France's Noyer on Urgent Action on Capital Markets Union, ECB Rates

Let’s start with one of your recommendations here, a number that caught my eye, €1 trillion of funding needed by 20-30. How realistic is it that we get there? Well, basically, well, thank you very much for receiving me and and good morning to all. We believe that we can do it. We can do it in the European Union because we have a very high rate of savings and simply this money is not well enough targeted. It goes too much into investments abroad and and and not enough into equities. So if the investor base is better reorganized with simple principles more towards retirement and and and pension systems new new products or or more often transformation of existing products to make them more efficient. We believe we can. We can move probably something like 200 billion a year towards the the real needs of the of the economy. And also we can develop new instruments in especially securitization to accelerate the rotation in banks balance sheet and and permits banks to to lend more to where it’s needed for the transition, the green transition, the digital transition that is more into the the needs of corporates, equipments and and infrastructures for energy for instance. Christian, a lot of what you’re outlining sounds very similar. Your outline sounds very similar to the way that the United States functions these pension systems is regulation around savings, the lending story. A lot of that, however, is regulated and dictated to some extent by the SEC. I’m curious if we need a European SEC, does ESMA serve that purpose? Well, we believe the the role of ESMA can really increase. We’ve done that in the in the banking sector for the the monetary union, for the banking union, we have what we call this Single supervisory mechanism that is working under the umbrella of the ECB and we believe that ESMA could really enhance its role. It’s probably not saying that all the national supervisors will will disappear. They have not disappeared in the supervision of the banking sector, but as much it really be the the, the, the driver, the head of the of the the single supervisory system. And what we propose is to start with big market infrastructures, the cross-border and systemic market infrastructures were really doesn’t make sense to have a number of of national regulators. And we also believe that it could develop its role progressively for the major asset managers. It would really make sense because the fragmentation of the supervision today means a lot of costs and inefficiencies. Yeah. Christine, good morning. Do we also need a mindset shift for European businesses that have relied for a long time on bank funding rather than using capital markets? Is is that at the heart of the problem? That seems to be something that’s been discussed for for more than a decade. Well, it’s it’s it, it’s true. It’s true globally, although there are differences between countries. For instance in in France the the share of market financing is probably close or equivalent to that of the UK. So it’s not at all the American system, but it’s probably something like the double of what exists in all the countries. Now we’re not alone it’s true also in the in the Netherlands for instance so that there are already a premises of of the start of a possible move but we we believe we can develop that. It doesn’t mean that the role of banks will disappear. They they can arrange structure securitize part of the loans they they do and then move that to the market. But yes, it’s true in a way we we should move towards the model you described, the American model or or at least be on the way to, to change. Yes. OK. So some kind of mindset shift. I mean you’re talking about more union here, Christian. And this has been, as we say, discussed for many, many years, how you forge more capital markets union. How do you set that in the context of European politics where we see the rise of populist leaders in some places, not everywhere, but certainly in some places. And the idea of more integration could prove controversial. Well, I I believe that first we, we want to to be very concrete for the ordinary people. I mean there’s the savers, they are interested in what they get the the return they get on their savings. What we propose would be products that would enhance the return they they receive on that can be a very, very telling for for the for the people in general. 2nd, we we think that we have no choice anyway if we want to finance and to find the money to finance the the big investment costs for the transitions, we need to really move ahead. This is well understood across all countries. I think there is a political dynamics in the sense that we had a few days ago the report from Henry Coletta who is well known and who who produced conclusions shorter than than ours, but that go in in in the same direction. And I don’t, I don’t think that this is a subject that really the populist parties will will want to discuss too much. They’re not so much interested by that. Christian, good morning. It’s guy you know a thing or two about monetary policy. So let me just get your take on what is happening. The Federal Reserve increasingly looks like it may not cut interest rates this year. How far do you think the ECB can stray and cut from the feds if we if the Fed is basically on hold? Well I think, I mean the ECB is is is in charge of a large enough monetary union to be to be really independent. So to say on what they desire it. What they have to do is to look after the reality of the European economy and target price stability for the European economy. For the Eurozone economy the the things may be different and they seem to be different because the the growth in the US is more resilient. It has been in the in the EU or in the Eurozone is stronger. The level of unemployment is lower and and it’s clear that the the needs seen from the the Fed, from the FOMC may be different at a certain point of time. So I I have no idea or I shouldn’t talk about what the ECB will do the the the they have to decide that but it it’s not irrealistic to believe that they move at different times even if the general the general movement will probably be go in the in the same direction. But there can be a gap of some months or quarters depending on the circumstances of each economic and monetary zone.