Committee on Economic and Monetary Affairs Ordinary meeting
Legend
Transcript markers
- text Sentence being played
- text Search result
- text Intervention cited by the link you opened
Click a sentence to play the video from that moment. Select text to quote it with the speaker, timestamp and link.
More options
ECON European Parliament
Follow its sittingsSpeaker 3
So this may be a situation in which lending terms could be weakening. We are not seeing this right now in the data, but we must also say that the data is quite incomplete, which also makes it difficult for the banks to assess their own policies against those of the market. So we will explore banks' underwriting practices more closely in a very proportionate manner, to also understand emerging trends at an early stage. Our second main priority is to address operational resilience because banks, as I said, face competition from many nonbank providers of digital payment services. They use artificial intelligence to improve their services.
They're faced with more frequent cyberattacks, and they outsource many activities. So that means they need strong IT systems, strong operational resilience, to make sure that, in the end, they also stay competitive in this changing environment. And since they currently have good levels of profitability, they have a window of opportunity to make these investments in IT, into their operational resilience. The second big part is not just about safeguarding resilience, but also about streamlining supervision. So I've reported before about the work we do in order to improve our supervision to make it more risk-based, more efficient, more effective.
And we're rolling this out across all of our activities. Just to give you a few examples, so we're working with the EBA to collect less data for the stress test as much as we need, but not more than that. We have reduced our own supervisory reporting by about 20%. We are subjecting our processes to standardization. So most of the decisions on authorizations, qualified holdings, procedures are taken using a new risk-based approach.
And this is all supported by the digitalization of our key processes. This year, we are working on developing a more proportionate approach for small and non-COPS complex institutions with regard to supervision, reporting, stress testing, and we're also streamlining our supervisory guides to make information more accessible and to once again underline their nonbinding nature. So we think that these two things, streamlining supervision, safeguarding resilience, are really key to prepare also the banks to compete successfully in a challenging environment. But we need support from policy, and maybe let me conclude here. So it's really important to strengthen the single market.
I think this will, in the end, have positive implications for banks' ability to reap economies of scale, diversify their activities. So that means also harmonizing the rules and removing barriers to cross-border provision of services. So we very much welcome the European Commission's package on market integration and, of course, support it a lot. We actively contribute to the Commission's consultation on the competitiveness of the banking sector. And in the end, completing the banking union, I've said it here before, would promote integration and improve price preparedness because we really need strong supervision, credible resolution regimes to ensure that banks can innovate and compete successfully.
Thanks a lot.
Speaker 1
Thank you. So Q and A session. And I will start with Ludac Nidarmeyer for APP. One minute and a half for the question. Three minutes for the answer.
Ludac?
Speaker 4
Thank you very much, and welcome, Madam Buch. I fully endorse your observation that the financial stability, the banking sector stability, is on a high level. So this allows me to ask the two questions that are not directly linked to financial stability. The first, after some hesitation, I guess, it's clear, flagship agent of the EU to build more single market, more efficient single market. Part of that should also be the merger and acquisition activity.
And there are some concerns, some observations that making cross-border banking mergers in Europe is still incredibly complicated. So I wonder what's your view on that, and what we should do to allow this market force to function. And the second, and here I will start with something that you mentioned, basically, to observation. The first, that Basel III is the priority that I agree that we are on the way. But at the same time, each Basel is creating more complexity.
And this complexity is more difficult for small and medium sized banks. And you just mentioned at the end that you are trying to work out a system that will allow small and medium sized banks easier complete comply with all the regulatory requirements. But do you still believe that this is the right way to continue within the Basel framework for everyone and finding such ways to reduce the burden, or that consideration to look at the system how it was done elsewhere is also the option. Thank you. And I will not need a follow-up.
Speaker 3
Thank you very much for the questions. So yes, indeed, we have many barriers to the full integration of the banking market. So for the banks, of course, we have the single rulebook. So it's clear we have the same rules. But then there's many other reasons why banking markets are still segmented, why we also, this is what we're also seeing in the data, why we still have quite a bit of local market power depending on the markets.
The markets are very different, and there's a limited degree of cross border integration of key retail market when it comes to deposit taking and lending. And we've also seen, and this is the point you alluded to, that the intensity of cross-border merger activity has declined since the global financial crisis. There is actually quite a bit of merger activity, but often also at the domestic level. Is it incredibly complicated, like you said? Well, if you look at our role, and this is what I can speak for and our rules, I think they are very clear.
So we have a very clear guidance for how we address cross-border mergers that we put out in 2021, where we clearly explain what are the criteria we look at and how we assess them. We look at mergers in a very neutral way, in the sense that we treat domestic and cross-border mergers alike. So I think the clarity that is needed from our side, what is needed in terms of prudential ratios, financing, governance, I think this is very clear. But as you've said, there are many other factors that are also holding back cross border integration. But I think our role is very clear here.
Then the second question you raised was about Basel and the inherent complexity. And I always like to differentiate a little bit why the system that we have is complex. And of course, modern banks are also quite complex entities. So I think hoping for a system which is very simple would be difficult because it wouldn't address the needs also of the industry. So a lot of the complexity also comes in through consultations, where industry points to issues that need to be addressed.
Having said this, the high-level task force of the governing council of the ECB has made recommendations also to the European Commission on how certain complexities could be reduced when it comes to the capital stack and also to reporting. I think this is an issue because you mentioned the small banks. This is something we hear a lot, that there are many different reporting requirements that sometimes overlap. There's insufficient information sharing among the authorities. So if we could make progress there, I think this would be a very good outcome of the current discussion.
The specific work we are doing is looking at the regime, which is called SNCI, so the small and non-complex institutions, which currently, so there's a lot of the less significant institutions that fall under this regime. They currently already face significantly lower reporting requirements than the banks, the institutions that are not within the regime. Still, we are checking whether more can be done in terms of supervisory frequency, intensity, always to make sure that we are proportionate to the underlying risk because small doesn't necessarily mean less risky, but, of course, it's different issues that matter. I think that the regime that we have in Europe applying, in principle, the Basel rules also to the smaller banks, with this differentiation that they also take into account the specificities of the smaller banks. I think this is a good approach, which is targeted towards the situation we have in Europe.
So I think we should work on whether within the regime, we can be more proportionate than we currently are.
Thank you. For the S and D,
Speaker 5
I'll be speaking Spanish. I'd like to welcome the chair, Miss Book. Good afternoon. In recent days and weeks, we have seen in the media. Okay. As I was saying, I would like to thank you and welcome you for attending.
And I was saying that over the last few weeks, we've seen in the media various different situations that are unstable in terms of private credit funds, mainly American bodies that look like they are limiting emission yields for issuing yields for clients. I'd like to ask about the banking sector in Europe, whether it's exposed to various types of contagion derived from this, such as the private credit fund crisis, looking at 9% presence of nonbanking institutions from credit overall. Aside from those nonbanking institutions, are there any messages that indicate that that isn't that bigger volume, but that the limits of those funds are concerning and that there could be contagion to Europe?
Speaker 3
Thank you very much for the question, which is indeed the links between banks and nonbank financial intermediation and private credit has actually been, for a long time, one of our focus areas. So we looked at this very carefully. So generally, what has happened, and this is also what we see in a lot of studies that have been done, for example by the Financial Stability Board, is that banks have, by and large, maintained their market shares. But in some areas, activity has moved outside of the banking sector to nonbank financial intermediaries, and many times for good reasons, because maybe there's better risk bearing capacity and so forth. But at the same time, the banks have stayed very strongly linked to nonbank financial intermediation and to private markets.
So we have done a targeted review of the European banks that are most active on this market already a couple of years ago. It's not all the banks, so particularly the smaller, the midsized banks, they are not so active on this market. And there's very often, there are also lending relationships between the banks and the nonbanks. So this is why we have been very vigilant to understand what these linkages are, how potential risks could also spill back into the banking sector, and what the exposures of the banks are. One needs to say that there's not always sufficient transparency about the private markets and the linkages to the banks.
So this is why it has long been also one of our policy messages that we had, and we also bring this forward in international for that we need more transparency. We need also more reporting, perhaps, of the non-bank financial intermediaries. At the same time, we've worked with the banks so that they monitor their exposure to these markets very carefully. So it's not that they shouldn't have any exposures, but they need to monitor them, and they need to have good risk management systems. And we're also working with the banks to ensure that they have the right exposures and good risk management.
And we've also seen improvements, but if you look at things as a supervisor, you always find things for improvement, and this is where we're interacting with the banks. Now on the very fluid, as you've mentioned, current situation, that of course we have many market adjustments, discussions around AI, the links between private credit and AI, artificial intelligence. I don't have better information than you do, but of course, we monitor this very carefully to make sure that we don't overlook vulnerabilities. And we also think that the banks are very much aware of this, and hopefully we can manage that situation well.
Speaker 5
But on these recent cases, where some funds are completely limited, the redemption is for the investors, BlackRock and other operators in capital markets. I don't know if you are monitoring concretely these cases and the potential impact on the European banking sector.
Speaker 3
Well, we generally, I mean, we know which banks are exposed to private credit and those markets. And of course, we, the joint supervisory teams, would also have discussions with the banks if any of these things come up. But I can't say anything specifically about exposures. It's more generally that we have very consistent supervisory approaches to the exposure to this market, so that the banks are aware of what our expectations are in terms of risk management. So I think there's a good dialogue also on this with the banks.
You, Rhopie, Fiery and Nico Giori.
Enikő Győri
Thank you, Madame Chair. Welcome back, Madame Bou. I have two questions too in the context of the ECB high level task force report on simplification, of course, to supervision. One of the recommendations of the report is to shift from directives to directly applicable regulations in order to reduce heterogeneity in transposition and harmonize supervisory practices across the EU. Aren't you concerned that the important national specificities, such as differences in banking models, market structures, and legal traditions, will not be taken into account if we really shift to the regulations?
And how would you ensure that these specificities are taken duly into consideration? And my second question on the same report, the ECB also recommends to review and potentially harmonize certain national supervisory powers, such as those related to mergers, outsourcing, or asset transfers that are currently based on national law, and differ across member states. In your view, what should be the appropriate limit of such harmonization, and how could the ECB ensure that any move towards greater alignment of supervisory powers doesn't weaken the effectiveness of supervision that relies on national legal frameworks, market structures, and established accountability at member state level. So my group is quite worried on those, so I would be grateful for any clarification. Thank you so much.
Speaker 3
Thank you for the question because this is really its core, I think, to the debate also on where can we have more harmonization, more of single market. And of course, we are not naive. We understand that there are different legal traditions across countries. We understand there's also good reasons for having different rules because there are specific national markets, and that also needs to be taken into account. And of course, we, from a practical perspective, I mean, we have many. If you look at our annual report, most of our decisions, the vast majority of our decisions, are fit and proper decisions where we also operate with the national legal frameworks.
