EU, plan to "mobilize" bank savings - 10 trillion euros of citizens can be used to support investments
Driven by the need to invest hundreds of billions a year to improve the competitiveness of the European industrial system, including on the defense front, and with the Banking Union still incomplete, Brussels wants to eliminate financial barriers and create a "Savings and Investment Union" that mobilizes at least part of the 10 trillion euros of European citizens in banks.
This declaration will be discussed by the European Union executive next Wednesday and provides a plan of interventions to unleash the economic potential of this gigantic mass of private capital, largely unproductive for the community. They represent 70% of the total financial resources of small savers and are used only by banks to finance in turn businesses and households through the indirect financial circuit. The remaining 30% is invested directly by savers in the capital market.
According to estimates by the International Monetary Fund, "barriers between Member States for financial services in the internal market are equivalent to 100% tariffs," the Commission writes. The difficulties of financial intermediation activity "are one of the causes of the low dynamism of the European economy."
"The need to remove obstacles to cross-border activities, to simplify and make regulations proportionate and to pay more attention to financial education" are common to all Member States. "Expanding financing opportunities for businesses" is also considered essential.
The Commission's draft concerns "the entire financial system of the Union" and makes it clear that these are actions that will require "a lot of courage" from capitals. Lowering barriers between member states for financial services expands the market and makes it more fluid, but brings an inevitable reduction in sovereignty. For this reason too, the document foresees that the Commission "should support initiatives agreed by groups of member states" that want to move faster than others.
The European proposal is divided into four areas of intervention: citizens and savings; investments and financing; integration and dimension; and efficient and harmonized supervision.
One of the main objectives is to facilitate the participation of small savers in the capital market. The main instrument identified by the Commission is the "savings and investment account", which in some countries has already yielded good results, thanks to digital platforms, simplified tax rules, preferential returns and the possibility of changing the manager at zero or almost zero cost.
A measure on savings accounts is expected to be approved in September, but it has not yet been decided whether it will be legislative or not and will also depend on the position of the Council and Parliament.
Financial knowledge
This will be accompanied by recommendations on the tax regime and a communication on increasing financial literacy: today only 18% of European citizens have a high level of skills. Also, by September, a recommendation on automatic registration in social security systems and monitoring by employees will arrive, always following the best European practices.
More freedom for securities
The first legislative measure envisaged in the list of 19 actions (of which 14 are regulatory) concerns securities. By June, in fact, Brussels "will present proposals for the revision of due diligence, transparency and prudential requirements for banks and insurers" with a "further simplification" of the rules. This intervention is part of the rich package of "actions" in the "Investments and financing" chapter which includes, among other things, an intervention in the Solvency II delegated act which "will specify the eligibility criteria for the favourable prudential treatment of long-term investments in shares" to facilitate insurance companies. The aim is to have more freedom for banks and pension funds.
Completion of the banking merger
Several measures are planned to remove various cross-border "barriers", including fiscal ones, that hinder the free movement of capital within the EU.
Finally, an integrated banking system and the Banking Union are considered "crucial" for the success of the Savings and Investment Union. The Commission therefore calls on the Council and Parliament to find an "ambitious agreement" on banking crisis management and on the European Deposit Insurance Scheme "and stands ready to provide its full support in this process".
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