Response to the EC’s public consultation on the CMU mid-term review 2017

17 March 2017

Consultation response

Brussels, 17 March 2017 – Finance Watch today submitted its response to the European Commission’s Public consultation on the Capital Markets Union (CMU) mid-term review 2017.

Key points of Finance Watch’s consultation response:

  • The development of sustainable finance will benefit from common definitions and standards, and from embedding the Sustainable Development Goals in financial policymaking – rather than focusing on developing (green) niches.
  • We welcome plans to address the tax bias for debt over equity and look forward to more developments on this topic.
  • We call on the Commission to develop a European regulation on crowdfunding.

In addition:

  • We advocate improved consumer protection rules through product rules and an improved disclosure regime.
  • Systemic and economic risks linked to shadow banking have yet to be addressed. For example, implementing proposals to curb the re-use of collateral and set minimum haircuts in securities financing transactions would do much to protect the economy against excessively pro-cyclical lending.
  • The legacy of non-performing loans and structures that distort capital allocation in the EU banking sector also need addressing. Among other things, we support the Basel Committee’s proposals to restrict the use of internal models and introduce “output floors”, and call for a review of Article 32.4 of the BRRD to clamp down on state-sponsored bank bail-outs.