We have authorizations. We have qualified holding procedures. So we are able to deal with these national specificities. Having said this, at the same time, of course, the rules are different across the countries. And this is not so much an issue for us as supervisors, but also for the banks who want to be active across borders.
They also a bank that wants to expand into another market needs to deal also with this many different national specificities when it comes to insolvency legislation, when it comes to the mortgage market. And this, I think, will never be harmonized overnight. So I think what needs to be done is to really look at what are good reasons to have differences, and that may well be. What are things that don't have a good reason anymore, because we've entered the banking union also with a lot of these national deviations, which maybe have lost a good, you know, good rationale in the meantime. And I think in the end, nobody wants to, you know, harmonize all business models of banks, but and we are able we appreciate the diversity that is there.
But I think continuing to work in a system where there's implicitly also different national rules also creates barriers of integration of markets for the single market, I think this can't be a solution for the future. And I think there's a big space in between that can really be explored to check for the legislators within the established accountability rules, of course, what are rules that don't serve a specific purpose anymore, that are not really needed anymore? And where can more harmonization be done? I think in the end, this is the key to improving the competitiveness also of the sector, because the lack of scale, the lack of diversification is really holding back also the competitiveness of the banks.
Speaker 9
Thank you, chair. Bueno Marigio, president book.
Thank you very much. Well, as you know, we're halfway through the simplification of the banking standards in Europe. And I would just like to add that the approach that we're seeing based on consultations from the commission and recommendations from the ECB should become the legislative standard for Europe. I would like to look here at the proposal to have a prudential regime simplified for banks, the smaller banks. As you know very well, this proposal hasn't just been put forward by the main associations from the main member states, but it's also been from various recommendations from the ECB, which has shown the need for greater harmonization of monitoring standards, given that the picture is different from state to state.
In most of Europe, and particularly in rural areas, small banks are the only place that people can get loans from, thinking about the essential role that cooperative banks play across Europe. Bearing that in mind, chair, don't you think it would be good to have a more proportionate and simplified approach bearing in mind the specificities of those institutions without risking deregulation? Thank you.
Speaker 2
Well, thank you very much for the question, which is a bit of a common theme also across the questions that are being raised. And we are very much aware that proportionality is key. And let me say also for us, proportionality, I mean, clearly this is embedded into our processes, because also we have to allocate our supervisory resources to what matters most. And this is the whole philosophy behind the reform that we are currently implementing, to be really focused on the most material risk. And then there are issues which we need to deprioritize because we are also lacking resources. We want to make sure that we do the best for all the banks that are active in Europe and for all the depositors that are there.
Speaker 3
So I think also the depositors of the very small banks, they also want to be reasonably sure that their banks are resilient, that they're safe, that they have a good level of cyber security, that they can deal with the challenges that are there also for the smaller banks, so that might not be active on the global markets, but that still are exposed to the risks of these days. So this is why when we talk about proportionality, it's really about the scope and the intensity of supervision. So we look at how big the banks are, how systemically important they are, how connected they are. And from that, we derive our supervisory intensity. And as I've explained earlier, we are already doing a lot to also reduce the reporting requirements for the smaller banks.
So they only have 30% of the reporting for the larger, more complex banks. And we're looking at this further, whether more can be done to be proportionate in our supervision. I think in the end, it's also the smaller banks that benefit from being integrated into a coherent system of supervision and reporting. As you know, we don't supervise the smallest banks directly. This is done by the national competent authorities who also have, of course, a lot of local knowledge.
But we have an oversight function, and that also makes it possible for us and for the national competent authorities to identify issues that are similar across the banks and then also learn from each other. I think there's also a big benefit that we have with a banking union. So yes, proportionality is really part and parcel of our activity, but it's not just about size. It's also about the underlying risk. And we are very careful to always review our procedures to make sure that we adhere to that principle.
You. For renewal, Louis Vito D'Arc.
Speaker 11
Thank you very much, and thank you for coming and discussing these important topics. I have three questions. The first one is related to the competition, global competition vis-à-vis The U. S. Banks that actually we have in the European banking sector have higher capital ratios.
So, what is your assessment of it? Is it because of different economic performance? To what extent is it a more cautious approach of regulators? Or, you know, how do you see that? Of course, in a world full of risks, it is good to have higher capital ratios, but I just wanted to know your opinion on that.
My second question is that you mentioned pockets of vulnerabilities, including the SMEs. So if you can elaborate a bit more on that, because we are also trying to increase lending to SMEs and also trying to invest in the future. So how do you see those risk factors? And the third one is also related to the program or the agenda of the Econ Committee that we are discussing a lot, digital euro or securitization. So how do you feel that the banking sector is prepared for these two changes in the system?
Speaker 2
Thank you for the whole range of questions. Let me try to be precise and focused. So the first point you mentioned was the global competition vis-à-vis US banks. So the one point that I would like to make here is that I think it's useful to think about this competition in terms of competition between banks. I don't think we should think about the European banking sector as such or the market is competing against the US because my worry is that that would get us into a potential race to the lowering of standards.
Speaker 3
And I think what needs to be done at the global level is really to uphold the standards that we have agreed upon, implementation of Basel III for the banking sector, and also work on, because we've heard about other vulnerabilities, and also work on common standards for nonbank financial intermediation and so forth. So I think this is really the way we should think about it, to not compete in terms of regulatory intensity. So when it comes to the individual bank and banks, of course, directly compete vis-à-vis each other, it's important to note also that many of the banks that we supervise are not in direct competition to The U. S. So there's a lot of, as we've discussed this before, there's a lot of local competition still in Europe.
And it's a few banks that are really active on the global markets. So we've done some work in the ECB to compare the profitability of, if you take that as an indicator for competitiveness, the profitability of European banks versus the US banks. And there's indeed some interesting results from this work. And the US banks, for example, have tended to be more profitable in the past because they operate out of a larger market. They can realize economies of scale more than European banks.
So this is one of the reasons why we're so much advocating for more market integration, a single market in Europe. There's also differences in terms of IT investments. So the U. S. Banks tend to have higher IT investments.
That's why I think this is also an important driver of competitiveness. And if anything, we don't see the differences in terms of regulation or capital requirements making such a big difference. So on average, and this is, of course, not yet taking the potential changes in the rules into account. But on average, the capital requirements are similar. If anything, right now, a bit higher for the large U.
S. Banks, a bit higher for medium-sized banks in Europe, but there's not that big of a difference. So I don't think, honestly, that this is the biggest driver of competitiveness or profitability. As to your second question, the pockets of vulnerabilities. So I was speaking about small exposures to small and midsized enterprises, that's indeed where we also see corporate insolvencies increasing more dynamically than in other areas.
So this is, of course, then also one of the drivers that, in the end, leads to loan losses or deterioration in credit quality. But I think, and this is what I said earlier, we haven't really seen the full impact of the tariff discussions of the conflict in the Middle East on the corporate sector and on then, thereby also bank balance sheets yet. So it's important that credit quality, if you look at our numbers in the report, is one of the core drivers of risk in banks. And this is why it's so important that the banks monitor this very carefully, and we also look at this very clearly. There's a broader discussion maybe one can have about productivity in Europe and SMEs and what are the thresholds for the growth of SMEs, but maybe that's a little bit outside the scope of our role and our mandate here.
Digital euro and securitization, these are both very big questions. So I'm not sure where to start. So maybe digital euro, I think, and many discussions, I think you've had also with the colleagues from the ECB. I think in the end, the digital euro is supporting the digital business models of banks. And the colleagues have interacted very closely with the banking industry to make sure that the design, the scope of the digital euro is conducive to the digitalization of the banks.
And I think we've the recent decisions, I think, are very positive and go in the right direction. And we, of course, also contribute a lot to the work on Digital Europe from the supervisory side. In the end, the challenge that banks have to deal with is, I think, a different one. It's really about the digitalization of financial services, the ability to have robust operational infrastructures to invest in IT. So this is, I think, where the investment needs in the industry come from.
Securitization, and the ECB has issued an opinion on this. Of course, we are not against securitization because it can be a useful way of transferring risks to part of the financial system where there are actors that can bear these risks in a better way, but securitization can be risky. So this is why we are very careful when we do the approval process for significant risk transfers and the associated capital reductions in banks. So we monitor this very closely from a microprudential perspective. And securitization can also be risky, in particular if certain market developments become procyclical from a systemic risk perspective, financial stability perspective.
And that is something that we're doing at the same time. We do fast approvals of standardized securitization products, but we at the same time collect information so that appropriate financial stability analysis can be done.
Speaker 14
Yes. Thank you, Ms. Boug, for coming here and for your report. One key word is stronger supervision, stronger oversight. And I think this practice of oversight brings us to my question.
What does the ECB's supervisory board do to ensure that this relates to banks in a risk-based way, ensuring that it takes into account the fiscal concerns of the member states. The colleague asked a question about the digital euro, and I would like to ask in concrete terms, to what extent does the Supervisory Board take into account the risks of a digital euro for the stability of the banking sector, in particular, with a view to potential deposit flows from the central bank currencies. Another concrete question on mechanisms. What concrete mechanisms exist within the supervisory system to prevent potential conflicts of interests or political influence, to identify these and prevent them? And what mechanisms are being used in practice?
Speaker 13
Thank you. Thank you for the question. I will answer in English if that's okay.
Speaker 3
For the question about how do we supervise systemically relevant banks. This is what we do directly. That's the oversight function for the less significant institutions. How do we ensure our independence? Well, first of all, I think our independence is clearly embedded in the legal and regulatory framework that we have.
So that provides very strong guardrails. So everybody who comes to the table of the Supervisory Board, of course, takes decisions within this framework. So the independence of the supervisory mechanism of the ECB, I think, is a strong protection of our independence. And we had the financial sector assessment program of the International Monetary Fund recently, which also looked at that and which found that the SSM in terms of decision making, the legal framework and also the budget, I think this has also, of course, important implications for independence, has a strong degree, grateful for the legislature who've enabled that. But of course, in everyday decision making, we also need to make sure that we have a clear structure for our decisions, that we have a clear process for how we take decisions, how we set our priorities, and that we also challenge our own decisions.
So we have, first of all, a clear process for risks and priorities, and I've described our priorities a bit before. Then we have a strong second line function, which is making sure that all decisions that we take are benchmarked within the organization. That is also challenging the individual teams with their decisions. And I think these are a lot of ingredients that we have embedded in our processes to make sure that within the very strong independence framework that we have, all decisions are properly challenged. And I mean, not the least, maybe I should have said this at the beginning, the very reason that I'm here today and that we presented our annual report, that I'm answering your questions, I think, is also a strong element of our accountability.
