Uniting Europe's Markets | Davos 2024 | World Economic Forum

well welcome uh everyone who's here and uh watching online this session on uh uniting Europe's markets and we are focusing particularly on uniting Europe's Capital Market though I think there'll be other aspects that we'll touch on I mean it's very striking I was commenting some of the other speakers I have a feeling of deja view around this I'm sure I have done just such a panel on a on a similar set of challenges around Capital Market Union at some point in the last few years you know the European Union has achieved extraordinary things in the last 15 years or so but if there's one major project that if anything has gone backwards in that time it is the development of a truly European Capital Market you know the free movement of capital was actually mentioned in the Treaty of Rome and the Capital Market Union project was forly launched it'll be 10 years ago this July and yet financial integration in Europe is lower than it was before the global financial crisis and the Europe's Bond markets and Venture Capital are all dwarfed in scale um by the US so we're going to be trying to kind of tease out I think not just sort of a moaning about you know why we haven't got here but also uh you know are they what are the key obstacles where could progress be made we may also mention whether whether it should be the top priority whether actually there are bigger things to do to do with the single Market um but anyway we have we have people sitting on lots of different sides of this Christine lagard obviously European Central Bank president Pascal donu EUR group president and expenditure minister in Ireland Christian saving uh the Deutsche Bank CEO uh Roloff B uh who's the managing partner for Europe in the US for sooya and Nadia calino uh the European investment Bank president so thank you very much to all of you Madame legard I must uh start with you uh you know we have been talking about this for a really long time yeah why do you think the progress has been too slow and I guess also what what for you what would be the single priority that we could press on in in the the 10y year anniversary of this project well good afternoon to everyone and Stephanie you're right it it has been a recurring topic uh for many of us and esec especially those of us who work on on European integration I think uh jeanclaude junker was the one who Pine who sort of made that one of his key project and that was already a long time ago and a few things have changed uh but it hasn't progressed much and as you said financial integration if anything has uh been reduced over the course of the last few years so why do I think that we should really mobilize our energies and and why do I think that all of us around this uh panel are convinced that we can actually make progress and you have to not blame anybody uh not try to nitpick and and finger point um but ask yourself whether there is a valid business case and an opportunity to actually take it further and then what you need to do is to look at history and the circumstances during which very large capital markets such as the US very large Capital markets such as the UK why did they develop and were the circumstances that justified it at the time that could be taking place now and that's what I think personally so when you look back at the US the Capital Market developed massively as a result of the development of the railroad across the country if you look at that numbers it was late 19th century but the take of the takeoff was clearly associated with railroad development and there was Bond emissions most of not all most of it but a large part of which was subscribed by foreigners the same happens with the UK and the municipal Capital Market grew to about half the size of the government debt Market I want to make it very uh specific and it was related to urbanization and the development of building roads sewers Gas Works and all the rest of it so what does that have to do with our current circumstances plenty of railroads plenty of Ste sewers uh and infrastructure but what we have in front of us now is what I call the ddddd one of which is decarbonization one of which is digitalization and if I'm to believe the numbers uh provided by the European commission and I have no reason to doubt them although they tend to increase over the course of time it will cost no less than 620 billion per year to actually move the green transition further into the hope of a clean energy environment and a serious reduction of our CO2 emission and it will cost 120 billion per year as well to develop the digitalization that we need so if you put these two numbers together I'll leave it to it do we have the money no public not enough fiscal space for that Banks I'm sure that Christian will say that yes they can carry some of it but it's not enough so I contend that there is actually circum a set of circumstances that could fully justify that we go over the many hurdles that we have faced and that still exist in order to put in place a capital market and I would be happy to expand on what we should do what method we should use because I have some views on that having gone through 15 years of trial and errors fail failing uh to to achieve the ultimate results and I think that artificial intelligence can help so Pascal donu you are head of the Euro group Christine has has very uh admirably kind of placed this on the economics the economic case for Capital Market Union you've stated it as a sort of priority for the group how are you going to pursue that in the next year so if I could give the uh uh political side of of the coin uh that Christine has described very clearly uh when she described the economics of it so politically as a finance minister working with other Finance ministers in the EUR group uh so much of our effort so much of our Focus has firstly been on budgetary matters where Finance ministers spend 95% of their time looking at how much they're taxing how much they're spending and how much they are borrowing uh what little time has has been available uh from dealing with those waiting matters over the many difficulties of the