Committee on Economic and Monetary Affairs Ordinary meeting
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ECON European Parliament
Follow its sittingsKyriakos Pierrakakis
We are now, however, quite conscious that to contain inflation, it is important that fiscal support measures are temporary and targeted, preserving the price signal necessary to reduce energy consumption. Moreover, support measures must not jeopardize fiscal sustainability. We cannot respond to every crisis through mechanisms that will effectively create another type of crisis should the measures not be optimally targeted and optimally designed. Fiscal space is limited at this point after earlier shocks, and this comes at the time when we have to respond to substantial investment and substantial security needs. Fiscal policy should operate, obviously, within the framework of the commonly agreed rules.
The existing arrangements already provide a degree of flexibility, which can be appropriately used under the current conditions. Obviously, the response is a function of the conditions that we have in front of us. Should the conditions worsen, we readjust and reexamine the possibilities that we have in front of us. Having said this, if I may add, yesterday at yesterday's Eurogroup, we had a very interesting presentation on behalf of the IMF to address your question. And I think that two data points stand out as the most important.
For the first one, is that untargeted measures primarily end up helping the rich rather than the poor. And the IMF corroborates this both in terms of gasoline support measures and electricity support measures, with a ratio of three to one. And this is why, amongst other things, the commission is advancing this perimeter of targeted, temporary and tailored measures as the proper ones, the appropriate ones to use in this environment. Second, the IMF provided data to corroborate the point that the impact that we're now witnessing, that we're now feeling from the crisis is 12% less than what it would have been had we not diversified in terms of energy since 2022. Those things together showcase that on the one hand, the types of measures that we should be using as governments should fall within this perimeter of temporary targeted and tailored, but on the other hand, they should also fit the long run strategic priorities of the European Union, be they in terms of investment in grids, in terms of storage, in terms of our overall sovereignty capabilities, both in the energy field as well.
The Eurogroup will continue to review and coordinate the implementation of national fiscal policies, and we will do our customary stock take over the fiscal stance in July. I have to say that I'm optimistic that the Euro Area economy can weather this latest shock. Yes. Yet, as I have pointed out on other occasions, resilience is not a growth strategy. Resilience is playing defense.
Europe now needs to play offense. If we limit ourselves to resilience, we risk managing stability instead of building growth. Many structural issues weigh on the medium-term economic outlook and on prosperity. And with the current level of growth, we will not tackle the challenges that we have ahead of us. At our current speed, we will simply not reach our destination as quickly as we should.
Current growth levels will not suffice to address demographic pressures, productivity and competitiveness gaps, economic security concerns, or the question of monetary sovereignty itself. Addressing all of this requires a wide-ranging reform and investment agenda focused on strengthening our competitiveness and sovereignty. And I have to say here, sovereignty is not about isolation. It's about having choices when others would deny them to you. The Eurogroup is fully committed to helping create the framework conditions necessary for this.
Let me briefly walk you through the key areas in our work program, starting with energy. Our response must be clear and structured: energy, investment, financial and digital strength. We, of course, fully respect the prerogatives of the Energy Council, but finance ministers take an active interest, as energy is central to our competitiveness and economic security. There is broad consensus in the Eurogroup that while the private sector will play a key role in the necessary transition to a homegrown non-fossil energy system, the public sector should also contribute. Moreover, there is recognition that energy is a common public good with a clear European dimension.
Efficient energy markets and integrated infrastructure, in this sense, are absolutely essential. I would say they're absolutely existential. Another area where urgent progress is indispensable for our competitiveness and autonomy is the savings and investment union. Europe has no shortage of savings, as you all are quite aware, but too much is being invested in other jurisdictions. Europe is not weak.
It simply does not invest enough in itself, and this is something that we must collectively change. Deep, liquid, and integrated capital markets are necessary to channel European savings into productive investment at home. Alongside the Capital Markets Union, a competitive and integrated banking sector is also crucial. Another topical and very important issue that we will be paying close attention to is the safety of our financial system in the presence of cybersecurity threats. And this brings me to our work on digital finance.
First, it seems to me that the case for a digital euro is by now abundantly clear. If we do not build European solutions, we will import them along with the dependencies that those solutions create. A digital euro would enable us to secure monetary sovereignty, ensure the resilience of our payment system, and provide the platform for private sector innovation as well. And my understanding is that the council, supported by the Eurogroup, agreed on its general approach late last year. I understand that the European Parliament is moving closer to an agreement on its position.
I sincerely hope that the trial of negotiations on the single currency package can be successfully closed in the second half of the year. It is essential that, together, we bring the digital euro over the finish line as soon as possible. Let me say this bluntly, because this is an area where we have very rapid technological innovation. It's not every year that counts. Every month counts, and we need to be able to deliver this project as quickly as possible.
Let me also say that this overall digitization of the financial sphere, both on the digital euro side, which is the public infrastructure, and on the private innovation around it enabled by the MICA regulation, and other institutional innovations that we have adopted, is absolutely existential in order to capacity build the international role of the euro. And this is something that we will closely monitor. A stronger euro means a stronger Europe in the world. Last but not least, I would like to recall that shortly after I assumed my new role at the helm of the Eurogroup, we welcomed Bulgaria as the 21st member of the Eurogroup, of the Eurozone. This shows that the continued attractiveness of the euro is clear.
Europe has talent. Europe has the resources. Europe has the capacity. Now we must show that we also have the determination. I'm very much looking forward to your questions.
Aurore Lalucq
Thank you. Thank you for this opening statement, dear president, Kyaka Kiss. Kyaka Kis, sorry. So I will now open the Q and A session, sorry, and you will have one point minutes for the question. You will have three minutes for the answer.
I think there will be a lot of questions, so please respect your allocation of time. And if we have more time available, then of course, there will be a catchy eye process. So I will start with EPP and Ludac Niedermeyer.
Luděk Niedermayer
Thank you, madam chair, and thank you, president, for being here. I guess this was one of the best speeches I have heard here for some time. I very much appreciate your two references on the way how you can very wrongly help so called families with the high oil and petrol prices. Unfortunately, not all your colleagues are listening to that. And the second, I like the reference to the digital euro.
But to save time, I would just give you a very simple question. Tell me, Sri, the most important things that you would like to be delivered in the next twelve months to get on the track, to speed up, and to head towards where we should be?
Kyriakos Pierrakakis
Well, thank you very much for your question. To be frank, the savings and investment union, if we unpack it, is many things at once. It involves elements from how to go from start ups to scale ups. We discussed this yesterday. It involves more banking consolidation in the European Union.
So if I had to codify things that I consider to be quick wins in a sense, things that we can deliver more quickly, the first one would be the digital euro. We need to meet the time frame as defined because, as I mentioned, every month counts, and we, as European finance ministers participating in the Eurogroup, should play a role in that. I understand that now, obviously, this is more in your hands as European Parliamentarians. Second, within the context of the savings and investment union that I mentioned before, think that we must revive the banking union elements, and we need stronger and bigger banks. The discussion emerging in the last weeks of anthropic mythos, I think, showcases why we see the security aspect of this.
But at the same time, if you look at the investments of European banks, please compare them to the technological investments that American and Chinese banks are making. You will see that in terms of size, they are comparable to banks in the UK and banks in Japan, even though the Eurozone is much larger. We need bigger banks that will be able to make more technological investments, and we need to act as facilitators of this. And final point, if I may add it, I think we need to have a common understanding of technological issues as well within the context of European finance solutions. Technology interacts with financial decisions.