And I think we also have with the inter-institutional arrangement that we have, I think we've established a lot of mechanisms which are also serving that purpose. Then the second question you asked was about the digital euro. So how are we involved in assessing the risks of the digital euro? So, of course, there are many benefits that have also been discussed here. But clearly, this has, I mean, the whole digitalization of financial services has implications for the banking sector.
And the banks need to make sure that they compete successfully, in the first place, against private suppliers of digital payment solutions. So I think this is the real competitive threat to the banks, not the digital euro, which is actually facilitating the banks' digital business model. So this is something that we've always made very clear. And to the concrete question, could it be that there are deposit outflows from the banks to the digital euro? First of all, there are a lot of elements in the design of the digital euro that mitigate that risk.
But then we've also very concretely worked with the data on the banks that we have to see what is the potential outflow risk. We've also worked with the national authorities who have more information about the less-significant institutions. And honestly, we don't see this as a significant risk. So this is, of course, we always have adjustments to new information that is coming in. But I think the design of the framework and also the functionality does not lead to the conclusion, and also the evidence that we have that this is a significant risk.
And in the end, I think the trust in the banks also comes from good supervision, good rules. And this is also a key element, of course, when it comes to changes in deposits. I should say maybe that's also relevant for the debate here. European deposit insurance, so completing the banking union, for me, is a core element of making sure that depositors have trust in the system, and that the same rules and protection apply.
Speaker 1
Thank you. Second round of question, what mute for the question, to mute for the answer. And I start with Irene Tinagi for the SME.
Irene Tinagli
Yes. Thank you very much for being here and answering all the questions. Actually, I want to go back to something that Ludwig Niedermeyer asked in his first question regarding the mergers, banking mergers, and cross-border mergers in the European Union. You already answered with respect to what the SSM does. But however, what we have seen in recent times is cases where you see the use either of national golden power instruments or, in other cases, public statements, interventions, interviews, everything to discourage market operations.
So regardless of what, of course, the SSM does, but this kind of instruments, attitudes and interventions from the national side, don't you think it's actually creating the kind of environment that is not conducive to the objective that we all talk about all the time? So, how do you assess the impact? Maybe I'm wrong, but I would like to hear your opinion, how you assess the impact of these interventions on market dynamics, especially when listed companies are involved? Because this, of course, can affect market valuation, market dynamics. And how do you view the recent use of golden powers in potential banking mergers?
Because I think this can also affect the banking union's credibility, don't you?
Speaker 2
Thank you very much for the question, which is, of course, also for those familiar with the debate, also potentially sounds related to a specific case. And let me make very clear at the beginning that nothing of what I say is related to specific cases. I think the Golden Powers, there was one example for Italy of that discussion coming up. And this is something on which the commission has also taken a stance. And my understanding is that this is currently also, there was a response also from the Italian side, and this is currently being assessed.
Speaker 3
And I hope you understand that. I don't want to get into that discussion. What I've said is that we have a very clear role, and we've also communicated this role very clearly how we see mergers. But this is now, I think, a discussion which is also happening at the European level, not at the European level also, but also at the political level. So I don't want to comment on the details.
Do you?
want a few.
Speaker 2
Yeah. Maybe briefly. I mean, this is, I think, the key message, and I think it was also very useful to have the discussion here with you today, is that we indeed live in an environment where we have this situation that the banks are stable, they're well-capitalized. We have built up a lot of resilience in the system, but we also have a lot of risks and uncertainty around us. So I think, for me, a good outcome of the discussion we are having also this year about competitiveness and how to assess the rules.
Speaker 3
And the framework would be that we maintain this resilience, that we maintain international cooperation and coordination, and at the same time, see where more streamlining can be done and where also more harmonization can be done because many of the questions also centered around what more can be done to really provide the single market for financial services in Europe, what more can be done to complete the banking union. So that would be for me a good outcome of that discussion, and I also look forward to discussing this with you next time I come. Thank you. Thank.
Speaker 19
You, dear Claudia, and thank you for the discussion. So, dear colleagues, I would like to welcome Dominique Labourneux, chair of the single resolution board, to his first public hearing in 2026 in the committee. And later this afternoon, we'll be voting on the recommendation to the plenary concerning the agreement reached on the CMDI package. So, Mr. Hala Buhijks will have an opening statement for five or six minutes, and then, of course, there will be the Q and A session.
Speaker 20
Many thanks, Madam Chair, honorable members, ladies and gentlemen, good afternoon, and thank you for welcoming me to this hearing. Over the past decade, Europe has achieved remarkable progress in building the banking union. The establishment of a single rulebook together with a single supervisory mechanism and the single resolution mechanism has significantly reduced regulatory fragmentation across Europe. Banks now operate under a common supervisory framework and within a shared system for managing crises. This represented a major step forward for European financial integration.
Speaker 21
Resolution plans are now in place for all major banks in the banking union. The single resolution fund has reached its now worth around €81,000,000,000. Banks have built substantial loss absorbing capacity, and the European resolution framework has been successfully applied in several member states. Just as importantly, the system works through close cooperation between European and national authorities. At the Single Resolution Board, we work side by side with national resolution authorities every day. Decisions are taken jointly, both in resolution planning and when necessary, in crisis times in the interest of the banking union as a whole.
Speaker 20
Thanks to these achievements, many of the barriers and constraints that fragment the European banking landscape should now become a thing of the past. Against this backdrop, the Commission's consultation on competitiveness in the banking sector comes at a very good time. I'd like to draw your attention to two dimensions for this consultation: simplification on the one hand and completion of the banking union on the other. Simplification first. This consultation provides an important opportunity to take stock of what has been achieved, to identify where the framework can be improved, and to consider how to streamline, simplify, it depends on the definition we give to simplification, to streamline regulation so that it can better support Europe's growth and competitiveness while preserving financial stability.
This effort also builds on important work already underway across the European institutional framework. As you heard from Ms. Claudia Buch, one hour ago, the single supervisory mechanism is delivering significant progress in simplification while maintaining strong prudential standards. On our side, at the Single Resolution Board, we are also actively contributing to simplification within our mandate and in line with the existing rules. Our approach is straightforward.
Speaker 21
We aim to reduce unnecessary administrative burden while keeping the focus on what truly matters for resolvability, as we say. For example, we are streamlining reporting requirements and making data requests more transparent and predictable for banks. We are also moving towards more proportionate resolution planning cycles, where banks have already reached a stable level of resolvability, the intensity and frequency of certain planning activities can be reduced. This allows both banks and authorities to focus their resources where risks are higher. Simplification, therefore, is not about weakening the framework.
It's about making it clearer, more proportionate, more efficient, and easier to implement. At the same time, and this is my second point, the commission's consultation also offers an opportunity to reflect on the next steps of the banking union. Without any surprise here today, I will repeat what I've already said several times in front of you. We need EDIS. European deposit insurance framework is definitely a tool which is missing, and I'm very happy to see that there's a full chapter in this consultation by the commission about EDIS.
While supervision and resolution have been integrated at the European level, deposit protection remains organized largely at the national level. Moving towards a more integrated approach would strengthen depositors' confidence and support deeper financial integration. Another important aspect concerns liquidity and resolution. Resolving large banks can require significant liquidity resources. Ensuring that liquidity support is available when needed would further strengthen confidence in the crisis management framework.
Speaker 20
These elements also matter for competitiveness because, in reality, when confidence remains fragmented along national lines, capital and liquidity tend to remain fragmented as well. This limits cross-border banking integration and reduces the efficiency with which banks can support the European economy. I'm drawing to a close. The Commission's consultation offers a valuable opportunity to build on the achievements of the banking union, to simplify where possible, and to further strengthen the framework. Institutions across Europe, including the Commission, the SSM, the SRM, are already actively working in this direction.
Speaker 21
I also note with pleasure that this committee will hold two important votes this afternoon on the annual report of the Banking Union and on CMDI. I understand that the draft report renews the committee's commitment to completing the banking union, an important message for all of us. And I would like to thank the rapporteur of this important report, Ms. Evelyn Regnay. And finally, let me also stress once again how important your work on CMDI was.
Speaker 20
And I would like to thank you once more about the positions you took in this complicated debate. Despite the intrinsic limits of the final text, it's a package which generally strengthens our toolkit. Thank you for that. To conclude, continuing the process of integration will help reduce fragmentation, strengthen confidence, and support a more competitive European banking sector. Thank you very much.
Speaker 1
Thank you. Q and A session. One minute and a half for the questions, three minutes for the answers. And we start with EPP and Ludac Nidermeyer.
Speaker 4
Thank you, Madam Chair. So I hope that our many years lasting saga on CMDI will get closer to end, but neither CMDI or EDC will conclude the banking union. I guess there are many more things that we should do. For example, I just asked Claudia Buch about the mergers, cross-border mergers that are difficult. So I wonder what, in your view, because you are experienced, I can say banker, what all should be on the table to really move to a genuine banking union where the competition will be much stronger, the clients will be better served, the products will be more competitive and more innovative.
So this is the first question. The second is very marginal. In your speech, sometime a short time ago, you mentioned that if the bank is the issuance of the issuer of the stablecoin, you will somehow reflect it in the resolution strategy. Is it something relevant or is it just one of the items that is in the bank balance sheet that we look after, but it doesn't create any kind of new orders. Thank you.
Speaker 20
Thank you. Thank you very much for these two questions. What do we need for a real, truly integrated market and a more competitive sector? I suppose that you discussed the notion of competitiveness as the level of banks versus the level of the sector or the system. And that's true that competitiveness is first measured bank by bank.
But at the same time, what do we need to do to improve this competitiveness bank by bank for European banks, for banking union banks in particular? My answer is clear. I think that we can discuss these elements of simplification in different directions. And one of them is clearly to remove the internal barriers inside the banking union, in particular. Why?
Because we've decided to create a single area with one single supervisor and one single resolution authority. So we know that this framework is not finalized entirely as the third pillar, the EDI, is not yet in place. But we already have the two first ones. And if you look at the details, you realize that there still are some exceptions, discretions, which are still tailored to national realities and not to the banking union one. And I think we should pay a lot of attention to these elements and try to remove these specificities, which can, let's say, impinge on a fully integrated banking union.
So some of them are inside the regulatory banking framework. They are coming from the regulation itself, directives transposed in the different member regulations decided, like the directives, by the college legislators. And we should not be shy to not have a look, to pay a look. Taking the distance of the eleven years, twelve years of the banking union, what was decided eleven years ago for us, single resolution mechanism, perhaps should be reassessed eleven years after. I think we have built a lot.
We have built the single resolution fund. We have built MREL. We have built resolvability. So perhaps that's the right moment to consider that we have built an amount of resilience, which can potentially give more capacity to the legislators to revisit some elements of the regulatory framework. So this is at level one, if I may say so.
