The
Capital Markets Union revives pre-crisis trends without adequately
integrating the lessons from the crisis. It also marks a shift in the
political momentum towards short-term growth and competitiveness at
all costs, when what is needed is long-term sustainable development
of the economy.
Civil
society groups denounce the Commission's plan for a Capital Markets
Union. No lesson has been learnt from the financial crisis, they say.
On Wednesday
September 30, EU Finance Commissioner Jonathan Hill, put forward his
plan for a "Capital Markets Union". It is presented as a
plan for financial stability and productive investments, in fact it
is neither. It is a plan that is to set deregulation of finance in
motion again after a short break. Among other things, it marks a
return to "securitization", which had been put on ice since
the financial crisis peaked in 2008.
In response
to Hill's plans, 27 organisations issued a common statement in which
the CMU is denounced: "The CMU revives pre-crisis trends
without adequately integrating the lessons from the crisis. It also
marks a shift in the political momentum towards short-term growth and
competitiveness at all costs, when what is needed is long-term
sustainable development of the economy," the statement
reads.
The Capital
Markets Union (CMU) is aimed at further developing market-based
financing (also called shadow banking, or non-bank lending) in
Europe. The Commission’s Action Plan and related proposals will be
released tomorrow, Wednesday, 30th September 2015. So far - and
despite its obvious public interest dimensions - debate on the
substance of CMU has been confined to insiders and has taken place
out of the public arena.
The CMU is
unlikely to create sustainable jobs and growth. It focuses on
increasing the supply of credit and does not address the root causes
of lack of aggregate demand. The revival of securitization, for
example, is unlikely to help SMEs as it is too complex and too
expensive to work without subsidies. Additionally, there is no
shortage of funding on average and banks can now lend more. There is
therefore no obvious need to promote market-based banking over
traditional banking.
While some
initiatives in the CMU package are welcome, several others could
create additional risks for the economy and for society at large, in
Europe and beyond.
The
organisations signing this statement, which include trade unions,
consumer groups, development, and environmental NGOs and think tanks,
have a variety of concerns about CMU. These include risks to
financial stability, retail investors, pensioners and consumers,
workers, and environmental, social and governance (ESG) issues. We
therefore call for the debate around CMU to be opened up for
discussion so that civil society proposals for greater transparency,
investor protection, and an overall strengthening of regulation can
be taken into consideration.
In addition,
while the debate on CMU focuses exclusively on how to finance the
economy, an equally important debate is needed on what we finance
(e.g. decent livelihoods, fair jobs, investments addressing climate
change, etc.).
The question
also needs to be answered: who will benefit from the CMU? Arguably,
the EU’s too-big-to-fail banks stand to benefit more than the 90%
of SMEs for which capital market-based financing is largely
irrelevant.
In summary,
the CMU revives pre-crisis trends without adequately integrating the
lessons from the crisis. It also marks a shift in the political
momentum towards short-term growth and competitiveness at all costs,
when what is needed is long-term sustainable development of the
economy.
The CMU
Action Plan comes with legislative proposals that will be discussed
by the European Parliament and Member States. The Parliament will
also reflect on the Action Plan as a whole and hold a debate with
Commissioner Jonathan Hill. Civil society organisations call on
policy makers to consider and integrate their concerns and proposals.
As the financial crisis demonstrated, financial stability is a
pre-requisite for creating sustainable jobs and growth.
Sources
and details:
Related:
Comments
Post a Comment