last years was then devoted to banking issues to banking Union during the global financial crisis and in the aftermath of the financial crisis building up and supporting our institutions and making all of the changes that were needed the benefits of which I think we've seen in recent years and I would contend actually that an opportunity cost and a Justified opportunity cost has been the political focus on the need to build and deepen our Capital markets uh has not been what it could have been because other priorities needed time and needed economic and political Capital the reason that is now changing is exactly for the reason uh that Christine has just outlined there what she summed up very very clearly is we think about Capital differently at moments of economic transition and we are are clearly at multiple moments of economic transition exactly at the moment that Finance ministers need to normalize budget policy and reduce borrowing and this has brought to the four the issue that we are discussing here today in terms of what change could look like from a process point of view and I won't go into it too much because process really makes compelling uh content um they're already here I mean you know well still I want to keep the audience in the room but I'll still stum it up quickly um Prime Ministers last March in the European Council asked Finance ministers to look at this project we've been engaged in a number of different processes and looking at us and it's now going to conclude in March where we are going to say to the commission and to the next Commission in particular these are the areas that we want you to consider we want you to act upon and we believe as a group of Finance ministers we can make progress on these matters quickly and just as the president outlined the different D there D's of the changes that are happening I think there's an ABC that we need to be aware of what's the architecture of capital markets how can we change us and if we change it what's the be of what it can mean to a business and what's the see critically as a politician of what it can mean to Citizens and that's the areas that we want to make further progress on on top of the gradual and important change that the commission have been making and they have been but we're all conscious that we have to do more now and the time ahead so Christian saing you're sitting there at Deutsche Bank does your heart leap when you hear that this is now going to be a priority uh do you see I mean is this something that is ex remotely exciting to you or actually just not a big deal for your business well it's super exciting for me and and and and I mean if you have followed me for the last 5 years I think um I'm I'm one of the biggest um pushers and fans of the European Capital markets Union and um for for a couple of reasons number one Christine and and and Pascal both said it I think we are coming into an era over the next 10 years and and forget about the banks from a corporate industry where operating expenditure is so to say replaced by a pro priority by capital expenditures the number of Investments which corporates have to do in Europe in order to be in the game in competition from a digital from a sustainability ESG point of view is tremendous and and and I think those companies who are investing will be successful those companies who are not following on AI and ESG will not be there anymore in 10 or 15 years and therefore the the necessity to invest is huge we can't do it as Christine is saying even if I would love to do it and I think by the way um the European banks have done a tremendous job in cleaning up being robust healthy sustainable profitable the numbers Christine just mentioned are impossible to stem for us today unfortunately 70% of the financing of the German middle stunt is done via bank loans in the US it's actually 25 or 30% the rest is coming from the capital markets if you're now think about how much investments will be necessary in the next years the bank balance sheets as robust as they are will not be sufficient and we also talked about the public finances doesn't work and therefore we definitely need the European Capital markets Union and therefore I'm I'm really I think the one who is again and again saying we need to make progress now two things to this number one I think we need to do a better job including the banks explaining why we need these Capital markets I think that in particular in Europe in my home country there is also from the society point of view still a kind of a distrust in capital markets and that may go back to the 2008 financial crisis and we can criticize it but it doesn't help we need to do a better job in explaining why it is actually necessary for keeping the wealth and the prosperous situation which we have in Europe and I think this is one thing it's education of the people why it's so necessary in order to get Europe uh competitive and let it stay competitive and the next item is and and I'm sure um our partner to the left will will talk about that when we think about European Capital markets we think about kind of the deep markets for um whether it's Equity insurances whether it's Bond inssurance but usually if you get a deep Capital Market then the sidearms are coming and what I mean with sidearms is venture capital private Equity other people other players are coming to to the game and this is again necessary in order to finance new technologies new emerging Industries which are coming and therefore I think we also need to see the capital markets Union not only as the financing port for traditional Industries but actually as our chance to attract new Industries like the tech industry into Europe we have the talent we have the we we have the Excellence if you look at autom uh industrial AI some German companies European companies are leading in the world but we also need then the underlying financing and therefore my heart is leaping if I hear that there we go NAD calino I guess we can add you to the list of people that also or the European Investment Bank also can't afford to finance all of the things that have been talked about but what role can can the