We need a clear technological doctrine. When we speak about technological sovereignty, even us in this room, we do not mean the same thing. We sometimes employ the same vocabulary, but we mean completely different things. And in order to have a strong presence in any such discussion, be that a domestic discussion in a member state when we're making a technological investment, or be that a global discussion, a multilateral discussion, transatlantic discussion on technology, we shouldn't be, if I may use the term, asymmetrically interdependent. We need to capacity build our own capabilities in Europe, our own European technological champions.
This is what will enable us to participate more in critical supply chains and to thus have a stronger presence at the table when any such discussion emerges. So having a clear doctrine, let's say, a clear approach on this, I think, would also help, and this is something that we must do quite fast because, frankly, technological innovation and technological deployment is moving at the pace which goes contrary to the typical understanding that we have. We understand the world linearly. Technology is changing exponentially. It was always changing exponentially.
It's Schumpeterian, creative destruction. But the scope, the scale, the speed of that change is in weeks. The problem is that we understand the world linearly, and the typical accusation that policymakers around the world receive is that we react sublinearly to the policy challenges that we have in front of us. We don't have that luxury right now, especially in AI. I would say that it has elements of both the moon race and the nuclear arms race simultaneously, because it has a productivity challenge, a labor challenge, an overall economic disruption challenge.
It will change the job of any minister, be that the minister of education, the minister of labor, or the minister of health, on the one hand. On the other hand, unless we regulate the problematic aspects, the critical aspects, the security aspects of that technology as fast as possible, we run into risks that the exponential nature of the change does not fully enable us to foresee.
Nikos Papandreou
Thank you, mister Pierre Kainkis, Carlos Sirhante. I'll speak in English. Very excellent presentation, and makes the Greeks proud, I think. So you did speak about the digital euro, and I'd like to hear a little bit more about that. We agree with the huge need for sovereignty, and the geopolitical case for the digital euro is obviously stronger than it was few years ago.
And the majority of the parliament also seems to be, and has been voted in favor of the digital euro, but you, as an outsider from this process, how do you see the legislative process going so far? And one other question, if I can ask, based on your AI. I read that yesterday, Trump is asking for a pause on AI to be reviewed by the government before it's introduced. I don't know if you heard that. Is that something?
This is something that makes sense for us. They're really worried about this mythos, a nice Greek word. So, that's a second question. Thank you.
Kyriakos Pierrakakis
Thank you very much, and thank you for your kind comments, Mr. Vaporeon. Me begin by looking at the digital euro from a helicopter view perspective. So what is happening in the world right now? We have a digitization of the financial sphere.
What are the Americans doing? They are not going to have a digital dollar. They're using stablecoins. They advanced an institutional framework that enabled them to have private innovation in the financial system. Why did they not opt to have a digital dollar?
For various concerns, I would call some of them actually cultural, premia on privacy as they would describe it, or other elements. The Chinese are doing the exact opposite. They will only have a digital version of their currency while not allowing for stablecoins to materialize in China in the similar manner that you would see them in the United States. What are we doing? In effect, the core strategy should be the public infrastructure.
So the core strategy is to have the digital euro. I think that this can give us an edge if we want to increase the international role of the euro and allow for private innovation to occur around it. Now, does MICA allow for this private innovation? It does. But if you look at the global status of stablecoins, you will also see that 95% of stablecoins are dollar backed and less than 1% are euro backed.
This means that the digital euro should be the core element of the strategy per se. I was recently in Washington DC and had a discussion with experts from the field, and what they told me is you will have an edge if you do the digital euro. Do it as fast as possible. And this came from people in the market. So, obviously, the timetable that the European Parliament will advance is the remit of the European Parliament and not the remit of the Eurogroup.
But what I can tell you is that opportunity costs are real. They're equally real costs. We learn that when we study economics. They're just less visible, but this one is quite vivid. If we don't have this delivered soon, as Europeans, we will miss out on a huge opportunity to capacity build the international of the euro.
I fundamentally believe this, not as the president of the Eurogroup only or as the Greek minister of finance, but as a European citizen. Now to your question on AI, the challenge here, what do we typically do? We overdramatize the present, and we underestimate the future. Right? So the whole debate of the day is anthropic mythos.
In some months, we might have three versions of equally powerful LLMs that we know of. We might even have more. What does this mean? This means that what we should be seeking is how to overall capacity build our technological sovereignty. That's why I'm trying to look at the broader debate in my presentation.
But having said this, what's the core challenge? The core challenge is that you need global orchestration in this technology in terms of how to govern it, and you need it at a time when multilateralism is challenged, to be frank. Do I have an obvious solution to what I just said? No. I don't.
But I think that the stakes are so high that, after a certain point, they will force themselves. They will force us towards some type of orchestration. I really hope that this will not come after an adverse event, that we need to move ahead as quickly as possible.
Aurore Lalucq
Thank you, President Pierre Cakakis. I now give the floor to Pierre Pompey for the PFE. Maybe we'll need an interpretation.
Pierre Pimpie
I'll be speaking French. I should understand. Well, I'm very glad to see you in this role. I think that this really sends a strong message and shows a strong symbol, given in mind the recent crisis that Greece survived. Greece.
Greece has overcome this crisis very strongly, and with a great amount of strength. So I would like to understand what you would suggest to Eurozone countries that may find themselves in a financial crisis as a result of debt. So I would like to understand what advice you would give to those countries that are facing such crises in the Eurozone on the basis of your experience from the Greek crisis, which has now come to an end. And then, on another point, you mentioned Eurofa. Couldn't that also be a problem when we think about what China and India are doing?
Kyriakos Pierrakakis
And perhaps we're underestimating the impact of those problems. Thank you. I'll answer in English.
In English, there are many lessons to be drawn from the Greek crisis, as you suggested at the beginning. But when people typically ask me, what type of lessons would you suggest to other countries from what you experienced in Greece? I try to tell them that the word hubris is Greek. So we don't plan to point fingers at anyone else who is in a budgetary difficulty or in a debt difficulty. What we can tell you is that we suffered significantly.
We lost 25 points of GDP in the Greek crisis. This alone tells you the scope and the impact that the average Greek family and the average Greek citizen experienced. Unemployment skyrocketed. We had 3 bailout packages implemented in Greece. But if there's one lesson, I think, to be learned from this experience, which we were the first ones to metabolize, is that you need fiscal stability.
First, need political stability. On top of political stability, you construct fiscal stability. And right now, we're at the point where we have surpluses, primary surpluses, the most quickly de-escalating debts in the world, together with the help from our European partners, by the way, on this. And we're close to having our historically low unemployment. We're about to reach the historical low, and our growth rate is about double the European average.
So that's the Greek case. What's the lesson? I think that if there is one lesson, it's a horizontal lesson. It's the one that we learned as well. Stability, political stability, fiscal stability, and reform.
It requires political courage to do certain reforms, and they're quite difficult to deliver because some of them are painful. But unless we manage to deliver them, we won't get our house in order to be able to achieve all that we want. We need higher productivity in Europe. On the one hand, there are certain things which are obvious. It's quite good if you have the dividend of the obvious in front of you.
If Europe delivers the savings and investment union, the digital euro, and all of those obvious reforms of eliminating the barriers that still exist between the member states of the European Union, you will have a growth dividend effectively in every member state, so this helps. This also exists nationally. Every country has national obvious deliverables that if you do them, they give you a growth dividend. And I think this is important to underline and codify, because we have a duality as policymakers. On the one hand, we need to resolve the outstanding issues of yesterday, market, reform your education system.
