
So a company in Bulgaria looking for equity funding probably won’t be able to get that investment from Madrid, for example. And that impacts whether investors in New York or Singapore want to invest in the European Union.
And that’s why our project for a Capital Markets Union is a top priority here in the Commission. The CMU is about working towards the completion of the EU’s single market for capital – also because of the wider benefits that this could bring.
Well-functioning, well-integrated capital markets could contribute to the post-pandemic recovery. In the European Union, we saw how these well-developed capital markets helped the US recover after the 2008 financial crisis.
And only deep and integrated capital markets can provide the scale of financial support needed to power the transition towards a greener and more digital Europe.
Last September, the Commission published a new Action Plan for the Capital Markets Union, based on three core aims.
Firstly, we want to help European companies access more diverse sources of non-bank funding, including across borders.
Secondly, we want to make the European Union an even safer and more attractive place for savings and long-term investments. A small investor base inhibits the capacity of EU capital markets to offer the funding that EU companies need, especially in smaller Member States.
And thirdly, we need to remove obstacles to the integration of national capital markets into a genuine single market. These obstacles include withholding tax and insolvency laws. And they are deep-rooted and will take time to tackle. But I am very determined to act on them.
An area we will reflect on in the coming months is supervision and the functioning of the European Union single rulebook for financial services.
Following the departure of the United Kingdom, Europe’s capital markets have a multi-centre architecture. Several financial hubs fulfil specialised or regional financing needs.
If we want to match the performance of other highly efficient centres, we need to make sure that the EU hubs cover the necessary product range, have enough liquidity, are well connected to each other and are integrated.
And EU financial centres need to operate and compete on an equal footing.
This will require greater supervisory convergence. Financial regulatory harmonisation has made considerable progress since the last financial crisis. However, even harmonised legislation can lead to diverging supervisory practices by national regulators.
So we need to bring the vision of a single rulebook for financial services closer to reality.
This year, we’ll gather the input of stakeholders and report on issues of supervisory convergence in a comprehensive manner, without any preconceived idea of what the outcome should be.
If we look to this wider issue now of sustainable finance: the benefits of the Capital Markets Union are not limited just to the financial system. It will also help us mobilise the huge amounts of money we need to become a green economy.
And as you know, the European Union is firmly committed to becoming a sustainable economy.
Our plan to get there it the European Green Deal.
It aims to make the EU climate-neutral by 2050, by supporting green jobs, green growth and green investment.
The financial system has a key role to play. Finance itself needs to become green – and it also needs to finance the transition to sustainability of the wider economy.
The European Union has taken major steps in sustainable finance to enable finance play its full part in the transition to sustainability.
Our sustainable finance toolkit increases transparency and clarity about what economic activities and investments are green, notably through the EU Taxonomy.
And we’ve also recently proposed the Corporate Sustainability Reporting Directive. This will allow companies report clear, comparable information on what impact things like climate risks have on their business – as well as their impact on society and on the environment.
Now the Commission is working on a renewed Sustainable Finance Strategy to provide a roadmap to increase private investment in sustainability. It will look at how to empower companies to move towards sustainable activities. And it will seek to make climate and environmental risks mainstream in the financial system.
This summer, we’ll also bring forward a proposal for a European Green Bond Standard, based on the EU Taxonomy. The aim is to create a gold standard based on market best practice, available to all green bond issuers on a voluntary basis.
Now of course, we all know that climate change is a global issue. And markets are global. That means sustainable finance must be global too.
Here the European Union is leading the global sustainable finance discussion. We set up and co-chair the International Platform on Sustainable Finance. We want to bring policy-makers together so that international work is both coherent and ambitious. The members represent over half the world’s emissions, GDP and population. And we are glad that the United Kingdom is a member of this body.
The European Union is also actively participating in discussions in the G7 and the G20, and we are looking forward to COP 26 later in the year.
We support the UK Government’s intention to make this year’s COP successful and impactful. I recently met COP President Alok Sharma in Brussels where we discussed our shared goals.
This global challenge will only be met if everyone across the globe meets their international sustainability commitments.
And that brings me back to the issue of trust.
When you sign up to international agreements and make commitments, partners need to be able to count on your word and your signature.
The European Union is based on 27 countries that decided to come together to build trust between them, and this does not happen by accident: it is built day by day.
That trust and collaboration is what’s needed for us to continue to integrate our financial markets, and for the EU to be open to the rest of the world from a position of strength and resilience.
And the European Union maintains that commitment to multilateralism at a global level.
We want and expect to build relationships beyond the EU based on trust and meeting commitments.
And we hope to rebuild that trust with the United Kingdom. Addressing our shared challenges, including on finance and a greener future, demands it.