European Investment Bank play yes two thoughts from my side to complement what already has been shared and I let me start where you where you start started yourself which is this feeling of deja vu now I was responsible for financial regulation around the the Euro crisis I left it in 2014 and by the time we already had the clear diagnosis that Capital Market Union was a top priority and that we needed to move as fast as possible in this direction 10 years later we still discussing you know and and um despite the fact that I I always agree with with Pascal I think that we can spend years discussing what the ABC is and maybe it's going to be more difficult to reach an agreement on that uh so my uh approach to this would be let's do it let's start somewhere you know and find some lwh hunging fruit or some realistic element on which to start it can be a market it can be an instrument I will I will come back to this in a second but an additional reason to to Christine's uh to why we absolutely need it is that for the climate transition we need scale so we have the Technologies we have wonderful startups and companies that have developed the technologies that are going to allow Europe to succeed to rise up to the challenge and we will and we can do it but we need scale and so it's not only a matter of capital markets Union it's also a market of integration of our markets and making Europe have the sufficient scale for this to become profitable and to become affordable because as Pascal said these new techn Oles cannot be only for Rich citizens or for wealthiest States you know this this transition needs to reach the whole world uh and so I think that it is it is of the essence and it's urgent that we actually proceed with this and this brings me to my second point which is what can the eiib do and as you know the EI has uh I think been very successful in becoming the climate Bank we fixed ourselves a target of 50% of our business in climate Finance we outperformed this uh Target not only in the bank but as a group together with the European investment fund actually I can tell you I mean we will be uh disclosing the 2023 results next week in detail but I can already tell you we've made 49 billion EUR in green investment in 23 up from uh 38 the previous year so you know the progression is I think outstanding it is impressive mhm and we were also Pioneers since 2007 issuing uh climate awareness bonds you know this is the this is the Pioneer instrument of of climate bonds and green bonds uh why don't we start there why don't we try to find an area a market where we have the taxonomy Europe is in the lead in developing these uh new instruments and green Finance there's a strong political commitment to The Climate transition and I think the eiib should indeed play its role in being a catalyst uh Dr risking Investments supporting Financial uh sector also you know uh taking on new instruments and trying to explore new Financial engineering instu instruments that can allow us to fund the necessary Investments and mobilizing public and private Partnerships which I think are going to be necessary if we are to succeed which we will thank you R of B your sort of C sming at the end and um I'm sure you're very polite anyway but you look like you're being particularly polite when you sort of have this feeling that a lot of what people have just talked about is completely irrelevant to you I mean this is partly this project is partly about having more seoa sort of deeper sources of venture capital as well as other sorts of financing in Europe and I don't get the sense that any of this would sort of fundamentally change the way you think about Europe but maybe am I completely wrong there uh that's mixed firstly thank thank you very much for having me here I feel it's an honor to be uh invited here today you know it's a qu we back Founders that build early stage companies uh and over the years we've backed Apple Oracle Cisco uh Nvidia Google PayPal YouTube Instagram WhatsApp the list goes on so the companies we back today account for 27% of the NASDAQ when they were private companies so we operate in a very different part of the universe and candidly I'm kind of daunted with the challenge that you face because we deploy small amounts of money in Founders who have a dream to build for the future but I feel that in our business Money Follows the opportunities and so we've been active in Europe for over a decade uh I remember in 2010 May 2010 I was introduced to a young company in Copenhagen called Unity there were 30 people in the company and I hopped on a plane and I flew to Copenhagen immediately and we made an investment in that company and today it's a global winner they have two billion in Revenue it's a big public company uh we did that with uipath in Romania so from my point of view there's a a tremendous amount of opportunity in Europe and we've we now have people on the ground in Europe looking for opportunities last year 11 of our 44 Investments were in Europe uh we have a fantastic investment in a company called robco in Germany uh building robotic Solutions Penny Lane is a software company in Paris we have an early stage AI company called dust that's also based in Paris so I see tremendous opportunity from the bottom up with Founders who want to build for the future and hopefully that becomes a driver of economic growth but is Europe just to get back is is Europe already a single Market as far as you're concerned I mean is that what what are the do you face any obstacles from our narrow point of view from a capital Market point of view it really is the same because we can hop on a plane and go anywhere and make an investment the challenges are more from an operating point of view where you know what the founders tell us is they want easy access to deep pools of talent so Penny Lane wants to concentrate all the best talent it can in Paris from wherever uh they want predictable and consistent regulations and they obviously want a large Market opportunity but I'll say the other thing that's changed about European Founders by the way part of the reason we're so enthusiastic about being here is that they have