And on the other hand, we need to be reacting to the emerging issues of today and tomorrow that we can't predict. So within the duality, if you have obvious things that will give you a growth dividend, you know, as the slogan says, just do them. On exchange rates, I wouldn't be able to comment because this is ECB pure ECB remit. But what I can tell you is that we firmly support them, we stand behind their independence.
Buongiorno, presidente.
Giovanni Crosetto
you. Good afternoon. In this committee, we're going through a very important legislative period, bearing in mind that there are a lot of proposals coming from the commission at the moment, with the aim of getting the saving and investment union over the line or at least trying to take steps forward looking at savings and trying to improve competitiveness and growth in the EU. Now this is a laudable goal, but I would like to ask you whether we are actually doing everything we need to in order to achieve our objectives. The big EU institutions from the ECB to the national authorities, do they have a very clear mandate for what they need to do in terms of stability and for competitiveness and growth?
I think these institutions periodically put pressure on legislators in relation to financial stability. I think, clearly, and this is something that we will see when we're talking about when we're voting later in this committee, often, we're talking about stability and growth, but that this is affecting our market. Now I think we're looking at the same dynamics now with the banking package that the European Commission is currently working on. My question to you is, are we really trying to restimulate, really trying to stimulate growth and competitiveness? If that is what we're trying to do, then shouldn't we start from a solid basis in relation to finance and risk?
Here, particularly looking at the current legislative framework? Thank you.
Thank you, President.
Kyriakos Pierrakakis
I think there are multiple parameters to be examined in a possible answer because no portfolio is fully standalone. And if you ask me what the core problem is, with regards to how quickly we can advance certain things, I would tell you bluntly that all ideas are out there. All policies are more or less out there. The problem is that we all agree in theory, but we also need to agree in practice. I said at the tech conference in the morning, we talk the talk.
Do we walk the walk? And this is up to the member states. Because if you agree with the savings and investment union, we agree, and then we say, but then we advance a national consideration. Now I'm not without sin when saying this because I represent sovereign states, a member state, and we have our own national considerations in this regard. But what I'm saying is that unless we realize that the opportunity cost of not delivering certain things is bigger than the status quo, we miss out.
And we're missing out on making Europe, as a first step, a single market. But in reality, we have to decide: are we going to be a single market or a global power? Because we can be a global power. The question is, first, do you do the obvious things, remove all of those barriers? So to answer your question, yes, the discussions are quite technical.
We need to find landing zones between the member states. We're doing that today. But for instance, we need centralized supervision in our capital markets. Why do we need centralized supervision? I'm mentioning something that we were discussing this morning.
Why do we need centralized supervision in our capital markets? Well, because I think it's quite obvious to say that you shouldn't be doing the same thing 27 times. And if you do the same thing 27 times, you're effectively not a complete capital market. Plus, asking us to capacity build the capital market supervisors in terms of the technological capabilities of regulating that market that's changing every month times 27, I can think of not many more difficult tasks than this. So it's up to us.
Do we mean it? I think we should be part of a generation of policymakers that mean it, and it will make much more sense historically to relinquish part of it. That's why I would say sovereignty is not a synonym of autonomy. Sovereignty has many dimensions. Autonomy being one of them, but you also have control.
You also have legitimacy. And sometimes you decide that you will end up being more sovereign, more capable if you actually decide to act synergistically within the context of a broader union, as we have done here, on many portfolios and many agendas like the one that you described. In banks, we need European champions. We don't need national champions. All of us have a tendency to be more protective about our national market, of course.
But unless we realize that we need to capacity build European banks at the European level, they will not be able to compete with the American and their American and Chinese counterparts. Let's try to think five years ahead or ten years ahead, non-linearly, exponentially. If they miss out on the technological investments that I just mentioned, they won't be part of the equation, simply put.
Aurore Lalucq
Thank you. President Tiara Gakis, I now give the floor to Renu and Anuk Van Brugge.
Anouk Van Brug
Thank you very much, and thank you, Mr. President, for being here in parliament today. In the European Union, we have a clear agreement that member states must keep their debts and deficits under control, and this is essential for our economical stability. But currently, in times of crisis, you see that some countries are ready to step away from these rules. So my question is simple. How will you make sure that fiscal discipline is respected in your area, and how do we protect sound economic policy, especially in these times of crisis?
Thank you very much.
Kyriakos Pierrakakis
The first part of this equation is that we effectively need to understand and metabolize the lessons of the previous energy crisis. And the commission has done this. We have brought the IMF to yesterday's discussion at the Eurogroup, as I mentioned, to also make that assessment, to tell us how many of the measures that we employed fit, first of all, into the perimeter of temporary targeted and tailored. The IMF made a very interesting assessment, by the way, which I didn't mention, which is that the cost of the measures in 2022 was 2.5% of GDP overall. And they're saying that had you targeted the overall measures to the bottom 40% income-wise, the cost would have been 0.9%, and it would be less price distortive.
So why do we make this presentation? Well, part of it is because we need to get this common understanding within the group. Right now, there has been no deviation from the fiscal framework that we have advanced. The fiscal framework itself allows for the flexibilities which mandate, which say when and where you can deviate, for instance, in a severe incident. They have within them, embedded within them, the parameters under which you can see those deviations.
We decided to have the escape clause for defense because we understood that defense is a collective public good, especially after Russia's invasion of Ukraine. What I can tell you is that at this point, there has been no such agreement. Right now, we're discussing the measures themselves. The commission is advancing a series of other proposals with regards to competition policy or allowing for national taxation of windfall profits in member states, etcetera. We're monitoring the situation.
We're coordinating between ourselves. But let me also add what I said at the beginning: what you do is a function of where you are. And right now, let's admit it, we are not in the best-case scenario with regards to the crisis in the Middle East. If we look at our expectations at the starting point, we're not at the point which we would have envisioned as the best-case scenario. Are there problematic scenarios ahead of us?
Perhaps yes, perhaps no. Uncertainty is the new norm. We should be prepared both in terms of the policies that we will advance to support the most vulnerable and, you know, our member states overall, also with regard to our fiscal stance and our fiscal health. We the energy crisis shouldn't fuel a fiscal crisis. But on the other hand, we should also support especially the most vulnerable.
This is the message that, I guess, all of us are receiving from our citizens in every single country. So we need to be surgical, I would say. We need to balance both. Balancing both is a function of the content of the policies, but also of the context of the situation. At this context, the commission, and we agree with it, is advancing no deviation from the fiscal rules.
Should the context change, I would say that then the headline will not be the deviation. The headline will be the problematic context itself, because this will mean that we will not only be in a stagflationary tendency, but in a much worse situation. So let's hope that this will be avoided.
Siegbert Frank Droese
I will be speaking German. So I thank you very much for your report. I don't agree with all of the things of your opinion. However, it was a real error to move away from Russian energy, and it has led to a situation where we've moved away. We've decoupled from Russian energy, and we have a serious economic crisis.
So in Germany, we consider that to be a serious error. The digital euro, you want to bring that in as soon as possible. And I think it's strange that you are listening to experts who are based in the U. S. A.
I have a question about AI. It offers a high potential for productivity increases. But at the same time, there are scenarios whereby it will disrupt the employment market. So which recommendations would you make to the member states in order to prepare themselves for fast structural changes due to AI? And do we does Europe need to have a strategy to deal with retraining and mass unemployment?
Thank you.
Kyriakos Pierrakakis
First of all, if I may say on a personal note, on diversifying from Russian energy sources, let's agree that we disagree. I think that the fact that Europe is more sovereign and more diversified in this regard is absolutely existential for Europe's interests. And if this requires us to capacity build our capabilities overall with regards to energy, then that's a good thing. After all, this is what the calculations that we suggested at the Eurogroup showcased. The fact that we made those investments post-2022 enabled us to have 12% less of an impact right now that the crisis has hit.
