Europe's capital market reform needs urgency, UK cooperation
De Nederlandsche Bank's Olaf Sleijpen stressed the urgent need for Europe to accelerate its capital market reform and foster renewed cooperation with the UK. Speaking in London, Sleijpen compared Europe's journey to a 'race against time'.
A race against time
Sleijpen emphasized that Europe's path to a Savings and Investment Union is not a leisurely journey but a race against powerful trends.
Geopolitical threats from Russia and China, difficult relations with the US, an aging population, climate change, and lagging productivity growth demand immediate action.
The European economy needs to become more productive, dynamic, and competitive now.
While the Savings and Investment Union is not the sole solution, it is a crucial part of it, aiming to increase returns on savings for citizens and mobilize risk capital for companies.
Despite widespread recognition of these benefits, practical progress in capital markets has been slow, contrasting sharply with the rapid pace of European rearmament.
Impactful and achievable steps
Drawing a lesson from Jules Verne's Phileas Fogg, Sleijpen highlighted the need for adaptability and inventiveness in overcoming obstacles.
While full harmonization on insolvency regimes, taxation, and company law is a long-term goal, Europe should prioritize impactful and achievable reforms in the interim.
He expressed strong support for the European Commission's current approach, which focuses on four key areas: the supply and demand side of capital, market infrastructure, and supervision.
These proposals are seen as ambitious and target areas where significant progress is genuinely possible, ensuring that efforts are concentrated on practical advancements rather than prolonged legislative debates.
The Channel as a shared solution
Sleijpen argued that achieving real progress requires the right partners, specifically advocating for renewed involvement from the United Kingdom.
Brexit led to the EU losing its deepest capital market, ironically increasing the need for internal integration.
The UK's stock market capitalization, roughly double that of the EU relative to GDP, reflects accumulated expertise and institutional depth that could offer valuable lessons.
Policies like the UK's automatic pension enrolment scheme demonstrate how broad-based participation can deepen capital markets and build a domestic investor base.
Closer EU-UK cooperation, through mutual learning and aligning where sensible, can support stability and growth for both sides.