Enhancing EU competitiveness through strong capital markets
Mario Draghi's report on strengthening European competitiveness provides the right impetus for mobilizing additional capital. GDV is campaigning for harmonized creditor rights and insolvency rules to promote cross-border investment. These are urgently needed to make Europe more resilient and independent.
The insurance industry welcomes key points of Mario Draghi's report on the future of European competitiveness. In light of competition from the US and China, the EU must significantly strengthen its position. The report provides important guidance for the work of the next EU Commission. For example, it would be beneficial to reduce reporting obligations by 25 % in order to reduce administrative burdens and use resources more efficiently.
Furthermore, as Draghi recommends, private and public capital should remain in the EU to a greater extent. “In Europe, companies outside the financial sector finance only one fifth of their business via the capital market. There is an urgent need to revitalise the Capital Markets Union project in order to create targeted incentives for institutional investors,” said Jörg Asmussen, Chief Executive Officer of the German Insurance Association (GDV).
From the insurance industry's perspective, it is important to remove investment barriers, strengthen creditor rights across Europe and harmonise insolvency proceedings. “We currently have 27 national insolvency regimes, each of which wants to be the best in the world. However, a single, standardised regime would suffice for cross-border investments - it doesn't have to be the best, it has to work,” Asmussen explained.
Therefore, harmonised minimum standards for creditor rights and extended powers for insolvency administrators should be introduced. “Investors will only be prepared to invest their capital over the long term if they are confident that their claims will be protected in the event of insolvency.,” Asmussen said. Without clear rights to trace assets, there is a risk that there will be insufficient protection in the event of insolvency.
Private savings boost European investments and pension provision
The report emphasises the potential of long-term savings and retirement products to mobilise private capital to finance necessary investments. Draghi places particular focus on occupational pensions, but private pension schemes are also a lever from GDV's perspective. The association proposes that citizens should be more involved through pan-European savings and retirement products that combine the objectives of both the Capital Markets Union and pension provision.
Instead of the current rigid product regulations, flexible and clear criteria should apply. A broad investment strategy to protect private investors and a focus on investments in the European economy are key. “A European label could serve as an incentive to encourage investors to invest in forward-looking products,” Asmussen said. The overarching aim is to promote long-term investment, secure a stable income in old age and close the pension gap.
Reviving the European securitisation market
The roadmap presented by Draghi and his team of experts also provides for a significant strengthening of the European securitisation market. In view of the previously untapped potential and the importance for transformation financing, this is welcome from the association's perspective. When revising the European securitisation rules, adjustments for insurers in their role as investors would be useful. In particular, this concerns a risk-adequate easing of capital requirements.
The positions of the German Insurance Association on strengthening the Capital Markets Union can be found at the following link:
