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00:00We just heard from Jamie Dimon some of the sort of very common refrains we hear about,
00:04your over-regulation, not enough simplicity, and critically, not an integrated financial markets,
00:09capital markets, you know, what we used to call it. We're now focusing on investment and investment
00:13union. You've just presented your ambitious, you said yourself, market integration package.
00:20For us, just framing this, how important is it to get it through? And then I think critically,
00:24how close are you to making it an actual reality now? Well, good morning. Thank you for inviting me
00:30to be here. It is very, very important that we do this. We have been discussing this element of the
00:36savings and investments union, the capital markets union, for over a decade now. So this is the time
00:42where we actually need to deliver. We have all agreed that we need a single market when it comes
00:49to financial services, because that's where the potential is. We need scale in financial services
00:55in Europe in order to get the necessary funding to the priorities we have in Europe. And for that,
01:03we need to eliminate the barriers. We conducted a very extensive consultation to the market,
01:09and the same problem keeps coming up again and again. It's all about fragmentation. So that is
01:15what we are trying to tackle here. Fragmentation in the way our rules are being transposed,
01:22interpreted, and even supervised. And one of the other critics that we hear often of Europe is that
01:27it moves too slowly, particularly in a day and age when you see such speed, particularly within the
01:32United States. You yourself have said that we have no time to lose. We do not have the luxury of time
01:36to act. Talk to me about the next hurdles and the speed at which you'll be able to clear them.
01:41Regulation, for example, centralizing that. How much buy-in do you have there? What are the next steps
01:46to actually making that a reality? Well, we've just adopted the proposal at the commission level.
01:51Now we have to engage with the co-legislator, with parliament and council. I am hoping that both
01:56co-legislators share this sense of urgency. I have had the chance to explain the plan actually previously
02:04to its adoption, but still the main the broad lines of it with the European parliament, the coordinators
02:10on the committee. It was very much welcomed and recognized as something that we really need to see
02:15done. I haven't yet had the chance to do it with with council, but I hope to do it later this week.
02:22And I really need to insist that this is urgent and it is very important that we deliver. And in the spirit of
02:28that urgency and your most sort of ambitious and optimistic timeline, what does that mean in terms of actually
02:33making concrete progress, getting the stuff over the line? Well, I think we should move to have this
02:38package discussed and approved as early as possible so that we can start implementing on the ground. I mean, ideally,
02:47if we could start implementing it by 27, I think it would be really great. It's a big package, so it's going to take some
02:54time to negotiate and get to a final agreement. But I think it's doable. And so this is a legislation.
02:59Another side of this is, of course, the financial institutions, the banking we got out of the United
03:03States, their national security strategy. There was a whole section in that on preserving and growing
03:08America's financial sector dominance. Their approach in large part has been cutting regulation in the
03:13United States. The Bank of England last week lowered their capital bank requirements or capital
03:18requirements for banks. Are we prepared to talk about deregulation in Europe? I know last time we spoke,
03:23you said you don't like that word. But I fear that in the conversations in Europe, when we just talk
03:28about simplification, it doesn't really seem to strike at the heart of the scale and the urgency
03:33of the task for Europe. Well, in the U.S., they talk about modernization. So they also don't talk
03:38about deregulation. They don't use the word. Well, the supervisors talk about modernization. That's the
03:44word I heard. But that's beside the point. We have committed under the Savings and Investments Union
03:49strategy to do a complete assessment of the competitiveness of the EU banking sector. We are
03:56already starting that work. We will be consulting with the market. We'll be consulting with the banks,
04:03obviously. We will be gathering information. We really want to understand where the problem lies
04:09and how we can fix it. If what what the problem is, because it's not just about our banks being
04:16competitive. It's also how they can support the competitiveness of the European economy. So let's
04:21talk about some of the specific dimensions of that. For example, I'll refer to the UK again. They've
04:25they have boosted the cap on on pay for bankers and to boost competitiveness. Is that something
04:32that you would consider in Europe? Is that something that you consider looking at? Is it on the table,
04:36at least for you, in discussions next year of review? At this stage, we have nothing off the
04:41table because we are still conducting the assessment. So we we don't prejudge what we are going to
04:47conclude out of this assessment. I think we should have an open discussion, understanding what where
04:53the problems may be and putting in place. Do you think the pay could be a problem? I had it hasn't
04:59come up in any of the conversations I've had so far. But again, this is early days, but it hasn't come up.
