Keynote speech by Martin Merlin at the Federation of International Banks in Ireland Annual Conference 2024

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Good morning, everyone. 

Many thanks to the Irish Banking and Payments Federation and to the Federation of International Banks in Ireland for inviting me to speak here today. 

Firstly, I would like to commend the organisers for the timing of the event. 

In the last six months we have had European elections, US elections, and last but certainly not least, we will have Irish elections next Friday. 

It is certainly timely to come together to discuss the future of international financial markets.

And I am delighted to be here having this discussion in Dublin, which has cemented itself as a major centre of financial services in Europe. 

Today in my remarks, before I look to the future, I would like to briefly touch upon areas where we have made progress over the past five years. 

Then, I will touch upon areas where more work is needed, and what the Commission’s priorities are for the next five-year political term in Europe. 

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The last five years have been some of the most turbulent in the history of the European Union. 

We have seen major and unprecedented crises that we have had to respond to quickly. 

We have seen a global pandemic, war on European borders, a cost-of-living crisis, and an energy crisis. 

As you will all be well aware, each of these crises needed specific and tailored responses. 

We were able to adapt our rules and provide more flexibility during the pandemic to ensure that banks could continue to lend and were able to absorb pandemic related losses. 

We put forward a capital markets recovery package to ensure that capital markets helped to stimulate the recovery from the pandemic.

And we delivered unprecedented sanctions to curtail Russia’s economy and reduce its capacity to wage war.

Despite these unprecedented challenges, we have also worked to make the financial system more efficient, and more effective.

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One example of our efforts is the reform of the EU investment funds regulations, specifically the Directive for Alternative Investment Fund Managers and the Directive for Undertakings for Collective Investment in Transferable Securities. 

Also known as AIFMD, and UCITS, respectively. 

The reforms we put in place better integrate the market for alternative investment funds, improve access to additional sources of financing for the European economy, and strengthen investor protection. 

Additionally, our changes improve the resilience of investment funds and enhance the management of financial stability risks.

We have also made significant progress in reforming the rules for European Long-Term Investment Funds, or ELTIFs. 

ELTIFs are unique as they are the only funds dedicated to long-term investments that can be distributed across borders to both professional and retail investors. 

However, since their adoption in 2015, the uptake has been lower than we had had expected.

In our recent review, we worked closely with co-legislators to eliminate barriers that were limiting the growth of ELTIFs.

The result is greater clarity for investors and increased opportunities for retail participation, all while ensuring robust investor protection. 

Our work to improve investment fund rules opens doors to greater investment in emerging European companies, supporting our green, social, and digital transitions.

We have also driven forward progress on other areas, such as payments.

Through our work on instant payments, we have made transfers in less than ten seconds a reality across the Union. 

This brings great advantages to Europeans and exciting possibilities for innovative payment providers. 

We have also led on landmark advances in combatting the misuse of financial services for illegal means by reinforcing our anti-money laundering rules and setting up a dedicated EU Anti-Money Laundering Authority. 

And we have worked to realign our financial system with our shared sustainability goals. 

Through initiatives like the EU Taxonomy Regulation and the Sustainable Finance Disclosure Regulation, we are fostering transparency and green finance. 

These rules also incentivise capital to flow towards sustainable projects, thus bolstering the EU's commitment to combat climate change and promote sustainable development.

As regulators, we have to make it as straightforward as possible for the private side to play their part in transitioning our economy. 

And I will come back to this in more detail later.

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Recent reports from Mario Draghi and Enrico Letta emphasize that a strong, competitive Europe is key to achieving our shared goals. 

Without this focus on competitiveness, Europe will fall further behind, and will lose the ability to have influence among its global peers. 

This is the vision for the coming political mandate, as set out by Commission President Ursula von der Leyen in her political guidelines. 

This vision is for a Union that is faster and simpler, more focused, and more united, and more supportive of people and companies.

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An important aspect of Europe’s economic competitiveness is the need to reduce the regulatory burden on companies. 

Our rules must be fit for purpose, and they must add value. 

Currently, many European companies are grappling with high costs to comply with some of our rules, which was never the intention. 

We want our European firms to be able to focus on their primary objectives of providing value to their clients and communities, both local and European. 

However, while this is going to be a central theme of the next political mandate, it is important to frame it correctly. 

Burden reduction does not mean deregulation. 

We have worked hard to bring in rules to ensure Europe’s financial stability since the Great Financial Crisis, and there is no appetite to roll back on any of them. 

In the coming mandate, European rules will be vetted to ensure that they are contributing to a more competitive economy. 

Commission President von der Leyen has also announced that the next Commission will be an “investment Commission”.

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This includes the announcement of a Savings and Investments Union, including both banking and capital markets.

While the specifics of this new concept are still being discussed, the broad direction for future policy measures is becoming increasingly clear.

First, there is a clear need to support citizens in building household wealth, economic prosperity and more generally in saving for the future, particularly for retirement. 

Record-high savings rates and substantial household wealth held in low-yield bank accounts reveal untapped potential. 

Directing these EU savings toward capital markets could unlock significant benefits and opportunities for financing EU investments.

Second, it is clear that the scale of the industrial transformation that needs to take place will require both capital markets and banking. 

Seeking synergies between the capital and banking markets therefore makes sense. 

Political momentum is needed to be able to make the Savings and Investment Union a reality, and we have seen some suggestions and discussion already on how to make it happen. 

For example, on reviving securitisation, on achieving more consistent and coherent supervision, and on fostering consolidation of financial market infrastructure and retail investment in capital markets. 

If we want to really change how our capital markets operate, we need to be ambitious and tackle some of the difficult issues that can really have an impact. 

Indeed, in terms of how we work together as a Union, strides forward are needed in the coming mandate. 

But I’m optimistic that the recent political support for the objectives of a more competitive Europe means that we can make real progress.

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Thank you once again for the opportunity to be here with you, and I look forward to our discussion.