EDIS proposal was hastily cobbled together
Mr. Ferber, in the Economic and Monetary Affairs Committee, a compromise proposal for the European Deposit Insurance Scheme was recently voted through. Is the way now clear for fully communalised insurance?
No. Because we've managed to formulate a very comprehensive set of conditions that must be met before moving beyond the initially proposed liquidity support, towards a communalised approach. For example, the special rules for France regarding the target allocation are being questioned. Also, before taking the next step, measures to reduce risk in the banking system would need to be agreed upon. So, there is not an automatic progression towards full insurance.
Nevertheless, you're far from happy about the vote?
Yes, because firstly, I am concerned that the EU Commission may misuse the vote to make further proposals for EDIS. And secondly, I consider the scope of potential liquidity support to be far too large. After all, funds amounting to 0.4% of covered deposits would be transferred to the EU fund, and would then be available as liquidity assistance. If a country then gets into a larger crisis, it will have problems repaying assistance of this magnitude. This proposal was hastily cobbled together.
So you would have preferred lower payments into the EU fund?
Yes. A significantly lower amount would have been sufficient for appropriate liquidity support. Take the example of France: France only secures 0.5% of covered deposits. If it now has to pass on 0.4% to the liquidity pool in the future, French deposits will no longer be secured. This is not really a contribution to preventing bank runs.
Reservations were also expressed in the debate due to the lack of consistency between EDIS and other EU regulations.
Yes, we have a huge problem at the moment. We recently completed the first reading of the Crisis Management and Deposit Insurance (CMDI) legislative package. The vote on EDIS contradicts what we decided on CMDI. Therefore, it is necessary to consider whether it makes sense to push ahead with EDIS while we are still negotiating with the Council on the crisis management package.
The EU Parliament also recently positioned itself on the Retail Investment Strategy. Does this mean a ban on commissions is now definitively off the table?
I think Parliament's position is clear and straightforward, namely no ban on commissions! Not even a hidden one! We have taken a different approach with a benchmark model. Member states would be better advised to orient themselves towards the Parliament's position. But they are still pursuing a different path when it comes to the issue of non advisory distribution.
Are you happy that a majority in the EU Parliament voted against a commission ban?
Yes, I am pleased that a large majority of the EU Parliament shares my view. Because before the vote, I had to face hostility. Now it is clear that I represent anything but special interests.
The legislative term is coming to an end. What has been achieved in financial market regulation during this term of office?
Certainly, the finalisation of Basel III, and regulatory requirements for insurers are on the plus side. So, CRR, CRD, and Solvency II, all of which we concluded in the plenary in recent days. In these cases, we demonstrated that we are able to move forward cautiously in the areas of banking and insurance supervision.
And where would you have liked to see more?
What has been lacking is progress on Capital Markets Union. We need to consider whether we should move away from focusing on the harmonisation of products. Take, for instance, the Pan-European Personal Pension Product (PEPP). It is anything but a success story. Instead, we should focus more on financial markets infrastructure. But for that, we need majorities, for example, to bring Euro clearing back. Apparently, the French prefer that Euro clearing remains in London.
What about comprehensive regulations in the area of sustainability?
In retrospect, I also view this on the negative side. Sustainability regulation and reporting have created huge bureaucratic burdens for the finance industry. I don't believe that CO2 reduction can be achieved through documentation, but through investment. Thus, we need to provide incentives to transform dirty technologies into clean ones. Instead, it has been firmly established that as much money as possible flows into green technologies. We will need a rethink there.
What will the new EU Parliament focus on first in the autumn?
First of all, there are still a whole series of Level 2 measures pending, on supervisory rules, sustainability reporting, or MifiR. Reducing bureaucracy will not be easy while these delegated acts are being delivered. On the other hand, I personally perceive within the EU Commission that there are considerations for a regulatory pause.
So what topic is going to be at the top of the regulatory agenda then?
Capital Markets Union. The question of how we can actually advance the financial internal market played a significant when EU heads government met recently. I advocate that we first focus less on measures for retail investors, but rather work on creating the conditions for more IPOs in Europe again.
