European financial markets, Paris’ proposals to exploit community savings

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PARIS – One week following the European summit entirely dedicated to the competitiveness of the continent’s economy, the French government has published today, Thursday 25 April, four precise proposals to better integrate European financial markets and fully exploit the enormous amount of community savings that at best it remains dormant in deposit accounts or worse it is invested in third countries, particularly in the United States.

The premise is now known. The European Union has huge financial needs to support sectors of the future, such as energy, digital and climate. It is estimated that net of defense and security, the needs in these three areas amount to 1,000 billion euros per year. At the same time, according to Eurostat, the savings of European families amounted to 35 trillion euros in 2022. The goal is therefore to make full use of this mountain of money.

“There is a lack of investment in an economic context that is too weak (…) The underdevelopment of the European financial market is no longer acceptable,” said Christian Noyer, author of the report presented today here in Paris and in whose drafting other people participated seven exponents of the world of finance. Christian Noyer was director of the French Treasury (1993-1995), vice-president of the European Central Bank (1998-2002) and governor of the Bank of France (2003-2015).

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New common financial products

The report proposes to create new financial products, common to all member countries and which are long-term. Today, European investment is often short-term. “Bank deposits, savings accounts and secured and liquid life insurance funds represent 47% of European households’ financial investments,” the report reads. The report proposes a series of six criteria to be respected in order to obtain the European product label.

Relaunch securitization

The second proposal is to relaunch securitization. Before the 2008-2012 financial crisis in Europe the amount of securitized securities was 400 billion euros, today it has dropped to 150 billion euros. The reason for the collapse is linked to the regulation decided at European level, in the wake of the crash at the beginning of the century. It is therefore necessary to review the regulatory system in a less restrictive sense and above all to create a specific platform on which to exchange securitized securities.