Now have we done, before I go to AI, everything that we should be doing in energy? Not yet. We need to further diversify. We need to further invest in grids. We need an investment of around €580000000000 in grids.
We need an investment in storage, and we need to be following all the technological innovations in the energy sphere as well, because there are going to be many, and we need to be present. I think this will significantly help Europe. Plus, the deployment of the energy union overall is going to be existentially important for the competitiveness of businesses in every country, and for the viability of every household in every country. Now with regards, quick comment on the digital euro as well. This is not only American experts participating in the IMF meetings and the World Bank meetings.
They're experts from all over the world. So the person who mentioned this happened to be a European expert. But, it's quite important that even American experts agree with this. Because when you're hearing someone telling you that if you do this, you're gonna get an edge, and they mean it. I think it's quite important to listen to everyone.
We have two ears and one mouth to listen twice as much as we speak, so I try to do exactly that. Now final point on AI. I think that this is gonna move faster than what we have experienced in the past. I mentioned that Schumpeterian creative destruction was always there. It was there since the invention of the wheel.
But classical technological changes of my generation, blockbuster to Netflix. It took, what, two decades, one decade, years to materialize. The technological changes of this generation, of the generation of my kids, is gonna be in the months. LLMs are changing everything in months, so that's why it's more difficult to metabolize this and more difficult to develop the policy responses in this. What's the response?
Well, the response is certainly not to become adherents of the ideological positions of Ned Ludd in the industrial revolution and start breaking things and believing that technology is not gonna be there. That's what we call the ostrich policy of technological change. The solution is to understand the impact and to try to think of how you will help primarily those who will be more adversely affected by it, people who will be disrupted employment-wise, jobs that are gonna be lost. So there, of course, you need lots of help from the ministries of labor, and you certainly need many changes in education very quickly, core change in education. The previous generation, one degree. My generation, one degree and one master's degree.
The next generation, original skills at the beginning, lots of reskilling during their life. So this will require you to change and reform the educational systems all over Europe. Are we doing that? We have started doing that. That would be my quick answer.
Aurore Lalucq
Thank you. Second round of questions. One minute for the question, two minutes for the answer, and I will start with Mister Aftias for EPP.
Georgios Aftias
Dear colleagues, I will talk to the Greek.
Mister Piarakakis, you said that energy is a public good, and I agree with you on that point. Half of Europe is in the green, and half is in the red, and part of Europe is paying a high price for energy. So while electricity connections are critical, that's the first thing we need to look at. Second point, we do need to ensure there is funding for aerial protection, and a shield needs to be in place. Mister, what's your view on that?
Kyriakos Pierrakakis
I hope that you can make some progress here. Please accelerate these things and reply in Greek, so that the Greek people can understand. Thank you very much for this question. And it's very simple indeed. We have worked together.
We're a journalist, and on many occasions, you asked me questions, and I always answered your questions. This energy union really is. Electric connections and electrification, all of this is pivotal. And in that vein, we have made an investment. The EIB is making progress in that direction.
We need investment for storage and networks, grids throughout all the countries. The existing grids are obsolete, so we need to work on infrastructure. And on the other hand, the rules relating to the energy union do need to be modernized. We have already started this project, but we need to ramp up our efforts. I am taking on board advice and opinions from my colleagues, and together, we have raised this issue in discussions among economy ministers, not just among energy ministers.
It is true to say that we have a very high cost that we're paying directly and indirectly, and therefore, we need to have a holistic understanding and to offer shared responses. The second point you mentioned, defense. Especially following the Russian invasion, I think we can all agree that defense is indeed a European good, and we need to provide responses not only in silos at member state levels, those member states working individually, but we need a European level response together. We have started to implement the escape clause for defense. We requested the implementation, the triggering of this clause.
We are facing a very particular, unique geopolitical backdrop, and we have very specific, unique needs for our defense budget. But, of course, this is a sector where we could do much more if we mobilize all our resources. For example, joint procurement of satellites or using specific technologies when it comes to aerial defense. You know this very well, and I also said that myself, our president, Mr. Takis agrees to our agreements and discussions also happening with the Polish prime minister.
And I really do think we're going to make some progress in this direction at the EU level. Thank you.
Claire Fita
Thank you, chair. I'm going to speak French.
Thank you very much, sir, for being with us here today, and for sharing your important messages with us. You highlighted investment, how important that is for our sovereignty, for social justice. And I would like to talk to you about fiscal justice. In 2022, the EU overreacted and spoke about excessive profits and used article 123 of the treaty, meaning that unanimity was not required. But my question really is very simple.
Do you believe that the EU today is facing an urgent situation which would require an exceptional response, meaning that we would perhaps be using article 122? And then my second question is to ask your opinion and whether you would be familiar with whether you would be in favor of taking action against the mega profits being made by certain companies? And on the eurogroup, do you believe that the qualified majority could be used within the council to adopt such a measure? Thank you.
Kyriakos Pierrakakis
Thank you very much for your question. I think that given the sensibilities and the opinions expressed by all the 21 member states of the euro and 27 member states of the European Union on the table on that matter, the commission is taking a very balanced stance. And as president of the Eurogroup, I have to reflect the position that speaks for everyone. So in this regard, the decision that has been made, the proposal advanced by the commission after the letter of certain European finance ministers on the windfall profits of energy companies, is that this is allowed, but this is allowed on a national basis. It's a sovereign decision that can be made by the member states themselves.
The windfall profits is something which we did in 2022 in certain member states, and there is an experience of doing it. It was done at the national level as well. You allow it at the European level. It's implemented at the national level. So this has been, I would say, the opinion advanced by the commission at this point.
And I have to say it's an opinion that I agree with because there are, I would say, supply chain sensibilities and supply vulnerability sensibilities that we also need to take into account in this equation. Why am I saying this? Because we need to have the helicopter view. As I mentioned before, sometimes we overdramatize the present, and we underestimate the future. We need to have the proper incentive structure in place for our overall energy system in order to make it more sovereign.
So the question is what types of decisions will, in the short run, not affect the long run. And if I may connect this to the previous discussion, because it was mentioned before that diversification was a bad idea, which I disagree with. What took place in the 1970s had effects that stuck until today. So what after the oil crisis of the nineteen seventies, the International Energy Agency was created, North Sea oil exploration ignited. We discovered Soviet energy resources, and we continued up until quite recently having Russian access to Russian energy sources.
And nuclear energy to a very large extent in France, 40% of the nuclear capabilities were developed after the crisis of the 70s. Some of the things that we decided were positive. Some of the things that we decided are negative, and they stuck as we understand them and perceive them today. So what I would suggest more broadly would be that the smart thing to do here is for your short-run response to coincide with your long-run strategy. So what's the proper way to address, I think, your question and any question in a similar policy discussion?
What do we want for Europe overall? What are we trying to achieve? I think diversification is a parameter. Technological innovation and energy are another. A single and unified energy market is another.
So if we want all of those things plus investment, we should reverse-engineer the goal that we're trying to achieve, and then see what policy fits where. For the time being, having those decisions at the national level as the commission suggested, I think, makes maximal sense.
Aurore Lalucq
Thank you. I think we have something like five minutes left. So is now a request for the floor, I think. On my list, I have Nicolaou Alavanos for 1 minute. Floor is yours.
Thank you. Thank you, sir.
