Finance Watch comments on CMU mid-term review

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

Commenting on the mid-term review, Finance Watch Acting Secretary General, Benoît Lallemand, said:

“We strongly welcome the Commission’s efforts to promote a financial system that serves sustainability goals. This mid-term review is an opportunity to take stock of concerns expressed by stakeholders and set a new and more sustainable course for financial policymaking in the EU.”

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.

To download the response, please click here.

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