Global Ambitions I'll be honest when I first traveled to Europe 20 years ago I felt that Founders here were aiming for small exits they they were happy with an acquisition and now they really dream big your phrase Money Follows opportunity rather than um the other way around did I get the way around yes uh it just makes you want I mean does are we focusing on the wrong things I don't know who want wants to take it up on but you know Pascal should we be thinking more concretely about the opportunities in the broader economy and let the money come to it but that's what we are doing and I completely agree with the analysis you've just offered there regarding the Outlook uh for European entrepreneurs if I look at how we are doing with our share of patents in different very important parts of the global economy and if I look at the entrepreneurs that I meet in Ireland alone uh their ambition their inov ation You' be very familiar with stripe course you've invested in at the seat stage we were the first invest you one of the first supporters and now globally successful company with peers uh nowhere near that scale yet but many peers who are as ambitious in Ireland H and all over Europe to do that all over again but it's precisely because now the appetite is there in the European economy for that kind of innovation with lead is able to do it the question then becomes how can Europe itself play a role in providing the savings and the capital to contribute to that and obviously ultimately to benefit from it as well and uh to build on your point it's about making sure the money is there to follow the opportunity and not just which while of course we hugely welcome it uh money coming in from other parts of the world which played the role in European companies growing to the scale they are so it's because of that practical opportunity and need that we're all now devoting time to how we can make it happen God knows it will take time but in Europe uh we do move slowly at times but we move carefully over years and look back at the huge progress we've made and that's what we need to do here now except occasionally in the middle of a crisis where you move really dramatically in a single night and and of course what's particularly challenging about this uh opportunity rather than a crisis is it's an opportunity that moves gradually and then you look at the huge change that's happened in the European economy that other parts of the world have helped play a role in funding and uh we just want to add to that by European savings playing a role So Christine lagard concretely what are the steps that could be taken in potentially a shorter time frame without putting the whole edifice in place I would argue that we don't have time to be slow this this time around because the climate transition I is an imperative and has to move fast so can we Pascal is right we tend to move slowly but surely accept and I think we are in an accept case where it's not a crisis but it's massive investment that is needed so I I have a a slightly provocative view probably but that's because I have tried to help you know using the bottomup approach trying to uh pick the low hanging fruit move one little initiative at the time in the hope that it will eventually work I I recently I gave a speech a speech in Frankfurt and being in Frankfurt I advocated that we needed to uh use a conscient shift and move from this bottomup approach that we we have adopted for the last 15 years to a top-down approach and for that I I have I have three practical suggestions that's what youve asked me to focus on the first one is to have a single set of rules rules that would apply to the capital markets across the European Union so that the regulatory authorities and I'll come to that in a second applies the same rules throughout the European Union the second that we need you know why is the US market strong it's notably because the SEC is pretty powerful and can actually Implement and deliver on the single set of rules throughout the United States well if we had an esma or we can call it a different name if we're not happy with the name but that had the similar Authority as SE it would certainly also make a dent in that very slow and gradual process and third I think the uh infrastructure uh the the trade infrastructure providers uh it's one area where we do a lot better than the US in the US they have five times more venture Capital than we do we have 20 20 trade infrastructure providers when the US has won this is not a good idea we need to have a much more Consolidated trade infrastructure mechanism in place and where I say and then I I will not take any any more minute of your time Stephanie when I say that artificial intelligence can help I believe that it's not a question of eliminating the marketplace that Frankfurt Paris Madrid Milan and Dublin can constitute eventually but to bring them under one single mechanism one single set of rules one single regulator and we have been able to do that in banking supervision with the SSM where the local authorities in the various member states still enjoy a level of control and authority and conduct joint supervision with the SSM it is Du doable without destroying the turf and the territories that are fiercely defended in many corners of Europe well talking okay so starting with Dublin maybe uh what has the Euro group talked about Madame leg's excellent proposals are you going to sign up uh we have we we will be talking about them in our February and March meetings this it's November she said this talk about could you not have just had a phone call after she well we we we we talk all the time but actually the reason for why we've been doing this is we've actually been bringing into our Euro group meetings businesses who depend on private Capital to get their view of what's happening in Europe so we've been bringing in the private sector we've been bringing in so-called Market participants to hear what they think so what do you think you're going to say when you meet so I think there are elements of what Christine talked about uh that are definitely going to be considered may play a role in us uh in where we end