Lefteris Nikolaou-Alavanos
Thank you. European people are footing the bill. Prices are skyrocketing as a result of the war in Iran, and is supported by the European Union. And as a result of supporting Zelensky's regime and supporting the US and China, the energy crisis means that citizens are losing, but large businesses are not. The American stock market is recording huge profits.
Our monetary policies are allowing all of this and are allowing prices to increase. In 2026, you allowed for €6,000,000,000 to an increase of €6,000,000,000. How can you allow this? How can you allow European workers to pay such high bills? And what are you doing about joint borrowing and joint procurement?
Kyriakos Pierrakakis
Let me reply in Greek, since you asked the question in Greek. The road to hell is paved with good intentions. That's something that comes to mind when I hear all of this. I am part of the political generation that has seen wrong decisions being made, three crises in Greece. We do not want to repeat the mistakes of the past, and therefore need a common framework.
We need European rules that we all agree on together. We need to see what is really workable. In Greece, I think the fact that we have been able to reduce the national debt is a real success. We have the lowest level of unemployment in our history, and we have a very high growth rate.
Kyriakos Pierrakakis
wouldn't dare say to you all that we have discovered a magic wand that can resolve all problems. We don't have a silver bullet, but every country needs to look at their own trajectory and work at whether they're heading in the right direction. All countries are isolated in some way, but also in other ways are interconnected. In 2026, Greece is very different compared to the Greece from 2019. And facts and figures from the Greek economy show you this.
We will continue to support citizens, support the most vulnerable people where possible, but we will do so to the best of our efforts. And I can promise you that as a Greek finance minister, as well as president of Eurogroup.
Aurore Lalucq
End of this discussion. I don't know if you want a couple of minutes to conclude. No. Thank.
Thank you very much, president Piattakakis. I think your opening remarks really did us all some good in this committee, and we really appreciated your speech. We do hope to be able to have the chance to have these exchanges of views with you very often. We want to work closely together, given that the economic climate is very turbulent indeed. And please let us not forget that we are not weak, as you said.
We must remember that. So thank you very much indeed from me and, on behalf of all of the members of the economic and monetary affairs committee. See you soon. Thank you very much.
Damian Boeselager
Okay, colleagues. For your conversations, you can leave the room. For everyone else, please sit down. I would like to welcome you all to this public hearing on market integration and supervision, which follows the adoption of the related legislative package by the commission on 12/04/2025 and precedes the publication of the econ draft reports on three files next month. In particular, I would like to welcome our experts.
We have mister Nikolay Kossackiewicz, senior vice president and president of Nasdaq Copenhagen, miss Niv Moloney, professor in the law school at the LSE, mister Edwin Depoe, head of compliance and public affairs at Euroclear, miss Verena Ross, chair of ESMA. Thank you very much for joining us today. This legislative package is a central component of the EU savings and investment union strategy. It aims at removing barriers and unlocking the full potential of the EU single market for financial services, as well as streamlining and enhancing supervision of financial institutions. The package consists of three legislative proposals, the master regulation where Markus Fever, VPP is the rapporteur, a master directive, where the rapporteur is Eero Heinelume from the S and D, and the settlement finality regulation where the rapporteur is Giovanni Rossetto from the ECR.
Let me quickly remind you of our procedural ways of going ahead. We have opening statement by each of the speakers of seven minutes, which will be followed by a question and answer session of 10 slots, 1.5 minutes for the questions and minimum two minutes maximum as an answer by the speakers with a maximum of two speakers replying per answer per question. And if there's time, we will do a catch-the-eye at the end. With this, I would like to pass the floor to Mr. Nikolay Kusarkiewicz to give his opening statement for 7 minutes.
Nikolaj Kosakewitsch
Thank you. Thank you, Chair. Thank you, honorable members of the Econ Committee, for allowing me to speak today. Thanks for the opportunity to appear before the committee. And I represent NASDAQ, one of the world's leading market infrastructure operators and a long-standing participant in European capital markets.
We operate regulated exchanges across the Nordic and Baltic regions. NASDAQ welcomes the market integration and supervision package, and the ambition it reflects. The package addresses real challenges, and we are broadly supportive of its direction. In that spirit of support, we would like to share four observations today, including one area where we believe the package could be meaningfully strengthened. Let me begin with what Nasdaq strongly supports in this package.
We fully support the centralization of supervision and the creation of a pan-European market operator regime. Consistent EU-wide oversight of systemically important infrastructures is a necessary step towards reducing fragmentation and strengthening investor confidence across the single market. We would encourage further clarity on the delineation of responsibilities between ESMA and the national competent authorities to ensure the new framework is consistently applied, non-duplicative, and cost effective for supervised entities. We also welcome the reforms to CSD interoperability and cross-border settlement. Progress on post rate efficiency, the path towards C plus one, a greater issuer choice are all positive developments that will strengthen the European capital markets' attractiveness.
Finally, we welcome the technology-neutral approach and the extension of the DLT pilot regime. These provisions send an important signal that Europe is open to innovation, and we would encourage the co-legislators to prioritize the swift adoption. Competitiveness is about growth, strategic autonomy, and market-driven financing. For that, the EU should assess how to boost listings, and this intrinsically links with the way trading functions. We would respectfully invite the committee to consider one area where the package could go further, the question of market structure and the long-term health of transparent lit trading in Europe.
Over recent years, trading volumes on lit venues have declined, as market participants have increasingly turned to bilateral execution and dark pools. This gradual migration raises important structural questions about liquidity fragmentation, the quality of pre-trade transparency, and ultimately, the robustness of price formation in European equity markets. As activity moves away from transparent multilateral venues, informational asymmetries tend to widen, and the anchoring role that those venues play in the price discovery process is progressively weakened. These dynamics have a direct bearing on Europe's ability to attract and retain listings. Healthy, liquid and transparent secondary markets are a prerequisite for a vibrant IPO ecosystem and for the broader objectives of the Savings and Investment Union.
We note that this concern is shared at the highest political level. In their joint letter of 03/11/2026, the Finance Ministers of France, Germany, Italy, The Netherlands, Poland and Spain called explicitly on the commission to propose targeted measures to increase the transparency of EU equity markets as part of this package and emphasized that reform should not inadvertently deepen the shift towards non-transparent trading. In practical terms, NASDAQ would highlight two areas where targeted adjustments could make a meaningful difference. The first concerns the level playing field between lit venues and systematic internalizers. The current tick size regime creates asymmetries that, in practice, favor bilateral execution over transparent on-exchange trading.
Addressing these asymmetries as part of a broader effort to ensure that different execution venues compete on fair and equivalent terms would help redirect activity towards a more transparent market without being prescriptive or disruptive. The second concerns the SI retail execution framework. We welcome the commission's proposal requiring systematic internalizers to update their quotes before executing retail clients' orders at an improved price. This is a positive step. We would, however, encourage the co-legislators to consider whether additional safeguards are needed to ensure that price improvements are genuinely meaningful and objectively verifiable in practice.
We recognize that market structures are a complex and sometimes contested area. Our intention is not to suggest that these questions have simple answers, but to encourage the committee to ensure that this legislative opportunity is used to at least begin to address them, reinforcing incentives for lit trading, protecting transparent price formation, and reducing structural imbalances that currently favor opaque execution. It is great news that eventually the EU will have the equities consolidated tape operational very soon in July. Our third observation relates to the proposals to expand the consolidated tape, in particular, to add depth of book data and venue attribution before the current top-of-book tape has been fully implemented and operationally tested. NASDAQ understands the ambition behind these proposals.
