MNI: Ministers Discuss Joint Label For EU Savings Products
EU officials speak of plans for moving towards Capital Markets Union.
Talks among eurozone finance ministers aimed at catalysing progress towards Capital Markets Union by launching a pan-European savings product are shifting towards the idea of each member state being able to launch its own savings product but marketed with a European Union label, officials told MNI.
"In the Eurogroup the idea was that each country should develop their own European savings product," one national finance ministry official said of the last meeting of the ministers on May 13.
The concept was originally conceived by former Bank of France Governor Christian Noyer who was commissioned by the French Finance Ministry to write a report on how to galvanise CMU efforts.
It has since found favour among many countries, notably Italy, who feared an EU-level product could lead Italian savers to desert domestic bonds for more attractive EU savings products. (See MNI: France Backs Proposal For Joint EU Retail Bonds-Officials)
"Italy is keen on keeping its Italian base for their own debt," one source said.
COMPETITION FEARS
Many smaller EU countries also feared they could haemorrhage savings should a successful EU product be launched.
"Fears of capital or savings movement is pitting small versus big countries," one source said.
The savings product and a push on securitisation are the two planks of the latest plan to boost CMU which have gained most traction, with ministers now avoiding divisive and politically sensitive proposals, such as those calling for strong European supervision of financial markets. (See MNI: Ireland, Luxembourg Resist Joint EU Supervision Proposal)
Germany too is backing moves to stimulate a bigger EU securitisation market by easing capital requirements on institutions holding these securities and has commissioned a report on CMU, giving the securitisation push more impetus.
Securitisation is seen by both Germany and France as potentially the easiest way to meet the key goal of CMU, which is to lessen European investors' over-reliance on bank lending, and so diversifying risk, increasing liquidity and reducing funding costs.
Where the two countries are more split is on the topic of public guarantees, with France more in favour of a model similar to that of Fannie Mae and Freddie Mac, which guarantee most U.S. mortgages.