up if I was to pick out the two things that has surprised me the most and what I've learned the most from all of the discussions that we've been in I've been really interested in how the development of national pension systems in different countries have played such a decisive role in increasing the volume of capital that is available to invest within companies and uh we're starting doing that in Ireland but there are other countries now that are well down the path that can relate to development of their pension systems now to economic growth and investment and that's been a very interesting Insight that has came out across a variety of different countries uh the second issue that has been I think new to the debate so far is it's not just about the integration across Capital markets it's the fact that many countries want to grow the depth of their own national capital markets at the moment and recognize that the really underdeveloped um and by doing that and looking at how we can integrate as we do it it again creates stability to add volume and just in you know in reference to Ireland while of course I'm speaking as president of the EUR group here rather than as a member of the Irish government of course we're always eager to look at ways in which the single Market can be deepened and complet us because we want to play a role then and playing that in that Arena um uh to grow financial services and and allow them to invest into the real economy Christian I guess I'd be interested in what you think the reaction in Germany might be to to to these proposals but actually also you've often you know in these conversations we often talk about bemoaning the lack of a European banking champion and I just wondered whether there's an you know if you think of all the obstacles to having a big European banking Champion is it the kind of things that we're talking about or is it something a bit more kind of cultural well I I would say I mean this is even a little bit different from from the European Capital markets but I get back to your point on the on the European banking Champion by the way I think you can't create a banking Champion uh just by forcing um the institutions to do that that that the market needs to want it and you need to have certain preconditions by the way in this regard the capital markets Union is not the pre-dominant precondition it's actually the banking Union which needs to be finalized um for us if if we think about um uh more consolidation in Europe uh one of the precondition is that from a regulation point of view um uh from a framework point of view we we actually finalized the last bit of the banking Union um I think that is one very important point I think there is another point and I'm really glad about the argument which came that next to the capital markets Union the first step in order to make it better is to develop the national capital markets and and I can say it from a German point of view the German Capital markets is actually not as deep as the Swedish ones as um some other Scandinavians ones and actually we can we could learn a lot from from these countries in order to develop the national capital markets as a first step actually to get to a capital markets Union so I think we also need to make the The Plea also to the politicians that they should not only focus on the capital markets Union but also work on the domestic scheme that's number one number two a very pragmatic first step to bridge into Capital markets Union even if everybody who has to say a lot and has the power to do something it will take another three four five years to get there where we want to we need secularization we need to actually Bridge the time to create capacity and therefore the uh um The Proposal done by Bruno L and and Christian Lindner to think about making secretz in Europe simpler to think about what kind of regulations can we also make a bit more light compared to the US ones that would help a lot actually to free up our Banking balance sheets in order to give new capacity into the economy so one of the proposals we are doing from a European banking Association is always saying we know how difficult it is to get to the capital markets Union but let's think about the pragmatic steps to there secretar isation could do a lot we have one1 of the volume of the US volume in secularization in Europe and that is simply not enough in order to create the capacity on the Banking balance sheets Rola I wanted to ask you because you know in different ways we're talking about whether there are also other aspects of the European environment which could be just as affect just could affect the opportunities as much as some of the things that we're discussing you're obviously um very involved with AI and open Ai and and other parts of that Community um something like the EU AI safety act which has obviously been a big focus of attention in Europe and elsewhere is that going to be good or bad from the from this does it look like it will be good or bad for startups and investment in AI in Europe not yet I think regulation is necessary with any powerful technology you know any technology can be used for good or bad I think generally regulation is uh especially advised at an application layer to make sure that you don't have discriminatory lending practices for example or that it isn't misused in healthare so I think at the application layer and there are lots of very good regulations for that already I would say be careful I might what I know about regulation but I'd be careful in the early stages to make sure that we don't accidentally snuff out the Innovation because there's tremendous Innovation Happening Here in Europe based on our analysis Europe has a much higher density of AI talent in the United States and the number of Masters and pH master's degree and PhD uh AI researchers in Europe is far greater than what we have and a company like mistol in France is a fabulous example fabulous Founders coming up with wonderful Innovation they're far more Capital efficient than some of the competitors in in the United States I would hate to um smother a young company that's blossoming like that but is