But also at level two and three, we should try to draw some conclusions about where we are today, better place than before, better resilience, and try to find solutions for allowing more unified banking union relationships, in particular, for groups with different entities throughout this area. And by doing this, we will free capacities to develop even more the cross-border activities, the potential mergers, the potential acquisitions on a national basis or on a cross-border one. I do not consider anymore my role at the national level, except when I'm obliged to compare with elements outside of the banking framework. And this is my second point. It's not enough to realign or to harmonize or to simplify, call it whatever you want, the banking regulation.
We need to go outside the banking regulation. And in my capacity as Chair of the Single Resolution Board, I'm obliged to tell you that we'll still be under a lot of difficulties during the time when we have 27 national insolvency laws. We should have a look at the capacity to harmonize national elements outside beyond the banking framework. There are other things to harmonize to give this capacity to grow, to have a growing banking sector at the banking union at a minimum, or even more at the European level. Stablecoins issuers.
For the moment, this is something we are following, obviously. One thing, perhaps, I would like to draw your attention to. For the moment, this is something which is not sufficiently significant to have a real impact on the capacity we have to act if one of these banks issuing for the banks, I mean, if it's a non-bank, it's a different story. We are not in charge of non-banks. But suppose a bank starts to issue some stablecoins. Normally speaking, for the moment, the market is very limited.
So we could manage via the tools we have. Suppose that this thing will become a real driver of the development of a given bank will be confronted potentially to something which is complicated to manage. I want to say that MICR, the regulation on MICR, is addressing the protection of customers, but is not addressing the fully fledged regime for the issuers of stablecoins from a crisis management perspective. MICR does not define a specific regime for the crisis time. MICR draws some connections and asks to embed the resolution authorities as far as necessary in the information flow, but does not define.
And I would like to recall that in the genius act, the famous act taken by the US administration, there is a full chapter on crisis management for stablecoins issuers. So perhaps there will be a moment when we'll have to go to this dimension, that's to say the famous non-banking financial institutions or the new products should also be embedded into crisis management adapted regimes. And it's not necessarily yet the case.
Speaker 5
Hello. Good afternoon. Thank you so much, sir, and welcome, Mr. Labarese. I will speak in English now. Yeah.
No, because I will be very short. Now I would like to jump on the debate on navies. Yeah. Many times, you have been very vocal, defending the necessity to complete the banking union, and in that case, to finalize the negotiation on the current proposal on EDIS. I have to say that this committee passed the proposal last year on the last Monday, sorry, issued that we didn't move the proposal to the plenary, maybe because we are not sure about the current political geometries in the current parliament.
But in any case, this house was able to find a landing zone from different political views based on a hybrid model. Yeah? Now the European Commission has opened a public consultation. There is a direct question on this matter. And I don't know if you think that the ECON position could be helpful to move the negotiation, or if you think that there are other ideas around Brussels or around other capitals that maybe could help more.
Thank you so much.
Speaker 20
Thank you. Thank you very much for this question. When you say the ecom position, you mean the one of 24, the Carras, when Mr. Carras was yes. I think it was an interesting attempt in reality by ecom.
And I said it publicly several times that I thought at that time that the step taken by ecom was exactly the good one to recall everyone that we need Edis. So Edis is a sort of brand which is not well understood anymore because it's subject to too many interpretations in reality. So let's not call it Edis anymore. I called it Edis several times already today, but let's try to find another branding. What matters is the reality behind.
The reality behind this is that today, we have a law adopted here, DGSD, a directive in reality, DGSD one, DGSD two, which gives a legal background for ensuring all the deposits, covered deposits at the same level, 100,000 per customer per bank. All fine. But in reality, this does not correspond to the reality, the financial reality of much more than 27 DGSs, deposit guarantee schemes we have in Europe, near to 40%, a bit less deposit guarantee schemes. And the intrinsic strength is, it depends, obviously, on the number of participants to this scheme. And on top of that, we have these additional financial agreements, which are generally speaking agreed between the DGS and the member states.
And so the capacity, obviously, of DGS of small countries is more limited by essence in terms of financial size, including the financial agreement with the member state, than for the bigger states in Europe, as simply as that. And what matters is that we see, even if it's not a big proportion, that we see that we are under the development of cross border deposit takers. That's to say, via your card issued by this bank in a small country, you invest some savings in the country. And so you depend, even if you have another nationality, you depend on this country as DGS and a potential financial agreement. And we see, in some cases, a big discrepancy on the deposit which should be covered coming from, let's say, one bank, and the capacity in case of the failure of this bank.
So this is exactly what EDIS tried to address, that's to say, to give via a different formula. And I'm ready to go for a step-by-step approach, developing first the sort of liquidity support, etcetera, and go in a second step to something stronger. But the technicalities do not matter so much. What matters is to give the confidence to our customers, our citizens in reality that whatever happens in their bank, they will be protected either because we will protect them via resolution or via the, let's say, the processes under the DGSD, that's, say, in particular, the payout function, not only, but in particular, the payout function. And that it's not anymore a question of a legal background.
It's a question of financial capacity. And if the smallest DGS are not able to finance, the other ones will, in a way or the other, support what is a common good. Financial stability is a common good. And that's exactly why I'm still supportive. So what we should do, hybrid model, not hybrid model, whatever you can achieve as, let's say, builders of a political agreement between the core legislators, whatever you can achieve will go in the right direction if we increase this level of confidence in our banking system.
Speaker 5
Very short. No. One of the arguments that we heard against Eddies is the debate that we should reduce risk. Yeah. The debate between risk sharing and risk reduction.
And behind these critics is the potential revision of the prudential treatment of sovereign debt. Yeah. You know perfectly well these arguments. My doubt is given that you are the chair of the SRV, when we put in place the SRF, these arguments could be the same. And we didn't have this kind of argument when we created a fully fresh single resolution fund.
So I don't know why this argument is already there.
Speaker 20
So you know very well the story. There is this idea behind the scene or explicitly that the constitution of some DGSCs could be built on contribution by banks from some countries at the service of failing banks in other countries. But again, I think that there is a misunderstanding here because the famous connection, the Doom Loop, etc., is intrinsic to the absence of EDISK because, again, as I said, if there is not enough money in the DGS, we need to go to the famous AFA, the agreement, the financial agreement, which is between the member state and the DGS at the service of the failing bank. So in reality, we expect the member state to participate in the financing of the payout in the extreme cases of the failing bank in liquidation. So I think there's a lot of political misunderstanding behind these notions.
I agree fully with you. SRF is not connected to any member state anymore. It's a fully mutualized fund, and it works. It's at the service of financial stability everywhere in the banking union. Could be the same for potential EDIs.
Enikő Győri
Thank you, madam chair. Mr. Labourieux, welcome. I have two questions. The first one was, of course, on simplification.
You were already elaborating on that in your introduction. And the second would be on something from the point of view of a nonbanking union member state position. So the SRB's 2026 work program focuses on both improving readiness and simplifying the EU bank resolution framework. And given how complex the current rules are, how does the board plan to simplify procedures without weakening the crisis management capabilities? And can you give concrete examples?
Because you also mentioned this dilemma on how where simplification would make the system more efficient, while keeping strong financial safeguards. And in particular, how will you ensure that simplification doesn't undermine or change the existing stock and structure of MREL instruments already built up by EU banks. And the second then, concerning effective crisis management, well, depends, of course, on cooperation and trust. And there's some MEP coming from a non-banking union, non-Eurozone member state. I would like to ask, how does the SRB plan to strengthen cooperation and build trust with resolution authorities outside the banking union, especially in cross-border banking groups.
And also, Javier de SRB ensure that the needs and capacities of nonbanking union entities are fully taken into account in these cases where responsibilities are shared between different authorities? Thank you so much.
Speaker 20
Thank you. Thank you very much for these two questions. Simplification without weakening the resilience, it's exactly what we've tried to say. That's to say, to build resilience needs time, efforts by everybody, but it can be destroyed very quickly because we are exactly speaking about confidence. So we want to keep this resilience.
We don't want to weaken the framework, which was so painful to build, coming back to the single recession fund. Indeed, the EUR 81,000,000,000 were contributions by banks. So it was extremely painful, costly for the European banking sector. So it would not be a good idea to find solutions which could weaken the global resilience, so costly and so painful to build. Once I've said that, simplification with concrete examples, there are two areas.
One, which is inside our capacity, so our mechanics. We've decided to simplify our approach regarding resolution planning. So to revisit completely for internal purposes, revisit the approach of building a resolution plan for freeing resources, in reality, for asking these resources to focus on operationalizing the tools. This was the strategy of a single resolution mechanism. But in reality, indirectly, doing this, simplifying the resolution planning phase, we are also asking for less data, less updates to the banks one by one.
And this is exactly a way of simplifying our relationships by asking less when only it is needed to ask an update and not when it's just for updating a chapter in a plan, which is not necessarily, in reality, necessary to update it. So I can give you many examples. By the way, we've published some papers explaining the nitty-gritties. I don't want to take too much time on these details. But there's another area, which is the area where we can suggest, but it's not in our remit because it's carved in stone in the law.
And I would like to repeat that eleven years after the inception of banking union, SSMSRM, I think it's exactly the moment to revisit some elements. I take a very concrete example, very technical, sorry for that: prior permission regime. So we ask the banks when they want to, let's say, reimburse issued MREL instruments to ask first for a prior permission authorization to reissue another series of bonds later. In reality, in 100% of the cases, we have said yes because all the conditions are respected. And nevertheless, it's an endless series of steps we ask banks to do this, to do that.
We have to assess, reply, etcetera. So bankers are complaining and saying, but please change this. But we cannot. It's in level one. We are implementing the law.
So typically here, happy to contribute to suggestions to adapt to technical elements. If I were telling you, well, we've said yes in 45% and no in 55%, I would not ask you to change this, but it's not the reality. So the reality is that in reality today, based on experience, the prior permission regime as it stands now is useless, and we should be ready to revisit it as simply as that, replacing it by something smoother and more simple. Corporation and trust. Here, I can tell you that the architecture built also under the same regulation, by the way, the crisis management framework works properly.
And here, I think I can say this extremely explicitly. We are able to work together for these banking groups who are located in the banking union with subsidiaries outside of the banking union or with these groups located outside of the banking union in the European Union and with subsidiaries and branches inside the banking union. I have several examples of both sides. And it works because we've built, you've built this notion of colleges. Colleges are the bodies where we discuss concretely these cases, and we find a way of agreeing.
And what I can tell you is that during the last years, we have agreed on all the cases one by one, whatever the connection, that's to say, banking union with a subsidiary outside of a banking union or outside of a banking union, European Union with subsidiaries inside the banking union. During all the last cycles, and I do hope it will be the case this year, we agreed case by case. So it works also because we have built excellent relationships with our Polish colleagues, Hungarian colleagues, Czech colleagues, Danish colleagues, etc. So this is also built on daily work at all levels, from the technical experts to the board members level. And I can tell you that this is something I pay a lot of attention to because I think it's crucially important to be able to build this confidence and to avoid reactions around I do not trust, so I'm obliged to prepare ring-fencing measures or things like that.
