The French Autorité des Marchés Financiers has published its annual report for 2024. As part of the update, the AMF Chair, Marie-Anne Barbat-Layani, outlined three major challenges for the agency.
Beyond investor protection and the choppy geopolitical environment, Barbat-Layani focused on the need to vigorously pursue the EU Savings and Investments Union to the forefront.
This initiative aims to remove market barriers across EU member states that impede the flow of capital and undermine investor opportunity.
The goals of the Savings and Investment Union include:
- Encouraging retail participation in capital markets
- Promoting equity investment
- Developing the supplementary pension sector
- Market integration and supervision
- Assessing the overall situation of the EU banking system
Barbat-Layani says the Savings and Investments Union is a key project for this year, and ending fragmentation of the European financial markets and supporting efficiency is important for the success of Europe.
“To bring this project to fruition, three major priorities must be pursued: mobilising European savings, establishing genuine European supervision of the capital markets – a guarantee of real simplification – and relaunching securitisation.”
The comments follow the gloomy Draghi Report, which lambasted the EU for falling behind economically. The report declared:
“First – and most importantly – Europe must profoundly refocus its collective efforts on closing the innovation gap with the US and China, especially in advanced technologies. Europe is stuck in a static industrial structure with few new companies rising up to disrupt existing industries or develop new growth engines. In fact, there is no EU company with a market capitalisation over EUR 100 billion that has been set up from scratch in the last fifty years, while all six US companies with a valuation above EUR 1 trillion have been created in this period. This lack of dynamism is self-fulfilling.”
Draghi stated that Europe is “hindered at every stage by inconsistent and restrictive regulations.” While there is plenty of talent in Europe, entrepreneurs tend to gravitate to the US, where capital markets are more robust and risk capital is more readily available.
While the US benefits from a risk culture of investors that supports entrepreneurs, where failure is accepted and almost glorified, the EU faces cultural challenges that may be difficult to overcome in the short term. How about new tax exemptions making capital gains in early-stage ventures tax-free? What about an intensive regulatory review highlighting the inefficiencies and costs associated with the vast bureaucracies apparent at both the EU and national levels? Pursuing the Savings and Investments Union holds merit, the big question is whether the needed structural reforms will be enacted to fulfill its ambitions.