Michael Kemmer, General Manager, Member of the Board of Directors of the Bundesverband deutscher Banken (Association of German Banks), Berlin
Welcome to Brussels Garden Reception
29th August 2017
Not checked against delivery.
Ladies and gentlemen,
I, too, would like to warmly welcome you, on behalf of the Association of German Banks, to our Brussels Garden Reception! Brussels is coming to life again politically after the summer break, and this is a moment we don’t want to pass up. So we are delighted that you have joined us tonight with an exchange of views in mind.
I. Europe before the German elections
Where does Europe stand today, and what direction should it go in? I naturally won’t try to answer this question, which is enough to fill a whole evening on its own. But allow me, if I may, to just briefly take stock.
Dutch prime minister Mark Rutte said at the beginning of the year that the election in his country was a sort of quarter-final in the fight against right-wing populism and anti-European forces.
It would be followed by the semi-final in France and then by the final in Germany in autumn.
Whether the general election in Germany is actually the final remains to be seen – the French election was probably more like one, I think. But what is true – and this is no bold prediction just under four weeks before the German election – is that the mood in Europe has shifted thanks, not least, to the election results so far.
The wave of anti-European sentiment that many feared following the Brexit vote has subsided. In none of these three countries will anti-European forces be able to co-determine, let alone dictate, policy in the coming years.
Something else is equally true, however: a final always merely ends a competition for the moment; sooner than you think, it’s time to start playing again.
Put differently, the election results – particularly in France – give Europe the chance to move into the next round and deliver convincing answers to pressing questions. But it has to seize this chance!
II. Stabilising and deepening EMU
Many of these questions are staring us in the face. One of them is of particular interest to us this evening: How can we stabilise and deepen the European Economic and Monetary Union?
There can be no doubt that the time has come to address this question. The EMU has been stuck in something of a rut during the past few years, occasionally even teetering on the brink of collapse. You can argue whether implementation deficits or construction flaws are mainly to blame for this.
But the fact is the member states not only each have to improve their competitiveness, they also have to strengthen and, if necessary, adjust the EMU’s institutional architecture. The European Commission presented initial proposals on this three months ago in its white paper on the future of Europe and its reflection paper on deepening the EMU.
III. Perspectives of private banks
So what is needed now from the private banks’ perspective? One main aim of the reforms should be making the eurozone an internationally competitive business location. When doing so, it is important to set the right incentives.
In other words, competences on the one side, as well as liability and responsibility on the other, must go hand-in-hand. This should be borne in mind when we discuss the idea of creating a European safe asset by packaging and securitising EU member states’ sovereign bonds.
One example of a good step towards integration in this context is the Banking Union. The Banking Union offered the prospect of sharing risks in the eurozone. This prospect was quite rightly tied to the condition of common European bank supervision and thus to the required restriction of national sovereign rights.
Whilst the first two pillars of bank supervision and resolution have already been put in place, I believe the third pillar, a European deposit insurance scheme, needs a bit more time.
National deposit guarantee schemes, with their own individual level of cover, first need to be harmonised before any common European scheme can be tackled.
To make progress on the road towards a single European financial market, efforts are needed in other areas as well, though. With the planned Capital Markets Union, the European Commission is moving in the right direction.
Its focus is on financing the economy, without losing sight of financial stability requirements. Also, it takes into account the important role of banks in business funding and pursues a complementary approach. When it comes to financial transactions, the still pronounced home bias in the eurozone countries has to be overcome. At the same time, a point of criticism is that the work so far on the Capital Markets Union focuses too strongly and too one-sidedly on institutional aspects.
IV. Introducing Prof. Selmayr
Ladies and gentlemen, French writer and politician André Malraux made the following shrewd observation: “In politics as in grammar, errors made by everyone are eventually accepted as a rule.” In the EMU, may I stress, the exact opposite should apply: rules should ensure as far as possible that no errors are made. A set of rules that work is essential for a stable and successful EMU. This is the lesson we have learned over the past few years.
On this note, we look forward now to hearing proposals for a modified and thus more effective set of rules from an authoritative source. How does the European Commission see the future of the EMU? We are highly honoured that Professor Martin Selmayr, Head of Cabinet of the President of the European Commission, has agreed to speak at our reception and to present the European Commission’s ideas on, quote, “The European Union: Towards a Challenging Year”.
Professor Selmayr, the floor is yours!