We are not there anymore today.
Speaker 25
Mister Laborex, thanks for attending this exchange of views. It's clear where the stakes are: finishing the banking union so we can be fully competitive. Looking at the forthcoming discussions about competitiveness and banking and the integration of banking sector, we need to strengthen guarantees, allowing for members of the banking group in if there's a crisis to get funds, liquidity, capital from the parents. And the SRM is a big part of this for the single resolution mechanisms and very important in terms of protection of the parent, without having an impact on branches. But in terms of how it will work in practice, how are you working in terms of reinforcing the credibility of the strategy and getting it properly implemented?
Thank you. I'll respond in English.
Speaker 20
Many thanks for this question, which is about the famous single point of entry strategy and the way of managing inside a group the resources in terms of capital and liquidity. So I think that I should start perhaps coming back to the previous question. I should start by delineating a little bit the scope of your question. There are three cases. The first one is a group, a banking group within the banking union, with subsidiaries inside the banking union.
And here, I'm sorry to say that there is no more home than host because there is only one single supervisor and one single resolution authority. So all the member states, members of the banking union via their authorities, are represented to our board each time there is a necessity. So if there is a subsidiary in country A for banking group in country B, the SRB, organizing the executive session when we have to decide about the failure of this group, will invite, obviously, the representatives from country A and country B. So they are participating in the discussion. They are voting members.
So they vote. So when we take a decision, it's not anymore a decision of a home against the host, or it's a decision taken altogether, as simply as that. So there is no more reason to consider that there could be differences between home and host inside the banking union. As I said, unfortunately, all the rules are not harmonized. And I'm coming back to the famous insolvency rules, which are not harmonized, and which are still nationally based.
And that's true that the debate resolution versus liquidation entails consequences, which can be different because indeed, if at the national level, the insolvency regime is not exactly fit for purpose, then we could be confronted with difficulties if we decide to go to liquidation. But if we decide to go to full resolution, we will take the decisions which are necessary to guarantee the final stability inside the banking union, including for the subsidiaries. That's extremely clear. Second case, it was the case raised by the previous question, in reality. A group which is in the banking union with a subsidiary in the European Union, but outside of a banking union, or the reverse scenario.
As I said, I think the answer is in the governance we have in place for the colleges. And during these colleges meetings, we decide how to embed the features, in particular, internal MREL, which is a way of prepositioning capital between the parent entity and some subsidiaries. We can do it inside the banking union, by the way, but we can even do it better when there is a subsidiary outside of the banking union and liquidity prepositioning if need be. So all these elements can be discussed within the colleges' processes. Third case, the third countries' subsidiaries in the United States, in Japan, in the UK as well.
In that case, we have for the biggest banks, what we call crisis management groups. Again, a sort of college, less formal, with less capacity to take explicit decisions. It's essentially an exchange of views. But we try to build a level of confidence, which gives us sufficient confidence in the capacity of each and every member of this crisis management group not to take individual decisions at the wrong moment and in the wrong direction. So it's a question of building trust.
Coming to, and I finish with this one, how to reinforce this question of credibility and confidence. It's by showing that when it's necessary, we can preposition resources in liquidity, insolvency, internal MREL, liquidity prepositioning. But when it's not needed, it's even better not to preposition and to let what we call unallocated resources be able to be monitored and to be targeted to the situation where it is needed. Because if we implement internal MREL or liquidity agreements everywhere, we are trapping in reality MREL resources and liquidity resources. And this will have an impact at the moment of a crisis, because we don't know where the crisis will start from.
It can be in this subsidiary. It can be at the parent level. It can be at the same moment everywhere. And so we need to be agile enough to find the solution. So prepositioning can be in peaceful time a way of reassuring when needed, but unallocated resources can be a better outcome in other circumstances.
Eero Heinäluoma
Thank you, Madam Chair. The ECB task force on simplification recommends, amongst other things, the simplification of the EU resolution framework. According to the bank, there is a need to align the requirements around the total loss-absorbing capacity and the minimum requirements for own funds and eligible liabilities, as the existing framework would lead to fragmentation and complexity. I would be interested to hear your viewpoint. How can such alignment be achieved, and how much would this alignment reduce requirements for the biggest banking groups? Or put it a little bit differently, how much would the biggest banking groups get out of such a reform?
Speaker 20
TLAC, the total loss-absorbing capacity, is the international standard. And what we ask the biggest banks, the GCs, as we call them, is to respect this TLAC standard because, again, it's a question of credibility internationally to be able to say to our U. S. Colleagues, Japanese colleagues, look, they are respecting the international standard. But what we have decided to do, what you call legislators have decided to do is also to impose to these banks to respect at the same time, MREL.
So the G-SIBs are respecting both requirements, TLAC and MREL today. And they report to us two different data reports, one for TLAC, one for MREL, and we are taking decisions each and every year on all these elements. We have decided in Europe to go much beyond the G-SIBs. In the U. So, we are limiting expectations, the loss absorbing capacity expectation to the G-SIBs only.
We've decided to cover a broader scope. And for this, we've tailored a specific regime, which is called MREL, minimum requirement on eligible liabilities. So the MREL definition is different from the TLAC one. The eligibility criteria are not the same. So some instruments are taken into account in MREL, not in TLAC.
Some exclusions are down in TLAC, not in MREL, or the contrary. So we have tailored a sort of specific European regime. So the debate about aligning TLAC and MREL is a little bit debate around aligning our pools and peers. The idea is the same, loss-absorbing capacity. But the way we have built these elements is not exactly the same for both.
So when I read some proposals around aligning TLAC and MREL, I think we should have the holistic view about the consequences, the pros and the cons of their approach in both ways. And I think that the respect of the international standard is definitely a red line. We cannot depart from the international standard. So TLAC is definitely the reference for the internationally active banks. So, what do we do with that?
Do we I have not read proposals to say that TLAC would replace entirely the MREL. What I've read is our proposals around what is called TLAC plus. That's to say, we start from TLAC as a sort of standard, a new standard for who? I don't know, for only the GC or the banks to be discussed. And then a plus, which could correspond to the layer of EMRA, the additional layer of EMRA, I should say.
I will tell you something. For me, I'm open to discuss all the proposals if they keep the resilience we want to find at the moment of a crisis. And in particular, something which should be well noted, is that the amount we ask banks to do for an open bank bail-in strategy depends on the solvency post resolution, that's to say, on Monday morning, the bank should be solvent. What does it mean to be solvent? To respect the solvency ratio.
And to respect the solvency ratio means that we have to be sure that we'll find sufficient MREL, TLAC, whatever, but the sufficient amount so that we can absorb the losses and recapitalize the bank at the right level. So what I want to say is that the level of recapitalization on Monday morning depends on what the supervisors ask us to do. And so we can reflect if there is this holistic approach, we can reflect on what is acceptable or not acceptable, and tailor a new regime. We can perfectly say that there is a sort of step one where the TLAC reference, the strategy we've adopted, the tool which is preferred, and a sort of step two with additional elements coming from our resolvability assessment. So we are absolutely ready to discuss if it's very clear that we need to take the holistic point of view covering the different elements, including the buffers, the macro-buffers.
And if we want really to achieve what should be achieved, that's to say, a sufficient amount of available resources when it's needed. And this matters in particular for the famous international active banks. We need to find a sufficient amount. And today, with the double reporting and the double request, we have, I think, an amount which is sufficient. But tomorrow, happy to discuss with retailer in this way or that way if it's well understood.
No. Thank you. Thank you very much. No, I don't want to take too much time concluding. I think we have covered a lot.
Again, the key question around this competitiveness simplification is around what we want, as I said, what we really want to achieve for tomorrow. We know that this competitiveness discussion will take, in reality, several years between the consultation today and the finalization of changes in the legislation. It will take years. So we are not thinking short-term. We are thinking midterm, long term, in reality.
And what matters for me is to find a way of maintaining, keeping the level of confidence we've achieved. The level of confidence we have achieved after 11 years of the banking union and in particular of the crisis management. So the resolution framework is much higher today than 11 years ago. I would not like to be obliged to tell you in some years that due to the measures we've adopted collectively at the European level, we are going the other way, and that's to say, decreasing this level of resilience. Once I've said that, within this amount of resilience and confidence we want to keep, I think we should be ready to move ahead with a stronger banking union.
This is the only way to increase the level of credibility and confidence, and to give the banking sector the capacity to act more on a cross-border basis and to be at the same time resilient and growing at the service of the European economy. Thank you very much.
Speaker 19
Thank you so much. And thank you for this conclusion. Okay. So, colleagues. So we now turn to the presentation of the draft report on the competition policy, annual report 2024.
Speaker 1
This year report is particularly timely with a range of commission upcoming initiatives in the field, such as the major guidelines, which are currently being reviewed and on which Econ intends to hold.
Speaker 1
Discussion with Vice President Theresa Ribera. So I will now give the floor to the reporter, Ms. Stephanie Yuncourtin, to present a draft report. Thank.
Speaker 25
You, chair. Colleagues. I'm delighted to present my draft report today on the annual report on the Competitiveness Policy 2025. We had some great competitive challenges. Our businesses had great strides to be able to compete with the U.
S. And with China, also to be able to become more competitive, provide more options to our EU citizens. Competition and competitiveness play a key role. Why? Because it goes hand in hand with encouraging innovation and providing variety to the European consumers.
So I structured my draft report with seven priorities. First of all, competition strategy needs to support innovation and digital security. It's a key tool at the heart of our European tools. The Draghi report should be a reference point, allowing us to create these tools. We need to reduce our dependence on non-European providers and suppliers.
We need to provide strategic infrastructure in the cloud, for example. So it's essential to prioritize Europe in these strategic areas, also encouraging key common projects. Secondly, we need to create an independent European competition authority free from political pressure. This competition is becoming more and more political, and this independent authority would allow us to break free of this, providing tools, antitrust aspects and state aid, for example, ensuring digital competencies and so on. Thirdly, the Digital Markets Act, which needs to be applied across the board. And fully, we need to ensure that it is applied across the board through all the stakeholders.
Its application requires stable funding. Revising this in 2026 and next year must be transparent, ambitious, and inclusive, particularly integrating SMEs. The cloud and other aspects must also be seen as key services in the DMA, as part of Europe's strategy and competitiveness. Fourthly, we need to apply antitrust policies quickly and effectively. There are many aspects that are being applied in antitrust authorities, particularly in the technology sector.
This antitrust policy needs to be applied effectively because there are certain actors, particularly in the finance sectors, who have been subject to these antitrust competition. We must also take into account globalization, looking at banks, looking at cross border strategic aspects such as telecommunications. We've also talked about the banking sector, payments, and energy. So we need to ensure fair competition. We must support a European framework for state aid, ensuring modernization and simplification of the rules, and supporting affordable dwellings and accommodation.
