Without a 'Kantian turn' Europe will fail before the challenges of deglobalization, demography and decarbonization
MADRID, 17 Nov. (EUROPA PRESS) -
Completing the capital markets union represents an "indispensable" project for Europe when it comes to addressing the challenges posed by deglobalization, demography and decarbonization, as warned by the president of the European Central Bank (ECB), Christine Lagarde, to who the creation of a European SEC would allow progress in this direction by unifying supervision and rules.
"A capital markets union is an indispensable project in this context," the president of the ECB defended in Frankfurt at the opening of the European Banking Congress with a view to the challenges posed by the growing fragmentation into competing blocks of the global economy. an increasingly approaching demographic tipping point and the growing impact of climate disasters.
In this regard, he has pointed out that addressing all these challenges at the same time will require a generational effort for which a massive investment is needed in a short space of time, recalling that the European Commission estimates an additional 620 billion each year for the green transition, on average, until 2030, and another 125 billion per year for the digital transition.
"It is clear that we cannot rely on our current framework to finance this investment," Lagarde summarized, as governments have the highest debt levels since the Second World War, while banks, which will have a central role to play, take on so much risk on their balance sheets.
"We will not be successful in these transitions if we do not get the capital market union back on track," he stated.
In this way, the Frenchwoman has defended the need to adopt "a Kantian turn", in reference to the revolution of thought proposed by the philosopher Immanuel Kant, with a change of approach that allows Europe to get back on track with the construction of the union of the capital market.
In this sense, he has warned that the conditions for the development of capital markets in Europe have not yet been satisfied, mainly due to the absence of a unifying project around which said union can be anchored, in addition to what he has considered an excessive dependence on a "bottom-up" integration approach.
"The bottom-up approach has clearly not provided sufficient incentives for interested parties to build a European market," admitted Lagarde, for whom this strategy has also not served the harmonization of areas that could really make a difference. in terms of breaking down cross-border barriers, so he proposes moving to a "top-down" approach.
Taking as a reference the development of the domestic capital market in the United States to respond to the challenges of financing the expansion of the railroad that would boost the country's economic growth, Lagarde has pointed out that the establishment of the Securities and Exchange Commission (SEC) in the The 1930s played a key role in addressing market fragmentation.
While the European Securities and Markets Authority (ESMA) does some of that in the EU, Lagarde has stressed that it is "not truly unique" and supervision remains largely at the national level, fragmenting the application of the rules. of the EU and law enforcement powers are often divided between several national regulators.
"The solution could be to create a European SEC, for example by expanding the powers of ESMA," the Frenchwoman proposed, for whom it would be necessary for the entity to have "a broad mandate", including direct supervision, to mitigate the systemic risks that raised by large cross-border companies and market infrastructures, such as the EU's central counterparts.
But beyond a strong institution, for Lagarde it is also key to have a single regulation that allows leveling the playing field and promoting integration.
"To mitigate fragmentation in EU capital markets, a more ambitious approach should involve the creation of a single regulatory code enforced by a unified supervisor," he said, as, in his view, this would empower private entities. to expand its ambitions to encourage high-growth private investments.