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The European stock markets insist on completing the Capital Market Union in the EU

Date: March 28, 2024 Time: 21:35:45

The stock markets of the Old Continent call for speeding up the implementation of the Capital Market Union in the face of the new environment of high interest rates. In a statement, the Federation of European Stock Exchanges (FESE) have asked the European authorities to complete this process as soon as possible, since it is a good instrument for raising funds, especially after the banking crisis and monetary policy. restrictive “The lesser capacity of the banks to finance the economy and the more restricted public budgets mean that the capital markets matter more than ever”, they specify in a document issued this Thursday.

The organization refers to the request made by several European leaders, including Paschal Donohoe (Eurogroup), Christine Lagarde (ECB), Charles Michel (European Council), Ursula Von der Leyen (European Commission) and Werner Hoyer (EIB). in which they called for more ambition in this project in order to channel Europe’s savings and foreign investment towards economic growth. In this sense, they regretted that the horrible amount of external funds obtained by companies comes from the banking sector, with a share of 75%, while the bond market represents the remaining 25%, just the opposite of what happens in the United States. .

From FESE they regret that to date, the UMC has not been able to reverse the “excessive” dependence on bank financing nor has it managed to mobilize the capital of European citizens. “Solid capital markets play a key economic role as engines of growth and wealth creation, but also for resilience to exogenous shocks,” they add. The organization, made up of 35 stock, bond, derivative and commodity exchanges present in 30 countries and owned by 17 financial groups, calls for a “robust” and transparent listing ecosystem, while ensuring that the reforms being debated in the current moment in Brussels represents a “real opportunity” to strengthen the capital markets and increase their attractiveness.

Thus, he refers to the proposed Listing Law, considers that he considers that it has been a positive step in this direction, since the current proposals achieved an effective balance between providing investors with the information they need and making listings more efficient and effective, allowing companies to list in Europe. “This should be a wake-up call to make listing attractive again, with less onerous requirements,” said FESE president Petr Koblic.

In parallel, FESE also believes that the future Retail Investment Strategy will be “crucial” to mobilize citizens’ savings and will increase the liquidity of community capital markets. “We need to mobilize the retail base to have levels of participation like those of Anglo-Saxon countries, lowering the cost of capital for issuers and improving returns for investors,” they have indicated. “Policy makers have one last chance under the current mandate to improve the regulatory environment in the capital markets consistently, so that Europe improves its competitiveness,” said FESE director Rainer Riess.

Finally, regarding the MiFID II regulation, they allege that it is a “real” opportunity to design “strong and liquid” capital markets that Europe needs to finance innovation and sustainable transition. “Addressing the main shortcomings of the EU market structure, improving market transparency, fairness for all investors, in particular retail, and striking a balance between business models and the negative side effects of fragmentation must will be the key priority of this review, which will frame the functioning of the EU capital markets over the next decade.

Christine Lagarde herself attributed the transfer of Ferrovial’s fiscal headquarters to the Netherlands to the fragmentation of the capital markets in Europe. “I don’t want to comment on this specific case because I don’t know it, but this story convinced me, even more, that we have to fight for a capital market union,” she said on a visit to Spain. In parallel, the Minister for Economic Affairs and Digital Transformation, Nadia Calviño, has also revealed her intention to accelerate this project when Spain holds the presidency of the EU during the second half of 2023.

This project has gained relevance after Ferrovial’s decision to start trading in the Netherlands to make its debut on Wall Street. In fact, the president of the ECB herself, Christine Lagarde, attributed the transfer of the aforementioned company’s fiscal headquarters to the fragmentation of the capital markets in Europe. “I don’t want to comment on this specific case because I don’t know it, but this story convinced me, even more, that we have to fight for a capital market union,” she said on a visit to Spain. Previously, the Minister of Economic Affairs and Digital Transformation, Nadia Calviño, also revealed her intention to accelerate this project when Spain holds the presidency of the EU in the second half of 2023.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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