We must ensure more transparency and more information for the parliament, ensuring the modernization of competition rules like the DMA. The parliament can also be a strong voice, and I would be delighted to have an exchange with my colleagues and other partners, particularly in the commission. Thank you. Thank you, reporter.
Speaker 1
Or to the shadow reporter, and I will start with the EPP and mister Marco Falcone.
Speaker 29
Thank you, chair. I speak Italian. In
Terms of the work that we plan to do on this strategic composition report, we'd like to set off from a key principle: the rules of the internal market need to go for everybody. That is an essential precondition to guarantee fair competition and make sure that the European economy works well. As a group in the EPP, we want to promote a constructive approach, particularly in sectors of the digital market and energy, and in relations with third countries. The priority of strengthening Europe places economic operators at the heart of sustaining competitiveness of our actors and growing investments and productivity overall. Bearing all that in mind, it's an ascension to get over the divide between the most disadvantaged regions such as islands and the least developed regions contributing to the territorial and economic cohesion of the union. We're against red tape.
We would like to see a drop in red tape, including income competition policy as shadow rapporteur for the EPP. The work on amendments on competition is all in that vein, guaranteeing fair rules, promoting competitiveness in Europe, and sustaining balanced development of the internal market.
Speaker 32
Thank you, Chair, and good afternoon to everyone. Thank you also to the rapporteur for a good first draft of the report. You raise a timely and relevant point on the role of the EU competition policy in supporting Europe's competitiveness. Turning now to my priorities as a shadow rapporteur. First and foremost, you can't spell competitiveness without competition.
Speaker 33
We should not lose sight of the core goal of the competition policy, ensuring well-functioning competition in the single market. Rather than focusing on picking winners, we should focus on removing the internal barriers that still fragment our market. Strong competition helps European companies become better, able to compete globally, while at the same time reinforcing consumer welfare and protection. The completion of the single market must, therefore, be a key priority. Well-functioning competition drives productivity, innovation, and long-term growth.
Speaker 32
It ensures resources are efficiently used, and supports higher output. This is crucial for scaling the green and digital transition. It also helps ensure that the gains are shared more broadly, supporting both competitiveness and good social outcomes. We are elected to represent citizens, and their top concern is the cost of living crisis and the rising prices in general. According to the Eurobarometer, tackling rising prices must be our priority.
Speaker 33
This is why we need to look more closely at competition in the whole food supply chain, for example. Here, I believe that Mario Draghi's proposal for a new competition tool can play a key role as an EU-level watchdog. It can also help address structural problems and protect consumers from unfair pricing. We should also look more closely at the competition in the banking sector. More competition can improve access to finance and conditions for consumers and businesses.
In payments, Europe remains dependent on the U. S.-owned duopoly. Here, the introduction of a digital euro will help reduce this dependency. It will also strengthen cross-border solutions, increase redundancy, and boost both competition and strategic autonomy. I look forward to working constructively with my colleagues on this in the process ahead.
And with this, I thank you, Chair.
Speaker 34
Going to speak French. I think we need to create a fair compromise between the virtue of free competition and preserving our businesses. What's important is ensuring that we are pragmatic. This report is going in the right direction, but we must be vigilant and we are aware and focus on creating this a DMA fee. We're not sure that taxes and fees are the best resolution, and the most appropriate solution.
There's also the plan to create a new authority, which would not necessarily be exempt from anti-democratic practices. It's important to remind everyone here that our businesses need a clear framework, so all of our efforts should be put in that direction. Competition at the heart of the EU must be free and without restriction, but it's worth keeping in mind that the strongest competition comes from outside of our borders. We shouldn't put rules in place that we are the only ones if we are the only ones to follow them. Thank you.
Speaker 1
For ECR, Marco Squarta. I don't think he's here. No. So for the greens, Rasmus and resin.
Speaker 36
Yes. Thank you so much, and thanks especially to you, Stephanie, for an excellent draft report with a lot of good elements in it from a green perspective, especially regarding tech. I think there are some strong paragraphs already in the report, which we can fully support. We will come with some amendments also on this part, of course, but in general, it goes in the right direction. Secondly, on the cost of living crisis, I think it will be quite important to link competition policy to the daily problems of a lot of European citizens.
Speaker 38
And I think the cost of living crisis, and some colleagues already mentioned this, is a very good example for this. We can take the energy debate right now going on in a country like Germany, where we clearly also can see that this has a competition angle because of less competition, like the big companies in the energy sector are able to create a different price dynamic than in other regions of Europe. But also when about food prices and so on, I think this clearly needs to be strengthened also in your report, and we will put some amendments forward. And I understand other groups are doing this as well. And thirdly, on the cultural and sports sector, you're already referring to the Paramount case.
This, we completely agree in, but I think also because of the dynamic, the developments that after you presented the report, we should update that, so there will be a green amendment on this as well. We would also like to introduce in the same part of the report some amendments on sports and especially professional football, where we can see that because of foreign investors, because of multi-club ownership, we can see a lack of competition or fair competition when it comes to professional sports and football. So we will have some amendments there as well. The same is true for dynamic pricing, which should be addressed. And then there is one part in the report where I still think we need to have some further debate, and that's about the European champions issue.
I think there are different ways to address this and how to look on this. And I also think we have not a clear line in the parliament on this because there are some national differences and there are some differences looking on different sectors and so on. So this is something where I think we still need to discuss a bit further how we can strike a good compromise in the report. But overall, it goes in the right direction, and I think we can end up with a strong and broad majority for your report.
Speaker 48
Thank you, Madam Chair. I would also like to thank the rapporteur and her team for the good, hard work they have been doing. I believe we can all agree that competition policy is vital for promoting European independence. And I agree with what Erasmus said about the discussion of European champions is something that we have to continue. I think something more to add, we must also recognize that its purpose is to protect consumers and European workers from the negative consequences of market concentration and corporate power.
Speaker 39
Reducing our dependencies must not result in the erosion of labour rights. We know well that mergers often increase corporate power. And consequently, EU competition policy should always take into account the impact of mergers and market concentration of labor rights and bargaining power. So we will propose amendments to the report to address these concerns also, and we look forward to collaborating with other political groups. Thank you.
Matthias Ecke
Thank you, Chair. Thank you, colleagues, also for this interesting exchange and a very interesting proposal draft report of, Stephanie Uncautchan. And I just want to mention one aspect that we really need to keep in mind, especially the telecom markets, because we have an interaction here between different proposals that are on the table. We discuss the Digital Networks Act at the moment in the ITRA committee and also in others. And at the same time, the merger guidelines have the telco markets also in the focus.
Speaker 40
And I think that we should take very good care that not by the idea of creating European champions in that market, we undermine competition, which is beneficial for consumers and beneficial also for rollout and investment, which we've seen in a lot of European markets. So we really need to bear in mind that here, the competition policy needs to go hand in hand with the industrial policy that we also do on this specific sector. And I would probably pose a few amendments to that. Thank you.
Damian Wasegier.
Speaker 43
Yes. I just wanted to underline also a couple of aspects. The first one is on AI. I think we all understand that foundational models can be difficult when it comes to, yes, becoming a potential natural monopoly. I don't think they're there yet, but I think it's interesting to understand if from a competition perspective, we can look at these concentrations of market power, both when it comes to the algorithms but also to the compute, whether there's something to look into, and whether we are applying competition rules strongly enough.
Speaker 44
I think it's also important that we understand, when we look at our industrial policy as a whole, that potentially giving larger subsidies to larger companies is a distortion of the market and creates barriers to entry for smaller entrants. And so I think it's also important to consider whether we are spending sufficient funding of our public money on small and medium sized companies and also on start-ups and SMEs, also when it comes to procurement, maybe something to keep in mind for the balance when it's about competition as well. Thank you.
Speaker 55
No requests for the floor. So I give the floor back to the reporter, Stephanie. Thank.
Speaker 25
You, chair, and thank you to all of you, my dear colleagues, for all of your very constructive comments. I think there are a lot of things people have to add, which is great. But this project draft report is very restricted in its format. So I'm delighted to hear all your suggestions. We have observed that the revisions that will come, we'll talk about the competition rules and update them, our rules within Europe.
We've tried to find a compromise with simplification. And of course, to respond to some of you, we need to adapt this draft report, which is already a few days old, to the current reality, particularly because there have been changes in the Paramount case. Also to do with the economic aspects that affect us from the war in the Middle East, talking about buying power and energy prices. Our other colleague mentioned something about the DMA. And we're talking about the DMA and Imco, so there are also some questions to address in terms of the telecom markets as well.
Speaker 42
So thank you so much. If you can study closely the amendments that will be tabled, and thank you for the discussion.
Speaker 46
Thank you to all of you. The discussion is a deadline for amendment is March 20, and the vote in Econ is scheduled for June 3. Okay. We now turn to agenda Item nine, the presentation of the draft opinion and the consideration of amendment of the European Competitiveness Fund. While Itray is the leading committee on this file, Econ has been entrusted with providing an opinion.
Speaker 1
Among other aspects, the opinion and the amendment focus on governance and draw on the expertise and experience gained by Econ on the investment in the EU. I will now give the floor to the reporter, Miss Nerudova, to present her draft opinion.
Danuše Nerudová
Thank you, madam chair. Colleagues, the European Competitiveness Fund is a new instrument, and it is important that we work carefully on its architecture and rules, as it will serve us for many years to come. My objective was to draft a report that doesn't overload the text, but rather clarifies it, because I believe that the flexibility of the ECF needs to remain at the core of the proposal. We do know precisely which sectors, industries, or technologies will flourish on the continent in the future. It is important to safeguard the role of Invest EU because it's a working and effective instrument, and should be the driving force of ECF.
But I also believe that governance is key. The parliament should play a major role in the implementation, including closer involvement in the overall strategic direction of the fund. We should also ensure that oversight by the experts responsible for allocation remains fully independent. And above all, we need to spread the competitiveness across Europe, not concentrate funds in just a few countries. We need growth in every country, from Paris to Riga, from Prague to Lisbon.
Every market can help us in the global race for innovation. We have many strong projects that just need a small push from the EU, but these companies face obstacles because they hit a wall of paperwork when applying for EU funding. This is particularly true for first-time applicants and less experienced applicants who often struggle to access EU programs. We need to support them better, including through technical assistance, simplified procedures, and more accessible calls. The rules of the European Competitiveness Fund should be adopted in this sense: simpler, faster, and more accessible, especially for CMEs, startups, and scale ups.
At the same time, we need more predictability. Multi-annual work programs can help provide stability for investors and implementing partners. And finally, the EU should not rely only on ECF funding to strengthen competitiveness. We must also complete the single market, including the capital market, make it easier for pension funds to invest, and simplify rules at both EU and national level, where many barriers still remain. Because competitiveness is not only about funding, it's about creating the right environment for companies to grow and innovate across Europe.