A well-functioning consolidated tape is genuinely valuable, and we support its development. Our concern is simply one of sequencing. The current tape is still in the process of being operationalized, expanding its scope before we've had the opportunity to assess whether the existing design is working, to evaluate its impact on market behavior, data quality, and investor outcomes, risks building on an untested foundation. We would suggest that any expansion should be preceded by a proper independent impact assessment after the entry into application of the existing framework. We also wish to flag a specific technical concern regarding the depth of book data.
Order book information that reaches users through the consolidated tape with even modest latency is, by definition, no longer a live picture of market liquidity. There is a risk that presenting such data as real-time transparency could mislead investors about the practical available depth and potentially confer an informational advantage on participants whose execution models are less dependent on pretrade transparency. These are consequences that deserve careful consideration before the scope of the tape is extended. We would also note that if Lipsenen.
Nikolaj Kosakewitsch
I'm sorry about that. Yes. Yes. To conclude, Nasdaq is committed to European capital markets and supports its reforms proposed in this package, and we succeed for investors, for issuers and for the broader European economy. But we would encourage the package to be strengthened by adding targeted provisions to support transparent lead markets, and addressing structural dynamics that, if left unchecked, will continue to work against the very integration and competitiveness goals that the MiSP is designed to advance.
And then we would encourage a careful evidence-based approach to the evolution of the consolidated tape, while ensuring the ambition is matched by operational readiness.
Damian Boeselager
Thank you so much. Then I pass the floor to Mrs. Maloney also for seven minutes. Thank you.
Thank you.
Niamh Moloney
You. Dear chair, dear members of the European Parliament, I very much appreciate the opportunity to be here today to share observations with you on this really important market integration package. And I should say, I'm speaking in a personal capacity as an academic at the London School of Economics. First, looking to the package and regulation. The package is very welcome in that it marks a decisive move towards greater harmonization, including through the proposed transfer of provisions from directives to regulations.
And this is very welcome, as it should increase legal certainty and reduce costs. The package would also increase the agility of EU regulation through, for example, the expansion of ESMA's no-action letter power and also the empowerment of the commission to temporarily suspend binding technical standards. And this is welcome and important, as financial market risks are becoming increasingly intricate and dynamic. So agile rulemaking is therefore critical for the success of the Savings and Investments Union. Secondly,
looking to
Niamh Moloney
the package and supervisory convergence. The package underlines that supervisory divergence within SIU can carry costs, particularly for cross-border businesses who may interact with multiple supervisors. And this is indeed a reasonable finding. But the proposed reforms carry most benefits to SIU, where they support supervisory effectiveness. Supervision is the operational process through which rules on the books become rules in action, and so the outcomes sought by regulation are achieved.
Effective supervision is therefore essential to securing the regulatory outcomes of financial stability, investor protection, and market integrity and efficiency, and the related effect of the management of cross-border risk. All of this is essential for SIU. The current supervisory system for financial markets operates through the European System of Financial Supervision Network, established in 2011. Supervision is conducted by expert home and host national competent authorities, and supervisory best practice and cross border coordination is supported by ESMA through its extensive supervisory convergence activities. Research tells us there is no single optimal model for how supervision should be conducted, what institutional structure should be used, or which methods to which supervisors should be aligned.
It is an operational, judgment-based process. So the EU's capacity to allow supervisory experimentation and learning within the framework of the single rulebook is a strength, particularly as markets evolve and as risks change. And the ESFS network has developed strongly in an evolutionary and incremental manner since 2011. ESMA has developed a wide and flexible supervisory convergence toolbox, which can be used with different degrees of intensity, as appropriate. We saw this over the Brexit period, for example, and over COVID.
ESMA has also developed new supervisory convergence tools, such as, recently, the important Common Supervisory Action. And I think it's worth noting that there has been no major financial market failure since 2011, or major failure in supervision. Many of the package reforms to supervisory convergence would strengthen the supervisory effectiveness of the ESFS in an evolutionary manner, which builds on experience. These include, and are welcome, the collaboration platforms, the data platform for supervisory reporting, and the mutual recognition of penalties. Some reforms, however, may somewhat disturb the ESFS and its effectiveness.
There are, for example, proposals that would empower ESMA to require an NCA to revoke or amend an approval decision, and empower ESMA to require a firm to suspend services. Now these may create some risks, including it may not be clear there will always be a clear correct decision that an NCA should have aligned to, because supervision is a discretionary and judgment-based exercise. NCA authority and operational independence may, in some circumstances, be compromised. And there are procedural complexities and legal certainty risks regarding the rights of a regulated actor who may be affected by any ESMA decision. Turning to the market integration package and central supervision.
The package would materially increase ESMA's direct supervision powers, giving it jurisdiction over significant CCPs, CSDs, trading venues, and all CASPs. Hitherto, ESMA has supervised a limited population of actors broadly concerned with data and with market gatekeeping that are broadly not systemic, and have not previously been deeply embedded in national supervisory regimes. The package would radically redesign this model. And this may create risks, including in terms of design. This is a very extensive cross-sector and punctuated reform.
The other unsuccessful grounds of power have been given incrementally and built on experience. It may bring transition costs and disruption at a time when risks are intricate and dynamic. CCPs, CSDs, and trading venues are systemic actors. So there is a question as to how fiscal risks will be managed, or if risks are to be mutualized. The accountability arrangements do not, I think, yet sufficiently reflect the scale of the proposed power transfer or the systemic nature of the actors supervised.
I would welcome the co-legislators considering a clear legislative direction on what ESMA, as a supervisor, its key mandates and objectives would be. And finally, the proposed scale of the transfer of supervisory power could disrupt the supervisory convergence model, which is worth pursuing successfully. It's not clear that ESMA could be a referee at the same time as it is a player. Within the banking system, for example, and for the banking union credit institutions, the European Banking Authority is the referee while ECB Banking Supervision is the player. In conclusion, it's not entirely clear that as yet in the package, the risks of the proposed model are sufficiently balanced by the likely cost efficiencies and other benefits.
Madam Chair and members, thank you very much again for the opportunity to attend, and I stand ready to address your questions.
Edwin De Pauw
Honorable chair, members of the committee, on behalf of Euroclear, thank you for the opportunity to contribute to this discussion. Europe is asking a great deal from its financial system. We wanted to finance innovation, defense, decarbonization, digital transformation, and long-term competitiveness. The need for capital markets that are deeper, more liquid, and easier to use across borders has never been more important. If the savings and investment union is to work in practice, it must prioritize the growth of European financial markets by turning savers into investors and innovative startups into European issuers.
Issuers need access to funding. Investors need liquidity, efficiency, and confidence. While we have a single market, too many frictions still make cross-border investment, issuance, and post-trade activities unnecessarily complex and costly. We recognize that Europe remains fragmented. Consolidation is still constrained by persistent legal and fiscal barriers.
A recent report by the ECB Amiseko Securities Expert Group has identified more than 40 remaining post trading barriers, 15 of which are deemed high impact barriers, half of which are in the areas of law and taxation. We are missing concrete steps to address these barriers in the current SIU agenda. Euroclear has a long-standing commitment to European integration. We are home to more than half of all securities issued in the European Union. We represent over 60% of EU settlement turnover, and our CSD links cover 98% of EU equity market capitalization.
