Jonathan Hill, Commissioner for Financial Stability, Financial Services and Capital Markets Union, believes that a lack of economic growth is now more of a threat to financial stability than anything else.
In a speech given to the Frankfurt Finance Summit, Commissioner Hill said that now was the right time to undertake a “stock check of existing regulations” to make sure that the “correct balance is struck between reducing risk and fostering growth”. He suggests that existing regulation should be analysed to see if it achieves its aims and whether it does so in a way that poses minimum burdens.
The focus on growth is consistent with earlier statements. In his first speech as Commissioner, Jonathan Hill said he would do “everything” through the prism of jobs and growth.
Commissioner Hill doesn’t anticipate the Commission producing the same volume of new financial services legislation that it has produced in recent years. He indicates that the Commission's immediate plans for financial services legislation include the following:
- bringing the legislative progress of the proposed regulations on money market funds, on benchmarks and on banking structural reforms to a "swift conclusion"
- adopting a legislative proposal by Autumn 2015 on an effective resolution regime for non-bank financial institutions, including Central Counterparties (CCPs)
- amending the Solvency II rules to make provision for European long-term investment funds (ELTIFs) and to give insurers more opportunities to get involved in infrastructure projects.
Elsewhere, Commissioner Hill will use regulation (ironically) as an instrument to cut red tape and integrate markets further across the Single Market. The flagship proposals being the creation of a Capital Markets Union by 2018 to fund investment and long-term funding, and cut reliance on banking. Greater diversity in funding sources should make Europe’s financial system more efficient, resilient and competitive and (potentially) more responsive to monetary policy signals and the needs of the economy. Commissioner Hill published a green paper on a Capacity Market Union (CMU) this month and expects to deliver substantial proposals over the summer.