05:04And one of your frustrations when we spoke about a year ago, you said bigger banks provide better
05:07services at lower costs. Obviously, bigger banks for Europe is one of the priorities. I was looking
05:11at the stock 600 banking index up 66 percent since Trump was elected versus the U.S. up only 30 percent.
05:17And yet we do not have bigger banks. How do we get bigger banks? Well, we have bigger banks if we'll
05:23from a regulatory perspective, we should get out of the way so that market driven consolidation can happen.
05:29But it should always be a market driven process. We will not be determining that banks should
05:34consolidate or not. We're just thinking that we would need some European banks, pan European banks,
05:42with the kind of muscle that would allow us to actually compete also in the global scale.
05:47It doesn't mean that there will not be room for smaller banks. It depends on the kind of asset,
05:52the services you want to provide in the market, part of the market you want to serve. But we should get out
05:58of the way from the supervision, regulatory and political perspective. And one of the ways that
06:03you could potentially get in the way in order to get more of a sort of market, more market respecting
06:09kind of banking sector within Europe. And you've talked about this is enforcement action against
06:14countries that basically are and I'll quote you here that perpetuate business models which are not
06:18fit for the future. How intensely are you looking at that? Is that something that you're going to move on
06:22potentially in order to get the sort of market driven consolidation we need in Europe?
06:26Well, implementation and enforcement is part of our job. If we agree on the rules, then the commission
06:34has to be prepared to monitor the implementation and follow up with enforcement if any member state
06:41for any reason does not comply with the rules. That is part of our job. It's not just agreeing
06:46on the rules. It's having them on the ground implemented properly.
06:49Is that something that is there are there specific examples you're looking at and that you could potentially
06:52move forward on? We have launched recently to infringement processes into European member states.
06:59It is a process which is never finished. It's we keep on looking at what needs to be done. And yes,
07:06enforcement is part of the toolbox we have to guarantee that we eliminate the current discrepancies
07:11among our markets. Do you have a timeline when you might have a view on those on the what sort of
07:17investigations on those? No, no, this is ongoing. So there's there's never a specific timeline.
07:22And I'd like to also if you could help sketch for us because the capital markets union or, you know,
07:26whatever you'd like to call integrated financial system within Europe. This is basically the highway,
07:30right, for capital to drive on even the absence of cars that can compete. Does that not sort of set up a
07:36highway for a bank like JP Morgan, some American banks to basically come in and eat Europe's launch if you
07:42do not have the banks? Do you see that as the stakes for European banking consolidation? I would say
07:46that the current fragmented landscape is benefiting mostly those banks you are mentioning because
07:51given that they are bigger, they have more resources, they find it easier to navigate through our
07:56fragmented landscape, which is ironic probably. Yeah. So it is not benefiting us. This somewhat prevailing
08:04protectionist approach that we can still see in some European markets is actually not helping Europe at all.
08:11And this is something that we that I have perceived from the many conversations I have with different
08:16stakeholders. So I would say that eliminating these obstacles can be a major element to support the
08:23scale up of European actors providing the good services in our market. And we want to remain open,
08:29but we want to be competitive. And another question I want to ask you about is about the frozen Russian
08:33assets. We heard from these sort of conversations over the last couple of days that the Europeans may be
08:37moving towards an agreement to unlock a reparations loan for Ukraine. From your perspective, in terms
08:42of financial stability, you think a lot about the status of the euro in the world, the European bond
08:47market. Do you believe that there's any risk in moving on that and basically threatening the haven
08:53status of the euro and these sorts of things? What kind of risks do you think are there associated
08:57with the move on Russian assets and how do you insulate from those? Well, I think that the whole
09:02market understands that Europe doesn't do this in out of a whim. This is something that is the reaction
09:09to a very serious situation, which is an illegal invasion, a war of aggression from Russia towards Ukraine.
09:19So this is not something that would happen to any foreign holder putting their assets in Europe. This
09:25is a very specific situation. And that was already tested when we froze the assets back in 22. So I think
09:33that was the first and probably the most relevant test. And I think that the whole market really understands
09:40that this is not happening to anyone just because Europe wants to do it. This is a war situation that
09:46justifies exceptional measures.
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