Mairead McGuinness, Commissioner for Financial Stability, Financial Services and the Capital Markets Union, shares some thoughts about the recent sanctions against Russia, the effect of the new international context on DG FISMA’s work program, and whether we are witnessing the shattering of the glass ceiling for women in finance.

DG FISMA is responsible for sanctions policy – what has the rationale been behind the sanctions packages agreed in recent weeks? What have we tried to achieve and what do you think the challenges are going to be in the coming weeks?

The whole idea of sanctions is to send a clear message to Russia that its actions will be met with severe consequences. The objective is to hit the money flow to the Russian war machine, including by cutting them off from the legitimate financial system. What has been remarkable is the speed and unity of our reaction at EU level. We’ve tackled the financial system, we’re tackling transport, technology – every area where we can shrink the Russian economy, because we won’t be fueling this war. We know that these sanctions will also impact us - including higher energy and food prices. This of course pales into insignificance compared with what’s happening in Ukraine. We have had this idea in Europe that we are beyond war. But what’s happened shows that we are not - war has returned to European soil. We may also have though that a global pandemic was inconceivable - but we are all too aware that that is not the case. We have come through the pandemic - more united, realizing that unity is important. And as we face the reality of the Russian war in Ukraine, we continue to keep and even exceed that unity.

I think of Ireland in 1972, when we had the referendum (on joining the EEC), and the newspapers on 1 January 1973 with ‘Good Morning Europe’ and the joy and euphoria that was felt. Because we understand the importance of the European Union and that unity and being together around the table really matters.       

Is there a first message you would like to pass to for instance banks and others in the financial system about the implementation and enforcement of sanctions? Because they are really at the sharp end of it in terms of having to deal with a set of new rules?

When we read about sanctions, we do sometimes forget that a lot of work has to go into making them take effect. So we have been very heartened by the commitment of the European financial system to do the right thing. This is not easy, so I hope that those who have come to us for guidance and support have found it. We want to help to answer your questions and guide you through what is a very difficult process. And that’s a two-way street – you need to help us understand where there are glitches. So we need to have a very strong engagement and relationship – and I think we have that, because we’re there to support one another. When we look back at this, I would want us to be able to say that we did the right thing, we did it effectively, in a timely manner and that we didn’t cut corners and there was no circumvention. That’s a big ask, but I think we can deliver it.

How is the new international context, with the increased geopolitical risks, affecting your work and the priorities for 2022? What risks do you see to financial stability? What impact on the further development of the EU’s open strategic autonomy?

Our work on Banking Union and Capital Markets Union is vital, especially when it comes to the resilience of our own financial system, so we can’t let these issues fall by the wayside. We’re looking at the Digital Euro – the financial system will be very different in the next few years. So we’re looking to the future not the past. But we also have to be flexible, because we’re not sure what the twists and turns will be in this war in Ukraine. So we have to be ready and ensure that we’re watching what’s happening – watching financial stability, watching commodity markets and making sure that there aren’t any risks to financial stability. So yes, timelines may change, but we will not tear up our work program because of what is happening.

Another important area of course is anti-money laundering (AML). Here, what is interesting is that now the European Parliament are saying sanctions and AML are linked. I think the Parliament may have ambition for something bigger than we’ve proposed – and maybe we should do something more. So I think there will be impacts on a number of policy areas because of the war in Ukraine and not least AML. If you look at our ‘freeze and seize’ task force, we’re freezing assets but there is the question of whether some of them should be seized as well. That’s for the courts to decide but it’s important that we look at this. And the fact that there is coordination beyond Europe is very powerful. I’ve said on many occasions that there is dirty money in the financial system – globally and in Europe – and we need to clean that out. Now perhaps is the time where we have the most political push and support to do that, so I think we should just get on with it.  

When it comes to the situation in Ukraine, FISMA’s work goes beyond finance issues to also look at the impact on energy prices, food prices and the cost of living. How does this change your priorities and those of the DG?  

One of the priorities that the current situation demands is the need for a huge ramping up of investment in renewables. And since 1 January, we have our first taxonomy around sustainable investments, and that’s all about renewables. So that has to be used and we need to push to get more private finance in that direction. But what do we do in the transition? We’re over-reliant on fossil fuels from Russia and that has got to change. This is where the complementary delegated act on nuclear and gas that is currently under the scrutiny of co-legislators comes in – and I would really like to explain what this is about. This is not us saying you must invest in nuclear and gas. We are saying that we want investment in renewables now more than ever. But there are Member States that can’t just go from dirty coal to renewables – they need transition. I believe it’s really important that private investment in gas and nuclear should be taxonomy aligned with conditionalities, around phase-out times and safety issues - this is what our complementary delegated act does. We have to enhance our own renewable production. But we also have to recognise that some energies like nuclear or gas – from reliable sources – are really important for the transition.

In addition to you as Commissioner for financial services, we also have Christine Lagarde, Verena Ross, Natasha Cazenave, Petra Hielkema and, outside the EU, Janet Yellen as US Secretary of the treasury. So, one could argue that women are more represented than ever in high-level positions, at least in the public sector. Are we witnessing the shattering of the glass ceiling for women in finance?

I think it’s always a mistake to focus on the numbers – that’s not how we need to be looking at this at all. I come from an agricultural background – both in my work as a journalist and in the European Parliament – and my experience has been that there are fewer women in finance than in farming. And that surprised me a lot. It’s not so much that we need more women at the top – that will happen. What troubles me is that there are a lot at the bottom, and they don’t seem to be encouraged to move to the middle. Not everyone wants to be at the top – and that goes for both women and men – but it shouldn’t be, as it is still today, that a few women do, and we think that’s enough. What I would say to younger women is that they need to look at the financial sector, because there are so many different opportunities and it’s hugely interesting and very rewarding. And it’s pivotal to so many things. Look at sustainable finance for example. That’s a game changer because it’s going to make our economy and society more sustainable.

Today, women invest less than men in capital markets. How can we create the right environment in the EU so more women feel both safe and empowered to handle their finances? How can the digitalisation of finance help here?

It would be great if women would take a hold of finance more. I think that we have made finance inaccessible because of the jargon – and I’m guilty of that too now that I’m on the inside! So we need to de-jargonise. And we need to further empower women to invest on capital markets and save for their own future. Many already have the skills they need as they are juggling budgets, planning for the year and paying for education – as finance ministers do! As we move into digital finance, my worry here is that again there are more men than women in this area. If we allow that to continue then the situation of women in finance in a digital era will be even worse than today. So let’s make technology accessible to all, let’s make finance open for all. We use the term financial literacy but maybe it’s more about being financially in tune, and making money work for you. And this is something that women and men need to know how to do.