Over the years, Euroclear has contributed to several of the major integration milestones. Fifteen years ago, we brought together Belgium, France, and the Netherlands into a single post trade platform, creating Europe's largest multi-jurisdictional CSD platform. If we look further north, Sweden is widely admired as a strong capital market and a model for Europe in terms of participation and efficiency. Through our local CSDs, we are building on that strength with the Nordic transformation, harmonizing our Swedish and Finnish setups towards a single platform. As a last example, I would like to refer to the market for exchange-traded funds as an area where Europe has already achieved a high degree of post-trade consolidation without forcing institutional redesign.
These low-cost instruments are a powerful way to channel more retail savings into productive investments. Euroclear has directly contributed to this infrastructure consolidation through the ICSD ETF model, under which issuance and post-trading are integrated at the European level. That is what helps issuers distribute products efficiently across time zones, including into Asia without recreating fragmented settlement silos. Euroclear is supportive of the objectives of the market integration package. Whilst the direction of travel of the MISP is correct, we believe it can be further improved.
First, ensuring that the framework supports competition, choice, and nondiscriminatory access across market infrastructures. We, therefore, agree with the commission's proposal on open access, which seeks to strengthen freedom of choice. Second, prioritizing efficiency and liquidity in CSD connectivity, we welcome the introduction of the concept of CSD hubs. CSD hubs can play an important role in facilitating single market connectivity and economies of scale. But for the framework to be effective, requirements for infrastructure developments and CSD links should remain more proportionate and reflective of the market demand.
Third, innovation in DLT requires more than pilot-scale experimentation. At Euroclear, we are engaging with Bank de France to migrate the €300,000,000,000 non CP market to a DLT environment. This initiative exceeds current pilot regime thresholds, yet it is led by regulated infrastructures with proven risk management and governance frameworks. A clear legal pathway is needed to allow such regulated actors to innovate at scale without weakening regulatory standards. Additionally, we should not replicate for digital assets the same national legal barriers that still fragment traditional finance.
The 28 regime codes concept can be an important tool to support an integrated single market for digital securities. Fourth priority is enhancing supervisory consistency. Euroclear operates effectively across different supervisory models today. Rather than promoting a specific setup, we emphasize the importance of efficient supervision based on consistent rules, proportionate application, and strong coordination. Any new supervisory model should seek to avoid high supervisory costs or increased complexities for supervised entities.
Finally, we should be careful not to rewrite what already works. The settlement finality regulation proposal needs to be carefully considered to avoid adverse market impacts. The current proposal risks creating legal uncertainties and barriers to the consolidation of CSDs using branch structures, going against the policy objective of streamlining our market infrastructure. Euroclear stands ready to support a more integrated, competitive, and resilient European financial market. Europe has the ambition, it has the talent, and it has the resources.
Let us build a system worthy of Europe's ambitions together. Thank you.
Thank.
Verena Ross
you. Dear Chair, dear members of econ, thank you for the invitation to appear before you to discuss the market integration and supervision package. This is an important public hearing, and I welcome the attention this committee is giving to what is, in my view, one of the most important legislative dossiers for the European capital markets in recent years. The MISP is one component of the wider savings and investment union. Progress on other fronts, from reforming EU pension systems to strengthening financial literacy, will also be essential to better channel European savings towards productive investments.
That said, the market integration and supervision package represents an important step forward in enabling our financial system to support growth, competitiveness, and strategic autonomy. Attractive and efficient European capital markets are essential if we are to finance key priorities, notably the digital and green transitions, as well as security and defense. Today, European capital markets remain too fragmented. This affects their attractiveness for our companies and for the EU and foreign investors. One fact illustrates this fragmentation well, the number of market infrastructures in the EU, for example, compared to the U.
S, where capital markets activity has consistently been stronger. Replicating the U. S. Model would neither be possible nor desirable. However, more dynamic and more integrated capital markets clearly bring real advantages.
As both Mario Draghi and Enrico Letta have highlighted, financial markets are, by nature, a scale business. In other words, a truly integrated single market for capital would deliver benefits to the EU and to each of the 27 member states that go well beyond the sum of the national parts. This is precisely the objective of the market integration package. By removing obstacles that create friction, complexity, and costs, the package ultimately aims to better serve both EU citizens by offering them improved investment opportunities and EU firms by providing them access to a variety of financing options. Among the improvements put forward, let me highlight three that can be particularly impactful.
First, the new pan-European market operator statute, introducing a single license allowing trading venue groups to operate across multiple member states at once. The logic behind it is straightforward, aligning authorization and supervisory structure with the increasingly cross-border nature of trading venue groups. Second, the push towards greater connectivity, enabling trading and post infrastructures to link more easily, and support deeper, more integrated liquidity pools. This is a direction we strongly support. It aligns with ESMA's vision of an environment where links are easier to establish, procedural barriers are reduced, and market participants can choose services based on value rather than geography.
Third, the commitment to harness innovation. Backed by an upgraded DLT pilot regime and modernized post-trade rules is a welcome and timely step. Our regulatory framework must keep pace with market developments and create the conditions for new technologies, such as tokenization, to take root and to scale within a genuine single market, avoiding the fragmentation of traditional markets that the Mist is seeking to address. Let me now turn to the supervisory dimension, which you would certainly expect me to address. The changes proposed under Mist are ambitious, but they are also targeted.
Under the Commission's proposal, the vast majority of entities will continue to be supervised at the national level, supported by strengthened convergence tools. The package foresees EU-level supervision only for specific market infrastructures and crypto asset service providers, where a more centralized model can enhance efficiency and ensure greater consistency. To my mind, this is a sound and proportionate approach. When rules are enforced the same way across the block, interpretation divergences disappear, regulatory forum shopping loses its appeal, and competition takes place on equal terms. This is the foundation for investor confidence, a level playing field for firms, and more competitive EU capital markets.
EU-level supervision also reduces unnecessary duplication and complexity. Clear common expectations for such significant cross-border EU players, faster time to market, and pooling of scarce supervisory expertise. All of this means more efficient and effective supervision. And perhaps most importantly, EU local supervision will provide a genuinely holistic perspective on risks and deliver consistent supervisory outcomes across the EU. ESMA comes to this debate with nearly 15 years of building direct supervisory experience.
Since its creation, ESMA has taken on successive mandates and delivered on each of them, from credit rating agencies and trade repositories to critical benchmarks, third country CCPs and more recently, consolidated tape providers, external reviewers under the European Green Bond Regulation. These direct supervision mandates cover diverse business models that operate across multiple member states and provide services to the EU from major third countries. They have been tested during periods of acute market stress, including the pandemic and recent geopolitical shocks. This experience has allowed ESMA to develop a supervisory model that is risk-based, data-driven, and outcome-focused, built on close cooperation with national competent authorities. Our commitment is to work with national authorities, leveraging their expertise and their local market knowledge.
This will be instrumental in delivering on the market integration package ambition to bring targeted additional EU entities under ESMA's supervision. Dear Chair, dear members, I very much welcome the ambition of the market integration supervision package and the sense of urgency to act. Please let me, however, make one important point. The package has been designed as a coherent whole. If we unpick it, we risk weakening its capacity to deliver.
I would also caution against middle-ground solutions that might appear attractive to find compromises in the short term, but would, in reality, endanger the desired outcome. Overlapping competencies, complex decision-making would blur accountability, introduce inefficiency, and make the new framework harder to implement. The proposal foresees new cooperation arrangements to leverage the good relationship between NCAs and ESMA in building supervisory capacity. I believe this should remain flexible, sufficient to ensure that they can evolve over time and cater to sector specificities. Likewise, the proposed reform of our current governance arrangements is sensible but should reflect the final agreement on supervisory responsibilities and ensure efficient supervisory decision-making.
