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I’m delighted to be back in ECON – the last time I was with you was for my hearing in October.
I want to honour my commitment to keep the Parliament – ECON in particular – fully engaged with my work.
We’re still in the midst of the pandemic and its corresponding economic impacts. We need to work together to put the recovery on the right track.
Thank you for your work in concluding trilogues on the Capital Markets Recovery Package in record time. I now encourage the Parliament to approve the Package in Plenary.
Our main objective this year is to ensure we have an open, strong and resilient economic and financial system, based on solid market infrastructures.
This is the key message in the Commission Communication adopted last week.
A strong economic and financial system will be based on completing the Banking Union and developing the Capital Markets Union.
This year, our work on the Capital Markets Union will see a legislative proposal on an investment protection and facilitation framework for the EU.
We will also propose the creation of a single access point for investors for seamless access to financial and sustainability-related company information.
We will review the rules on European Long-Term Investment Funds to support non-bank financing for SMEs and long-term investment in infrastructure.
And we will present a proposal to review the MIFID II and MIFIR rules governing the market structure for securities trading in the EU following Brexit.
Work on completing the Banking Union will continue. We will put forward a legislative proposal on crisis management and deposit insurance towards the end of the year. On EDIS our ambition has not changed – it is an essential part of the Banking Union. I do not need to remind you about the sensitivities. But you also know how vital it is for the long-term stability of the Eurozone and the wider European economy to make progress. I count on your support to move forward.
The final set of Basel III reforms will be important to tackle problems that remain in bank regulation. Again, this is a sensitive area. The EU banking system went into the COVID crisis much stronger, compared to the last crisis. But we need to use these reforms to finish the job, while taking into account specificities of the European economy and the impact of COVID on our banks.
In December we presented our strategy on Non-Performing Loans. This is about being prepared. Addressing any increase of NPLs early will let banks keep lending to households and businesses, and support the economic recovery. So it is important for negotiations to progress on the two legislative proposals on NPLs relating to Secondary Markets.
On insurance, we will review Solvency II to make sure the regulatory framework remains fit for purpose, and to allow the sector contribute to the recovery, the Capital Markets Union and the Green Deal.
As President von der Leyen has emphasised, the recovery is an opportunity to build a greener and more digital Europe.
We’ll spend a lot of time this year implementing the MFF and the RRF. The issuance of Green Bonds under NextGenerationEU is an opportunity and a challenge.
The Green Deal will be vital for our economic recovery, as our green growth strategy.
In financial services, we need to create the right incentives to support the transition to a green economy.
We will present a Renewed Sustainable Finance Strategy, review the non-financial reporting directive, and present an EU Green Bond Standard.
We are also actively working on the next steps for the EU Taxonomy.
We received over 46,000 replies to the public consultation on the first delegated act for the taxonomy, on climate mitigation and adaptation.
I think it would be helpful to take a step back and look at what the taxonomy is, and what it is not.
It is a classification system that identifies sustainable activities – providing clarity and preventing greenwashing.
It is not a mandatory list of activities that investors have to invest in but a guide.
Given the big interest in the public consultation, we need to delay the delegated act so all responses are duly considered.
98 per cent of the responses are from European citizens urging the Commission to uphold the ambition of the delegated act and not to break the alignment with Green Deal targets.
Business respondents express some concerns that the Taxonomy criteria go beyond what is required in existing sectoral EU legislation.
The Taxonomy goes further in some cases than existing legislation and policy because it is necessary to do so.
Because the EU is committed to climate neutrality by 2050, and the Taxonomy is a science-based guide to achieving that target.
The status quo is why we have a climate problem. Continuing on our current path will not do.
Many sectors need to transition towards sustainability and the taxonomy provides a guide to that end. It will allow business to set out clear plans and commit financing to meet thresholds. Investments will be taxonomy-aligned where they meet thresholds – or where there are clear plans to get there.
The Commission will consider recalibrating the technical screening criteria where serious concerns are raised, but we do not want to break the link with science or the alignment with Green Deal targets.
The Commission has asked the Platform on Sustainable Finance for further input on how the Taxonomy framework and the wider sustainable finance framework could help business with the transition.
Transition finance will be a key part of the Renewed Sustainable Finance Strategy.
I look forward to colleagues’ continued engagement on this issue.
On digital finance, we put forward important legislative proposals on crypto-assets and operational resilience last autumn. ECON’s work on both proposals will be key, as we want the co-legislators to reach agreement as soon as possible. We need to equip our financial system to seize opportunities while mitigating risks. This area is fast moving and the new frameworks are urgently needed.
On anti-money laundering, we will present ambitious proposals to reinforce the integrity of our financial system – proposing a single rulebook and a new EU AML Authority, with direct AML supervisory competence over the most risky financial institutions. We should not tolerate dirty money in our financial system.
We must also do more for consumers, so they are better informed, have plenty of choice among appropriate financial products, and benefit from digital innovation. We will increase efforts to empower consumers and step up work on financial literacy. We’ll assess the feasibility of developing a dedicated EU financial competence framework. And carry out preparatory work for a retail investment strategy to be adopted next year.
We will continue to implement the Retail Payments Strategy. Citizens and businesses should be able to choose from diverse payment solutions usable throughout the EU, supported by resilient payment infrastructures. We will support the rollout of instant payments. We will also work on reaping the benefits of the second Payment Services Directive.
And finally, Brexit. I welcome the agreement reached on Christmas Eve, and I would like to pay tribute to the tireless work of Michel Barnier and his team.
The EU and the UK agreed to reach a Memorandum of Understanding on Financial Services by March 2021. Talks have not started yet.
We envisage a framework similar to what we have with the USA: a voluntary structure to compare regulatory initiatives, exchange views on international developments, and discuss equivalence-related issues.
It is not about restoring market access rights that the UK has lost, nor will it constrain the EU’s unilateral equivalence process.
Once we agree on our working arrangements, we can turn to resuming our unilateral equivalence assessments of the UK, using the same criteria as with all third countries, including AML and tax cooperation.
We will only take decisions where they are in the EU’s interest.
The UK intention to diverge requires a case-by-case discussion in each area. Equivalence and divergence are polar opposites.
If we set up regulatory cooperation with the UK, that gives us a good forum to examine these issues in detail.
I’m optimistic that over time, through cooperation and trust, we will build a stable and balanced relationship with our UK friends.
As with all our cooperation frameworks, I will aim for maximum transparency with the Parliament and Member States. I want to continue the good example set by Michel Barnier and his team in terms of transparency and cooperation.
Brexit is a significant regime change for the EU financial system.
We saw no volatility or disruption in markets when the transition period ended on December 31st. Market participants were prepared, reflecting well on the work by EU and national supervisors.
We will continue to monitor any disruption for EU consumers and firms.
There were some quick adaptions – for example, trading in EU shares moved back to the EU without disruption.
We have given banks until mid-2022 to reduce exposures to UK Central Counterparties. A technical group will assess the issues involved.
We have a very busy year ahead of us. I’m looking forward to continued fruitful cooperation with this Committee, on all of the issues that I have highlighted, as well as any other topics that are important to you.
And I now look forward to hearing your views.