are you worried that they the act as as written or as as as designed will do as written the ACT is has no problem whatsoever I just think in general it's the same same conversation we're having in the United States is it's such an emerging technology there's a risk that one accidentally prevents Innovation that we have not yet seen and you know it may be better sometimes to follow very quickly with abuse that one sees rather than imagining all the things can go wrong and preventing something from flourishing so that's the the only observation I mean this has the potential maybe in general this week at Davos I've heard a lot of people Express concern about the risks of AI and I'm much more focused on the potential of AI to really transform Society I I listen to companies every week across every single industry and I see transformation in education in health care in productivity in security everywhere there is opportunity for greater productivity so I think we should harness that Nadia Calin I was going to ask you I mean f further to that but just generally thinking about I mean there is a sense I think of all the things that the Europe that Europe is facing and all the challenges for the European economy and how countries adjust to their models and things like a lot plethora of new National subsidies for different Industries thinking about competing with China and elsewhere is it just that this is not necessarily the biggest problem the biggest obstacle facing Europe do you think that there are other things en rco Lea as actually singled out other things that are going wrong with the single Market should we focus on those well it's very difficult to see because there's so many challenges that we're confronted with right now and they have to do indeed with the climate change it has they have to do with Technologies and and asymmetries of information also you know from a perspective of a regulator I was until December actually responsible for the AI act under the Spanish presidency and leading the negotiations that that drove and that allowed us to have this agreement on the ACT and I know how difficult it is to react to something as complex as an artificial intelligence and react promptly in a manner that really avoids that the risks materialize you know and there is a a symmetry between the expertise and the knowledge of the companies that are running and and creating the algorithms and any supervisor you know if there's a symmetry when we're talking about financial supervision imagine when we're talking about AI supervision you know from the public sector and there is a duty to protect citizens so there are so many uh things going on what I and and I I I would like to uh think I was very taken by this idea that we need to make Europe the land of opportunity you know which is a which is a very inspiring thought and I think in many in many instances and despite the challenges and the limitations and the absence of an internal Market in banking in capital markets in in energy in so many areas actually the EU has become the standard Setter in data protection and when we adopted the gdpr I remember people saying this is going to be the end of the world as we know it and no innovation and actually it has become the standard I think we uh can become the uh global standard on the taxonomy and that's green Investments and green bonds so there are many areas where Europe can and and will I think lead processes um and and just to to wrap up on on where Christine was I think it's a no-brainer that we would need a single rule book a single supervisor and you know that that would be uh that's exactly what we thought in 2014 that is what a capital Market Union from a from a regulatory point of view you would look like and you would have to focus on and because we have not been able to reach that there have been many different initiatives and bottom up and and smaller changes or not so small like the anti-money laundering regulation which we also making progress on but we don't really uh um manage to close the ABC that Pascal was was mentioning so that I think is leading me as a very to a more pragmatic approach in the sense of thinking okay let's focus on securitization or green bonds or climate Finance or uh artificial intelligence uh financing or scaling up of startups and let's build from the reality on the ground in parallel to trying to make progress on building a regulatory framework that that reflects these single Capital markets that we should have and that probably that approach is necessary in many other areas because indeed there are many shortcomings and there is a difficulty to reaching uh unanimous or qualified majority agreements in Europe in in many core areas uh maybe because of the maturity of our markets and the maturity of our economies which makes it more difficult to build from scratch you know uh maybe than in in some other areas of the world where maybe the it's easier to lip frog or to build uh new paradigms um starting on a on a w wide sheet of paper but one of the things we haven't mentioned there's only a few minutes left but we haven't mentioned what has happened since 2014 is Europe has actually lost its deepest most mature Capital Market in the UK London now I can understand yes London not the UK uh sooya where is your European headquarters London so you talked you talked about having a European team on the ground but they all then come home to London is that about right but they're French German Swiss they ROM they spend all their time on the ground in Europe okay can I go back to the institutional investment yeah briefly but I I do want to sort of make a challenge around just one observation in the United States most of the risk Capital that finances Venture and growth stage companies comes from endowments foundations nonprofits Pension funds and it is interesting that even in the UK it's more likely for a Canadian pension fund to invest in late stage than UK Pension funds because the rules have made it very hard for them so I don't know what the phenomenon is in Europe but it's just interesting to me I don't know if that kind of a private risk Capital Market exists here