Kyriakos Pierrakakis from ECOFIN: A plan for stronger European markets – Focus on investment, liquidity, and innovation

Kyriakos Pierrakakis calls for strengthening European supervision to complete the Capital Markets Union and stimulate investment and growth.

In a critical address to the ECOFIN Council in Luxembourg, Kyriakos Pierrakakis highlighted the need to accelerate European financial integration, emphasizing that the Capital Markets Union cannot be completed without a more coherent and robust supervisory framework at the European level. The Greek Minister of National Economy and Finance and President of the Eurogroup highlighted the link between deeper integration of markets, increased investment and the promotion of innovation, noting that the current fragmented model of 27 different national supervisory approaches is an obstacle to the development of a truly single and competitive European capital market.

A Capital Markets Union without adequate European supervision is like a Monetary Union without the European Central Bank. This was pointed out, among other things, by the Minister of National Economy and Finance and President of the Eurogroup, Kyriakos Pierrakakis, in a statement at the public meeting of the EU Council of Ministers (ECOFIN), in Luxembourg.

The prerequisites

As he also said, deeper market integration requires a corresponding degree of centralized European supervision. Market participants with a systemic or broad cross-border presence should be supervised through a common European approach. A truly integrated capital market cannot be created when cross-border activities are supervised through 27 different supervisory perspectives and practices.

Adding that, “if we are truly serious about creating deeper and stronger capital markets, more investment, greater innovation, and a Europe that can finance its future on its own, then we must have the confidence and ambition to build the institutions that will make these goals achievable.”

In detail, the speech by

Allow me to begin by congratulating the Cypriot Presidency and the European Commission, as well as you personally (ed. refers to the Minister of Finance of the Republic of Cyprus, Makis Keravnos, and EU Commissioner Maria-Luís Albuquerque), for promoting this legislative package.

I would like to begin by pointing out something that is obvious to many of us in our countries: when we try to describe the Savings and Investment Union more broadly, it is a highly technical matter.

And when we discuss such technical issues, a television series that many of us have watched, “Yes Minister,” comes vividly to mind. Sir Humphrey, an iconic figure in the series, had the unique ability to turn the most important political issues into extremely complex technical discussions, serving his own purposes.

And the MISP (Market Integration and Supervision Package) faces, I would say, the risk of ending up as one of those debates. Because a citizen watching this debate, which is currently being broadcast on television, might reasonably ask: “What exactly are all these people in Luxembourg discussing? What are they trying to achieve?”

I would say that the easiest way to understand the MISP is to start with the end goal and work backward. We want deeper and stronger capital markets, more investment, and more innovation. We want European savings to finance European growth, and a Europe that can finance its future more effectively. Each key chapter of the MISP serves precisely one of these objectives.

The provisions concerning trading venues and market infrastructure aim to create larger European capital markets with enhanced liquidity. The provisions concerning asset managers and investment funds aim to enable European savings to be directed more effectively toward European investment opportunities.

Similarly, the provisions concerning cryptocurrency assets aim to ensure that the future architecture of digital finance is developed on the basis of coherent European rules. Finally, the provisions on supervision aim to establish the trust and consistency required by integrated markets.

Last night, we all attended the Eurogroup dinner with Jean-Claude Juncker. And I don’t believe I’m breaching any confidentiality if I say that, when we asked him what is the most important achievement that today’s generation of European policymakers can deliver, he replied immediately: the Capital Markets Union. I believe he is right.

This is, perhaps, the most important European economic project, which remains unfinished. That is why it must be completed before the end of the year, during the Irish presidency, under my good friend Simon Harris. We must support the Irish Presidency so that it can bring this project to a successful conclusion.

In this context, I would like to reiterate that Greece continues to support the European Commission’s proposal, as we consider it to be the most coherent and ambitious approach to achieving the objectives of the Savings and Investment Union. We believe that deeper market integration requires a corresponding degree of centralized European supervision.

Market participants with a systemic or broad cross-border presence should be supervised through a common European approach. We cannot expect to create a truly integrated capital market when cross-border activities are supervised through 27 different supervisory perspectives and practices. Strengthening the role and capabilities of ESMA is therefore not a matter of institutional preference. It is a necessary prerequisite for creating a more integrated, efficient, and competitive European financial market.

In particular, regarding crypto-asset service providers (CASPs), Greece has consistently supported the European Commission’s initial proposal. However, if Member States converge on a model of direct supervision by ESMA only for the largest crypto-asset service providers, then the relevant criteria should be ambitious and take future developments into account.

These criteria should cover not only the largest providers currently active in the market, but also rapidly growing firms with a high degree of market interconnectedness, as their activities may, over time, become systemically important.

At the same time, we fully recognize the important role played by the competent national supervisory authorities. The future framework should be based on a substantive cooperative relationship between ESMA and the national competent authorities, making full use of the expertise and capabilities available on each side. The rule is simple: Europe must regulate what is European, and national authorities must supervise what is national.

Allow me to conclude with one final thought. Europe did not create Airbus by coordinating 27 national aerospace champions. It created Airbus by building from scratch a truly European venture capable of competing on a global scale. Nor did it create a Monetary Union while leaving monetary policy entirely at the national level. We created the European Central Bank because institutions must be commensurate both with the size of the market they serve and with the scale of our ambitions.

The same principle applies today. A Capital Markets Union without adequate European supervision is like a Monetary Union without the European Central Bank. If we are truly serious about creating deeper and stronger capital markets, more investment, greater innovation, and a Europe that can finance its own future through its own resources, then we must have the confidence and ambition to build the institutions that will make these goals achievable.