And at the end, I would like to thank you for sending 640 amendments to my opinion. Thank you.
Speaker 1
So I now give the floor to the shadow. I'll start with Irene 18 Agde for the SMD.
Irene Tinagli
Thank you. So first of all, based on the draft reports and the amendments, the rich set of amendments tabled, I'm confident that it's possible to build a solid majority in this committee to strengthen the current proposal. I welcome the fact that there are several amendments, including from the rapporteur, aiming at reinforcing the governance on the rule of parliament, which we also mentioned before, as well as to strengthen the role of InvestU. I mean, as a former rapporteur of InvestEU, I really welcome that, and I think it's needed. I would just like to highlight our five priorities here.
First, housing as a social window. We would like to see that. We tabled amendments to restore the social investment window under InvestEU and to highlight its close link with investments in social and affordable housing, which is a priority of this mandate. I mean, it is also related not only to social issues, but also to competitiveness because social infrastructures like skills are relevant for inclusive growth and competitiveness. The previous structure of InvestU recognized this by including a dedicated window, which allowed projects in the social economy, social infrastructure to access risk-sharing instruments capable of mobilizing private capital, and now we don't have that.
So without such a window, we have a clear financing gap. Other programs, such as the European Social Fund, cannot deliver the same investments. This is particularly relevant for housing, which is now one of the most pressing challenges in Europe. We also highlighted the need for dedicated funding for housing, in line with the report of this parliament that we voted on in plenary last week. Second point, the investor envelope must be strengthened along with the advisory project resources.
The current proposal of around EUR 11,000,000,000 would significantly reduce its investment capacity compared to the previous framework. So at the time when Europe needs to mobilize much larger volumes of capital, this would effectively downgrade the program. Third, governance. You already mentioned ensuring proper scrutiny and accountability is a key priority for us. We've strengthened those elements by proposing a governance structure that is more genuinely European and transparent, with clearer provision on investment policy and decision making.
The amendments table moved towards a governance model with stronger parliamentary scrutiny and accountability. And moreover, we also have announced the role of civil society in shaping the opinions and the decision-making. Fourth, compliance. Access to the program should be conditioned on compliance with social and environmental standards, particularly when investments are presented as contributing to decarbonization and social objectives. And fifth and last, additionality.
We have strengthened the role of InvestEU as a genuine economic instrument to address market failures by reintroducing a clear ex ante additionality check, and restoring criteria for assessing market failure and suboptimal investment situations. So we should ensure that the EU guarantee only supports investments that genuinely crowd in additional capital, rather than replacing existing public or private financing. So we can make sure that we are using the money in the best way. Thank you.
Speaker 49
Thank you very much. Today, I'm representing a colleague, Pokornay Ermanova, and I will continue in Czech. Thank you.
Speaker 50
Thank you very much. We're not just talking about content here, but the way in which we invest. Will they be responsible and democratically controlled investments? We have put forward four amendments. Accountability and balance are very important for us. So fiscal responsibility, budgetary responsibility, is very important.
We want to crowd in investments, but we also want to shift the burden away from the European taxpayer. We want stricter rules to evaluate risk, and we want true parliamentary scrutiny. We must also look at the targeted use of funds. The aim should not be to replace private investments. This could distort competition and could push private capital aside.
We need to have complementarity here, not pitting different things against each other. Now a third point is accountability. Now the commission has the power to prioritize funds, and the parliament is more or less sidelined. We think that's wrong. We're talking about hundreds of millions of euros.
You can't adopt such decisions without involving those who represent the citizens. A final point is on geographical balance. If we look at who has access to the funds, and if we look at the issue of competitiveness in Europe, we cannot just boost the competitiveness of a few countries. We need to have rules. We need to have justice, fairness, and a democratic approach.
Speaker 52
Europe will only be strong if every single member state is strong, not just the bigger member states. Thank you very much.
Speaker 25
Colleagues, rapporteur. The competitiveness fund is an essential fund for European competitiveness. We're in times of budgetary scarcity, so we must use our resources strategically. That is what Draghi said. We must disperse less, and be more targeted.
We must invest our money in our priorities. I thank the rapporteur for the work that has been done. This report heads in the right direction. But when it comes to SMEs, we fully agree that SMEs need support. Yet my group does not think that a specific heading for SMEs will produce results.
We think the best technical answer would be that under each budgetary heading, there is a specific chapter so that SMEs get enough support. If we look at strategic sectors such as decarbonization, digital, and defense, these are my group's priorities, and they have been reflected in our amendments. The aim is to increase the minimum and maximum threshold so that there is more investment ability. Second, as I said earlier, we need to have more support for SMEs, which are the beating heart of our European economy. That means that we shouldn't just provide financial support, but strategic and technical advice to these SMEs too.
So mentoring, training, and more. Often, SMEs really depend on this kind of funding, and we need to focus also on common projects of interest so that there is less red tape for startups and scale ups. We also want to ensure that there are possibilities for networking events and national partnerships. Third and final point, we need to have these funds used as levers so that we can bring in private investment. A final point now, which is essential, is the issue of governance.
Governance must be simple and effective. We don't want to have excessively complicated structures, which could mean that the funds are not being used for their actual purpose, the aim of which is to boost competitiveness and ensure investment in innovation. Thank you.
Speaker 43
Yes. First of all, thanks to the rapporteur and all the shadow. I'm very much looking forward to the common work, and I very much enjoyed reading your first draft. I think a lot of the points have already been mentioned. Let me just make a couple as well, that are very important for us.
The first one is on governance, as has been mentioned. If you look at how many laws have been folded into the ECF, it is clear that we as parliamentarians have a much less granular way of deciding where the money goes. If you had Digital Europe as a program in the past, of course, this is now all part of one. And this granularity, I think, is crucial because it really means that over the next seven years, once the ECF is decided, parliamentarians will not have a say in how European money is spent. And I think that is not good enough, and we have to make sure that we have some say.
One way to do that is, for example, to ensure that the decision-making structures include parliamentarians from the beginning, and that could be in the nomination, for example, of the people that are deciding on the funds and how they're spent. Second, on the governance, I think it's also important that we are problem-specific in our solutions. If you want to learn something from DARPA in the U. S. And others, it is that industrial policy is best if a clear problem has been identified and then innovative solutions are found, and there's some amendments in this direction that we put forward.
On the innovation as a whole, we do believe that horizontal SME and start-up quota will actually help. Why? Because our industry policy is very much focused on the largest companies. And we have seen that new companies are actually the ones that are driving value in the U. S.
And other competitive areas right now. So I think we need to shift our industry policy to be more focused on the most innovative companies. And that means that we need to basically ensure that the hard work is done of giving more funds to smaller companies. And that also means that we should change our procurement in a way that we allow for more innovation-friendly procurement. On the InvestoU, similar to you and to the colleagues, we do believe that more money should be spent by InvestoU.
But also here, I think we should look at best practices. The EIF, for example, has also been doing quite a good job in supporting the venture capital industry. And I think what we what you can see in our amendments, there are a lot of proposals of how to make that even better. For example, secondary markets before the IPO for start-ups and scale-ups. The idea of allowing investments into fund of funds instruments also for the EAF, but also the idea of setting up something similar to the EOSMA fund, where maybe the European Union guarantees loss in venture capital, fund of funds investments, if there are more than 200 companies involved, but also caps the returns so that we basically make venture capital, larger fund of funds investable for the institutional investors and the retail investors, which are currently not able to enter the market because the risk return profile is too dangerous.
So I think there's a lot we can do with public money in the European Union to ensure that we have more innovation and, basically, yes, innovative companies of the future. Thank you.
Speaker 53
Yes. Fiendenk, Robrichtostad.
Thank you, madam rapporteur. I have to disappoint you. If we look at the number of amendments, we see that the commission proposal is an insufficient basis for work. So that's why I thank you for your report, Rapporteur, and your work on territorial cohesion, your amendments thereon, and your comments on the accessibility of EU funds and on just transition and the involvement of smaller stakeholders and the issue of qualifications. All of those elements I've just mentioned, all of those head in the right direction, all of those amendments improve the proposal.
But there are many issues that you've put forward which don't improve the commission proposal, including the issue of financialization of programs, but also the increasing dependence on capital markets and private financial entities, and also the horizontal protection mechanisms, which you have underlined and brought to the fore. The amendments are, however, of the utmost importance in my view. They close some of the gaps. Some of the shortcomings in the commission's proposal are thereby addressed. Now, look.
Competitiveness is not something we should aim for just for the sake of it. It's supposed to be there to help people. You know, if we want to make the EU more flexible, well, isn't that just going to benefit investors? But what about a more social and sustainable EU? That's going to be prevented.
And there are going to be 14 different programs merged here. That means the individual goals are going to be more difficult to achieve and more difficult to analyze. The focus is also on aviation security and defense, which means that we're shifting money towards the defense industry, and instead, we are not decarbonizing. We are not protecting nature. We are not ensuring cohesion and more.
In here, there will be less democratic control and less transparency, and there will be more powers of accountability shifted to the Commission. And we don't have conditionality here linked to social and environmental standards, and there is no application of the no do no significant harm principle. So we would recommend rejecting the commission proposal, asking for a new proposal which is truly effective and which is linked to environmental and social goals, while it also creates high-value jobs and while it ensures that any funds included here do nothing which will hinder or slow down the social and environmental transition. We should also maintain life, and we should increase parliamentary control. Alas, I don't think there is a majority for what I'm asking for.
There isn't a majority to topple this proposal. That's why we will be submitting various amendments. I think we may have already submitted them, and I hope that we can count on your cooperation so that we can do something that will actually benefit our European citizens.
Speaker 56
Colleagues, we're talking about the ECF. This is an extremely important tool. Of course, I support everything that Irene Tinaglia said, but there are two fundamental conditions which must be in place if this ECF is going to work well. The first is a wider political issue, which is linked to its success. We need to have a so-called European preference.
European resources must boost European companies and European industrial purpose in Europe. When we invest, it must be in Europe. The second condition is the volume, the amount that we earmark for this. So if we want to have innovation, if we want to have a digital transition, if we want to improve our industries, then we have to have real and long-lasting public investment. But, of course, we need private investors.
Speaker 54
That's been mentioned. But I really want to stress the public side of things.
Speaker 1
Request for the floor, so I give the floor back to the reporter, Miss Nehudova.
Danuše Nerudová
Thank you, colleagues, for all your inputs. I just received it already. I can see some common lines, especially regarding the governments and the strengthening of Invest EU. We will approach you with the compromises, and I'm looking forward to our negotiations.
