00:00Capital needs to flow as freely as people can flow.
00:03Talking about capital markets is very abstract.
00:06Everyone knows what savings are.
00:14Welcome to The Big Question, a series from Euronews
00:18where we speak to some of the most influential people in the world of business.
00:22And today is no different.
00:23I'm joined by Verena Ross, who is the Chair of the European Securities and Markets Authority.
00:29It's a real pleasure to have you on the show, Verena.
00:32Thank you very much, Angelo. It's a pleasure to be here.
00:34Now, ESMA's key mission is to enhance investor protection,
00:38promote orderly financial markets and safeguard financial stability.
00:43And you have one very big job on your hands at the moment as part of all this,
00:48which is to try and make Europe's capital markets essentially work more like a single market
00:54instead of 27 partly fragmented national markets.
00:58Can you just elaborate on why it's so important for Europeans?
01:03What people are essentially missing out on because Europe's capital markets are fragmented?
01:09So if we look at household assets in the European Union,
01:15there are about 37 trillion euros that are sitting largely idle.
01:24People make their own choices.
01:25They want to invest in their own home.
01:27They want to leave some money and cash in the bank.
01:31But there's a lot of capital which is basically not productively invested.
01:36And that is to the detriment both of the people who want their money working for them,
01:42to really want to save for their financial goals, for their old age protection.
01:48And it's also a problem for companies who are looking for financing.
01:53We need to make sure that we are able to live up to the speed of innovation,
01:59to the speed of developments in markets globally,
02:01and that we position Europe well.
02:05We are clearly stronger together.
02:07We need to make sure that we find European solutions
02:10rather than going back into our national markets
02:14and trying to solve issues at national level.
02:17We really need to put all our force together
02:19to make sure that as Europe, we can really compete at a global level.
02:29Now, the Capital Markets Union has recently been rebranded
02:34as the Savings and Investment Union.
02:37Why the rebrand?
02:39So there was the idea that, you know,
02:41talking about capital markets is very abstract.
02:43It's quite technical.
02:44But when you talk about savings,
02:47everyone knows what savings are.
02:50And if you talk about converting that into investments,
02:53that's again something which speaks to people.
02:56So I believe there is a general need to recognize
02:58that capital needs to flow as freely as people can flow within the European Union.
03:05We don't have borders.
03:06You can work wherever you want.
03:08You can invest wherever you want.
03:10And we need to ensure that investors,
03:13that citizens feel that they can, you know,
03:15make their money work wherever they happen to be based
03:19and wherever they want to invest.
03:21And so that kind of borderless market is really what we need to focus on.
03:26So compared to the U.S., you know,
03:28do you think that there is that lack of financial education in Europe?
03:32In general, in Europe,
03:34people are probably slightly less financially literate.
03:38But that is not because they don't have the intelligence
03:41or the wish to learn about it.
03:44It's more the fact that in America,
03:47because you don't have state guaranteed pay-as-you-go pension schemes,
03:51anyone who works and who needs to think about his old age
03:57needs to directly be engaged in thinking about investing in capital markets.
04:04In Europe, that's not necessarily the case.
04:06And I believe that we as Europeans need to be sure
04:10that we ask ourselves the right questions at the beginning of our careers.
04:15How can I make sure that I use my money to the best effect,
04:18even if it's not very much on a monthly basis?
04:22It can still make a difference if you invest that in a product
04:26or that in the long term will provide you with a decent return.
04:31Indeed. And Verena, there seems to be a misconception there
04:34that you need a lot of money to invest.
04:36But what would you say to that?
04:38I think what we actually see in many European countries
04:41is that when you create that right framework and environment,
04:46you can actually see real differences
04:49in how the prospects for investors and companies change.
04:53You see, for example, in Sweden,
04:56they've made quite significant reforms 10, 15 years ago
05:00to their pension system, to their taxation system,
05:02and to the whole ecosystem around investing and funding.
05:07That has really made a difference
05:10and has made now investors in Sweden much more financially illiterate,
05:16much more engaged in capital markets
05:18and also giving them returns from the capital market investments
05:23that maybe they started 10 or 15 years ago.
05:26At the same time, we see that the capital markets are quite vibrant there
05:31because you have actually companies going to the markets
05:35because they know there are investors that are interested.
05:39Similarly, we see in some countries at the moment
05:41a real uptick in looking at digital service providers
05:46to maybe invest a bit, putting 5 or 10 euros aside.
05:51You can actually start with something quite small potentially
05:54and still see that developing.
05:57But you also need to make sure that you are actually well informed
06:00when you take those decisions,
06:02that you understand the risks, the costs,
06:04and the opportunities that come with investing in capital markets.
06:08So we need more easily digestible information.
06:12We need more comparative sites
06:14that allows each of us to take the informed decisions
06:18that we need to take about our money.
06:20And Verena, how concerned are you about the rise
06:22of what they call finfluences, financial influences,
06:26giving investment advice on social media?
06:29We all live in a world where social media is becoming more important
06:33and finfluences, so the people who are trying to influence
06:37on finance matters, can play an important role
06:40to help investors get information.
06:43What we have done as ESMA was to also make sure
06:47that we alert investors to the fact that, you know,
06:50they need to be conscious.
06:52These people might just be providing their personal opinions,
06:55they might not really be experts,
06:57and they might be sponsored by companies
07:00without properly declaring that.
07:02And so you never quite know what is behind that kind of advice
07:06or that view that is provided,
07:08which, by the way, is not proper advice.
07:12It is a personal opinion most of the time.
07:14We've also done some work to try to explain to finfluences
07:19that they need themselves to be careful in how they interact
07:24on social media on financial matters to protect investors
07:27and make sure that they get the advice and the support that they need,
07:33but in a way that is properly regulated
07:36and that ensures that they get fair, clear and not misleading information.
07:41Farina, it's been a pleasure to have you on the show
07:44and thank you very much for sharing all of your excellent insights with us.
07:48Thank you very much, Angela.
07:49It's been a pleasure.
07:50Thank you very much, Angela.
07:51Thank you very much, Angela.
07:54Thank you very much, Angela.
07:54Thank you very much, Angela.
07:55Thank you very much, Angela.
07:56Thank you very much, Angela.
07:56Thank you very much, Angela.
07:58Thank you very much, Angela.
07:59Thank you very much, Angela.
07:59Thank you very much, Angela.
07:59Thank you very much, Angela.
07:59Thank you very much, Angela.
08:00Vielen Dank.
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