I just don't know but it is what we have in the United States and that is actually something that that the British government are also trying to focus on and it's a very clear Gap but I just wonder I know you're all going to say I'm mad but I mean isn't there if it's going to be so slow to have the full European approach to developing a capital Market Union would there be a way that you could at least have make progress by reconnecting in some way even in a even in a very partial way to the to the very well-developed deep Capital Market that Europe already has in London is that not even worth thinking about taking advantage of the strength that already exists rather than trying to create things out of scratch Pascal you're just looking at me very cooly uh I'm not talking about letting them in or anything I'm just saying you know is there a way because they were the greatest force behind some of this from in the in the old days well I mean the United London uh has been an anchor of uh the availability of global capital and uh I don't think was ever uh likely uh that their exit from the European Union as much as I regret that happening uh was going to have a very very instant effect on their scale and what they can do uh but for me I don't uh respectfully accept the premise that is inevitable that progress that we're going to make on Capital markets in the time ahead will be slow I don't accept that premise uh Finance ministers at the moment and prime ministers are deeply seized with the reality that we have to fund so much change and the taxpayer and European institutions on their own can only Supply a fraction of that resource a large fraction but a fraction and the gravity of that is very very clear to us there may well be and the private sector dictates It Anyway forms of cooperation that will continue to take place uh with the with London and with the United Kingdom uh but the reality is that the European Union needs to uh reorganize and deepen our Capital markets to fund things that Europeans want to see happen and I'll just end with a with a prediction um tomorrow afternoon no uh I'll be out of my constituency in Dublin Central meeting constituents I won't meet a single constituent that would be demanding deeper Capital markets off me but I'll meet lots of constituents who are going to be who are deeply concerned about a lot of the changes we've talked about feel in their bones the challenge that we have to grow and maintain living standards in the year ahead year ahead while at the same time seen the Brilliance of lots of European companies and entrepreneurs and the they want answers regarding How We join up all those dots and a big part of that answer is the theme that we're all exploring here this afternoon should we add that many of these successful companies that Pascal is referring to actually go and get their financing out in the US which we've heard a demonstration of this afternoon that is exactly the case so what's the final we just have you know we have one minute left the in a year's time since we're not going slowly anymore um what is the sort of most concrete form of progress that you would hope realistically hope to have achieved on this I well Pascal but also the the others would would like to see so I I'll kick off with the pension Biff actually in my single biggest learning particularly from looking at the Nordic economies is the way they have um uh uh presented so they developed amazing Auto enrollment pension systems with the objective of maintaining income sufficiency for their society in decades to come they have done it in a way that has delivered an amazing economic benefit to how they can invest in their own future and if I was to pick one thing uh that I think can change the direction is uh more countries within the European Union doing something which they want to do anyway to look after citizens later in life but doing it then in a way that deepens the volume of capital for investment in what we're talking about Christian I think a relief to the secularization rules because it would be an immediate relief to the economy and and to the banks and for you practically to have on this panel an industry leader um who actually says that they are not getting the financing which they need so if we finally explain to the people that Capital markets is not a Wish by the Banks but it's a necessity for the economy and this is represented by the industry leaders um then I think we are a step ahead Nadia I think that one year from now the EI will continue to be one of the drivers of the green financing uh framework in Europe we will continue to outperform our targets above 50% of green investment in our top top total numbers and uh you know I I have launched a project to try to see how we can can be more of a catalyst on the liability side you know and also to look into this green Bond and how to interact with financial markets in a manner which makes our green Finance markets uh you know quite relevant when it comes to Innovation and and climate change and climate action throughout the world and uh Roloff you said that you you were daunted you not you don't envy them their task but respectfully would what would you say they should put top of their list concretely what I want to do is I want to find the best Founders in Europe in the next 12 months and make sure that we help them build Global Business Leaders that's what I want to do Christine leard you get the last word you get to pick your your top that it is not topic for another panel next year and we have an action list and we have securitization under under way thank you fantastic thank you great thank you thank you very much

Channel: World Economic Forum

Views: 4,597

Keywords: World Economic Forum, WEF, Davos, politics, finance, economy, news, leadership, democracy, education, technology, tech, AI, automation, work, future, world news, economist, world, forum, economic, world news today, worldeconomicforum, switzerland, external affairs minister, globalization, robotics, bloomberg, Davos 2024, Davos Agenda, WEF 2024, wef24, Davos 24

Id: V-1ymPeTqOY

Length: 46min 8sec (2768 seconds)

Published: Wed Apr 24 2024