Speaker 57
Thank you. And the vote in Econ is scheduled for April 23. Okay. So we now turn to the presentation of the draft report and the consideration of amendment on the two proposals of the EU economic governance simplification package on which parliament acts as a co-legislator. The third file council regulation on the funding arrangement for balance of payment assistance requires the consent of the European Parliament and is expected to be referred by the council towards March.
Speaker 1
The draft report prepared by the corruptor on the sanction and draft budgetary plan regulation as well as on the post program surveillance regulation primarily address the whole of the parliament and the issue of accountability. The amendment mainly focuses on the union priorities and the role of the European Parliament, the role of the independent fiscal institution, the submission of draft budgetary plan, and post program surveillance. So I will now give the floor to the co-reporter for six minutes each to present the draft report. And I will start with Markus Ferber for the APP.
Speaker 60
The simplification package is a simple one. This is the biggest reform of the governance structure since 2014. There are some stray legal acts that still need to be adapted. The aim is to deal with inconsistencies and to make everything more consistent. Things that haven't proven themselves are being deleted, especially if they have not brought added value.
Speaker 58
And I think this is in line with the commission's overall simplification approach. I think the commission's proposal is a solid point of departure. These are technical changes. The aim is to ensure that the new set of rules on monitoring is more practicable. The commish, excuse me.
The council has generally just focused on technical issues, apart from in a few areas. In our report, we've kept it short. We're concentrated on one issue, which is maintaining the parliamentary prerogative when it comes to this covenant issue, governance issue. We're focusing on transparency, accountability, and institutional balance. So the council is trying to accumulate powers, which we do not agree with.
Speaker 59
And so you see all of this reflected in our amendments when it comes to budgetary dialogue and political dialogue, and when it comes to the amount of wiggle room that the commission has vis a vis the parliament. At the same time, it's also clear that we agree that we need to maintain this governance framework. We're not trying to fundamentally alter it. At the end of the last term, there were tough negotiations, so we're not trying to reopen the agreement. In our draft, we as the EPP have put forward some amendments, but we've only focused on one point.
Speaker 58
The issue of independent fiscal bodies is so vital for us. They are a central anchor when it comes to budgetary credibility and accountability at the national level. The council has looked at the relevant provisions on this and has removed them. Our aim is to maintain the status quo and to look at the framework and to ensure that it remains in place where good accountability is already in place. I look forward to your cooperation on that.
And I would suggest to colleagues that we focus on the issues that are politically sensitive. And we want to maintain this as a workable technical package. I want to thank the co-rapporteur, but also all of the shadows for their valuable contributions and the cooperative spirit of work that we've had thus far. I think that we can achieve a good outcome here. Thank you very much.
Speaker 64
Thank you, dear colleagues. I will speak in Portuguese. As my colleague, Mark Fairwer, said in the beginning, sorry. This is fact way, dossier with tech.
Speaker 63
As has been said, this is a very technical dossier, but not unimportant. We have some concerns, as Marcus has raised. We want to maintain parliament's role in this kind of work when it comes to these rules, and that's reflected in the draft report. If you allow me, I'd just like to point out some material changes that have been made. The end of the member states having to send in budgetary plans when a government is about to be elected or when there's an electoral campaign.
Speaker 61
There's also the end of the intervention program. So these are changes which will hopefully reduce costs for the EU. We won't have to have these missions or trips every six months. Let me say that I thank the co-rapporteur for all the work that he's done, and we're looking forward to working with you further on the file.
Speaker 10
Thank you. Let's move now to the shadow reporter, and I will start with Eni Kogury for PFE.
Enikő Győri
Thank you very much, madam chair. We can witness again a proposal for a piece of legislation with the aim of simplification originally, and the commission is using it and the parliament as well to extend their powers. We patriots have the position. We say yes to simplification, but no to the extension of powers. And this is how we worded our amendments as well.
First of all, we would like to stop the extension of the powers of the commission, for instance, when it comes to the sanctions and the decisions concerning them. At the same time, when it comes to the control of the commission, they should be controlled in the same way as the member states. When it comes to the other aspect, it is the European parliament's role. We should not politicize all the procedures. The economic stability of Europe needs cooperation with the institutions.
During the past years, we've seen that it is not justified to increase the powers of the European Parliament. Although we can ask the member states to abide by the rules of the European parliament, no member state came to the parliament with this purpose. Now governments should be responsible to the national parliament, and we should not make rules that would imbalance the institutions. So we have to respect all the powers. In our amendments, subsidiarity should be primordial, and supervisory procedures should be based on fair dialogue.
We have to take into consideration the specific situation of the member states. And when it comes to natural disasters, for instance, the fees should be decreased. So I think that we should concentrate on the original objective, simplification, and not on the extension of powers. Thank you.
Speaker 10
You. Dennis Necchi for ACR. No, he's not here. Okay. So Billy Keller for Renew.
Speaker 65
Thank you very much. Just to say that these proposed amendments to the regulation are about alignment of procedure and alignment of purpose with the preventive and corrective arms of stability growth pact to ensure that the economic governance framework is coherent. We spent a lot of time debating this in the last mandate. It was quite divisive, I suppose, at times. But I mean the simple purpose of the regulation is to ensure that we have some form of governance over the Eurozone and member states that have some fiscal discipline ensured as well.
And I mean, we've seen that because of the mistakes that were made historically. And I think any reopening of the debate beyond what we're trying to do, is to simplify the process, in my view, would be ill-advised and certainly would lead to a lot of resistance from grouping. I believe that a sensitive balance was struck, between strengthening and enforcing the stability and growth pack and the accountability of member states, so there is a greater ownership of budgetary trajectories. In other words, countries do have to take ownership and a lead role in putting forward their proposals to comply with the Stability and Growth Pact in both the preventative and the corrective arms. So we're of that view.
The balance should be preserved. And I welcome the draft report from the rapporteurs, and I appreciate that it is targeted and concise. And I hope that we can maintain that concise approach. In my amendments, I've tried to reflect the purpose of the preventive environment, corrective environment in the regulations on the draft budgetary plans, sanctions and excessive budget procedure. When member states are drafting budgets or when measures are taken to correct financial stability concerns, the objective to achieve the common priorities of the European Union should be taken into account.
And this, again, was really hard-fought and negotiated. You know, I know there were divisions between groups and within groups about this particular issue, but I do believe that the common objectives and the priorities of the European Union, as outlined, should also be taken into account when bringing forward a country either into the preventative or the corrective armour, namely, a fair green and digital transition, including the climate objectives set out in Regulation EU 2011-119, social and economic resilience, including the European pillar of social rights, energy security, and where necessary, the buildup of defense capabilities. So, you know, we hope that we believe there's enough flexibility in there as well to address some of the issues. And of course, we should also remind ourselves that, you know, the European Investment Bank is there as well, which is an organ that affords every member state to put forward applications in terms of areas that are important to them for infrastructure development, social housing, affordable housing. So there are many key areas that member states can access additional funding through the European Investment Bank, provided, of course, that their overall balance sheets are in fair order.
So I just hope that we will take the approach that it's to simplify, to make it streamlined, but not to reopen what is a fundamental issue with regard to the integrity of the Eurozone and the currency that we hold in our pockets and in our bank accounts. And I always said as a country that went through corrective, a very severe corrective measure in 02/2014 when we were in a program, it's only fair that we have a situation or a system in place that doesn't allow you to get to that stage anymore. And so therefore, I would be really concerned, Cher, and I'll leave it at that. I would be really concerned if we ended up with a situation whereby we were trying to unwind the commission's oversight of this and put it back into the council, where it would become a horse trading effort to try and bend the rules. Thank you very much.
Speaker 10
Thank you. Rasmussen Reissen for the Greens. No. For the left, Pascal Tredico. No.
Speaker 1
So any catchy eyes? So I will give the floor back to the reporter, the co-reporter, and I will start with Markus Verber.
Yes. Thank.
Speaker 58
thank you very much. I'd like to thank the colleagues for their contributions. From what we've heard, it's quite clear that we can build compromises that won't include all groups because the rules for amendments are there because each national budget has responsibility towards the common pot. And if we leave everything up to member states in terms of doing what they want to do, then we won't meet our goal. The same as with the currency union.
But, I'm sure we can get sensible majorities here, and I look forward to discussions in future with colleagues.
Speaker 10
Thank you. Cara Tavares, you want the floor to conclude? No. Okay. Well, thank you to all of you.
Speaker 46
The vote on these two files is scheduled for April 14, and the vote on the consent procedure is still to be scheduled. K. Dear colleagues, if you can go back to your seat, we will proceed to the vote. And we will start with a test vote. I open the vote.
Speaker 67
Vote. Test vote. Okay. Don't forget to proceed to the test vote, please. Test spot.
Speaker 1
So the first vote is the three recommendations to accept the council first reading on the CMDI files. There is our single vote, biocult vote. As members know, the council first reading position is the outcome of the trialogue held under the Polish presidency and the proposal before the committee this afternoon. It's to recommend to the plenary to accept this position at the parliament's second reading. This will close.
The legislative procedure. So the first file is the BRRD III file. Let's proceed to the vote. The vote is opened by a roll call. And the vote is closed.
And it is adopted with 39 favor, five against, and one abstention. Congratulations, we will proceed now to the vote of the second file, SRMR 2 file. Report is Erenet Tinagli by Hochul vote. Vote is open. The vote is closed, and it is adopted with 40 in favor, 5 against, one abstention.
Now the last one, DGSD two final reporter is Chiara Peterhansen. My roll call, I open the vote. And I close the vote, and it is adopted with 41 in favor, four against, and two abstentions. Congratulations to the three. Okay.
So we now pass on item 12, regarding the vote on the draft report of Rapporteur Michelisa, G. Pontella and the Banking Union Annual Report 2025 by showing off and compromise was in favor with against or abstain. Adopted compromise b was in favor against. We abstain. Adopted compromise c was in favor, was against.
We abstain. Adopted compromise d was in favor, was against. We abstain. Adopted compromise was in favor with against who abstain adopted. And compromise f was in favor. Who is against?
Who abstained? Adopted. We move to the final vote by roll call. The vote is open. And the vote is closed, and the report is adopted.
Thirty-six in favor. 12 against. Congratulations to the Rapporteur. Okay. We now pass to the vote on the E and E financial literacy and the rise of influencer in the context of the saving and investment union.
The reporter is Lydia Perera. Okay. So by showing off, we start the compromise. B was in favor. With against.
We abstain. Adopted. And we move to compromise C. Who is in favor? Who is against?
Who abstained? Adopted. Compromise d is in favor? Who is against? Who abstained?
Adopted. Compromise A, within favor, with against. We abstain. Adopted. And we go to the final vote.
Final vote. Vote by vocal vote. The vote is open. And the vote is closed. And it is adopted with 45 in favor, three against, one abstention.
Speaker 68
Congratulations to the reporter. Nice evening, and see you tomorrow morning.
Ask anything about this video — I analyse its transcript to answer.