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Jonathan Hill started his speech by looking back at his tenure as the Commissioner for Financial Stability, Financial Services, and Capital Markets Union (CMU). One major principle he followed during that time was to be brave enough not to regulate. At the heart of his approach was the Call for Evidence on financial services regulation, reviewing existing regulation. He made several proposals during his term, some of which addressed the need for a more proportionate approach to regulation, especially banking regulation, such that small businesses should receive different treatment than larger ones.
The panel with Gerhard Schick and Kay Swinburne, chaired by Guntram Wolff, discussed several issues relating to CMU and its past and future agenda. Mrs Swinburne acknowledged Hill’s general approach of reviewing the existing framework, while Mr Schick said that the project to harmonise rules in capital markets across Europe is still missing in several areas.
They further pondered whether the CMU agenda will be changing with the UK’s exit from the EU, and wondered what will happen to London. Mrs Swinburne argued that smaller countries actually have a higher potential to gain from CMU than London, and that it is important that the CMU project carries on and even accelerates to keep jobs and support growth. Mr Schick points out that there are other, structural barriers to access to finance that cannot be solved by improvements in issues like securities regulation as part of CMU.
The latter point was picked up again in the Q&A with the audience, where Mrs Swinburne argued that securitisation still helps make better use of capital and thus supports lending to small and medium-sized enterprises (SMEs). Meanwhile, Mr Schick said it is more important to have a differentiated banking system with more regional activity to fund businesses. Another question that was raised concerned financial stability. With banking union, Europe now has a very different and stronger banking system than before, Mrs Swinburne argued. Mr Schick mentioned that the system still has not been cleaned up, as the number of non-performing loans shows. This is ultimately due to the economic crisis, which needs to be resolved.
Event notes by Bennet Berger, research assistant.