EU should set 600 billion euro target for capital markets union-France

By Thomson Reuters Apr 25, 2024 | 5:47 AM

PARIS (Reuters) – The European Union should set a target to raise 600 billion euros ($644 billion) in investments annually by the end of the decade by integrating its fragmented capital markets, French Finance Minister Bruno Le Maire said on Thursday.

Although Europeans generally save more than Americans, EU capital markets currently lack the depth of their U.S. counterparts because they largely operate along national lines.

All EU leaders gave support to the principle of capital markets union at a summit this month though divisions remain on the details, with some countries reluctant to cede control of national financial rules.

“Let’s fix a target to mobilise each year 600 billion euros with a new capital market,” Le Maire told a conference at the Finance Ministry about making capital markets union a European priority.

Le Maire has pushed for a pan-European savings product to kick start capital market union, which he said governments should aim to make available by 2027 by agreeing favourable tax treatment and simple rules.

A report by French former central banker Christian Noyer for the ministry said that the new product could build on existing national schemes to offer similar terms for tax treatment, employer contributions and early withdrawal.

The aim would be to ensure that savings are locked up long enough to be steered into higher risk, higher reward equity-type investments which European companies sorely lack.

The report estimated annual inflows could reach 200 billion euros based on the example of French employee savings plans, which on average attract the equivalent of a month’s pay per year.

Noyer’s report also called for a push to revive securitisation where banks sell on standardised loan portfolios to investors better suited to carry the risk by creating a joint European distribution platform.

It also said more powers should be given to the European Securities Market Authority to ensure better cross-border integration of financial market supervision.

($1 = 0.9323 euros)

(Reporting by Leigh Thomas, Editing by William Maclean)