As you advance your work, ESMA stands ready to support you with technical input, facts, and impact analysis as well as our supervisory experience so far. Our shared objective should be a regulatory and supervisory landscape that is simpler rather than more complex, that enables scale rather than fragmentation, and that gives European citizens and companies the capital markets they deserve. Thank you very much.
Damian Boeselager
Thank you, Mr. Oss. Now we can come to the round of political speakers, and it's starting with Mr. Faber for 1.5 minutes.
Markus Ferber
Yes. Thank you very much. My heart is full of questions, but I have to concentrate on two if I got it rightly. So the first question, the commission tells us that the financial instruments are traded across more than 300 venues in the European Union, and that the top five U. S.
Venues capture 74% of trading volumes, while in Europe, the figure is close to 10%. So one of the central arguments for the package is that regulatory fragmentation is a key driver of the gap. So how do you view that idea that even for directly supervised trading venues, some responsibility mostly related to daily market supervision remains at the NCA level, and what will create a new layer of complexity, which goes to Mr. Koska Kevich? And the second question goes to Verena Ross because ESMA is being asked to do several very demanding things simultaneously, take on direct supervision of large systemically important financial market infrastructure, strengthening supervisory convergence across 27 member national authorities to do all of this, while the package also introduces new powers around intervention, non-action, latest data collection, so a huge demand.
This is a substantial expansion of ESMA's footprint. So parliament has a responsibility to help you in this expansion, of course. But on the other hand, what is your honest assessment, Miss Ross, of ESMA's readiness to absorb this mandate without either overstretching the institution or inadvertently hollowing out the national expertise that the supervisory system still depends on? I hope I was short enough.
Damian Boeselager
That was perfect in time. Thank you. We pass it first to Mr. Kusokewicz.
Nikolaj Kosakewitsch
Yes. Thank you, Mr. Furber, for the question. I would say that the central supervision doesn't have much to do with how we can create deeper liquidity pools, and how we can move away from deep fragmentation that we see in Europe today. I mentioned it briefly in my introductory notes that a lot of flow has moved away from lit venues onto dark venues onto systematic internalizers.
And we are investigating and we are looking for how supervisors and co-legislators can come up with mechanisms that limit this level of fragmentation. This is not the role of ESMA. This is the role of co-legislators to limit the amount of flow that is taking place in the dark space. This was the intention of MiFID II. Unfortunately, that piece of legislation failed for that purpose.
But this is where I think we should talk about how we can limit the amount of flow that goes directly to systemic internalizers.
Damian Boeselager
It was a very quick answer. Do you have any follow-up questions? Otherwise okay, then, Mrs. Was.
Verena Ross
So on your point, there is a lot in the MSIS package. I fully agree, and that would substantially increase the responsibilities of ESMA. At the same time, I believe in many of these areas, we actually have significant experience and I think would build on a very strong basis to grow, whether that is on supervisory conversions, whether that is on no-action letter and some of the regulatory measures to try to be more agile in our regulatory approach, or whether that is in data collection and bringing building IT systems for the wider EU supervisory community, which we have already done successfully in a number of areas. At the same time, there are also areas which are clearly new and where we would need to build up some of the expertise and the resources to be able to take on these new mandates. I think here, it will be key that we have proper transition periods where we can work with the national competent authorities to ensure that we collectively share the experience, that we build models where cooperation will work well, but at the same time, be clear about what the end model is that we want to achieve and are clear that we actually get to a point where it's one decision-making body for the directly supervised mandates at ESMA level.
Eero Heinäluoma
Yes. Thank you. And may I also thank our experts today for the presentations? My first question goes to Werner Ross. As you know, my group is in favor of the more centralized EU supervision, and this on all significant entities.
During the legislative process, we must really look closer also into the thresholds. I believe that if probably done, a more centralised supervision will increase efficiencies and create a level playing field in the whole European Union. At the same time, we must acknowledge that there is some resistance. A reformed governance system here is a key thing. How should we ensure that, on the one hand, the supervisory framework becomes more EU streamlined and less fragmented, as you said, without arriving at the situation where only a very small group decides?
And what would you say to the, especially to the small member states whose national authorities are a little bit concerned if their expertise and voice are heard in the process in the future. The second question to Eurocle, also important contribution. I would be interested to hear your viewpoints on the centralized EU supervision. I would imagine that it's in your interest that we have the same kind of interpretation of the rules in the whole European Union, but I have also acknowledged that you have been a little bit at least puzzled by the proposal, so would be interested to hear your experts. Is this something which satisfies your hopes?
Miss Ross.
Verena Ross
Thank you very much, Uts, for that question. So I believe we need to aim to build a governing model that actually allows for effectively conducting our various mandates. So having an executive board that actually takes the supervisory decisions that ESMA needs to take is very important. At the same time, the Board of Supervisors will remain ESMA's ultimate governing body. And there, all the national competent authorities will be clearly represented.
And I think particularly for smaller member states, to my mind, at the moment, they have very little influence over the supervision or even the convergence of supervision over some of the entities that provide the vast majority of the services to their citizens and to their companies because these entities are supervised. The big cross-border entities are supervised in other countries very often. And so they have to rely on their fellow national competent authority. They might get some information sometimes. But at ESMA level, they will be part of the governance mechanism of ESMA.
So I think actually, they will gain a view and an understanding and an impact on the way ESMA supervises those types of entities that are providing services to the small country as much as to the big countries.
Mr. De Paul.
Edwin De Pauw
Thank you for the question. Euroclear already today works with a wide range of supervisors, both in Europe and globally. We are prepared to implement any approach decided by the EU legislators, and we don't think it's for us to recommend who should become or should remain our supervisor. Now supervisory consistency is an important element of a well-functioning single market in Europe. So for us, the emphasis is rather on efficient supervision through consistent rules, through proportionate application of the rules, and effective coordination between authorities.
That's for us a clear benefit. However, I think as long as there remain national specificities in both in terms of legal fiscal regulations as well as market practices, we think it's important that we recognize the need for that local expertise as well. So any supervisory model needs to cater for that diversity, which still exists today in our progress towards a true single, hopefully harmonized, market. There is a second element, which is important for us as well, is that any new supervisory model, we should seek to avoid high supervisory costs and also increase complexity for entities. That is, for us, very important.
We also read some comments made by the member states, and I think they are valid, and they need to be addressed. So that's our view on.
Damian Boeselager
Supervisory proposals. Thank you. Then we have Mr. Sjemanova, I think.
Jaroslava Pokorná Jermanová
Thank you for the floor. I will continue to check.
We support a deeper capital market. We need better access to capital, more cross-border investment, and better infrastructure. So we do not question the objectives of this package. We want to know whether centralization is the real answer. The Czech position supports a simplification, deregulation, and eliminating barriers to cross-border trading and cooperation.
But whenever we give more powers to the European level, we cannot disadvantage smaller markets. I have a question to Mrs. Ross. Where do you think the national supervisory model is failing so that we need to bring it to the European level? I have a question for Mr. Kozakovich.
The diff the differences and the barriers, can we maybe find them mainly in the state rules and inconsistency of the markets? To Professor Maloney, we have supervisory convergence and centralization. Is the European level a useful way, or is it actually something that undermines a useful approach? What about the capital markets? Could we find better flexibility and help the weaker markets?
Damian Boeselager
Since you have to choose two speakers, I think we will start with Missus Maloney and then maybe Mister Akuzakovich, because Missus Ross has also been asked already. So Miss Maloney for two minutes.
Niamh Moloney
Thank you very much for the question. I think there is great value at the European level for supporting local markets in the extent to which there is an efficiency that supervisory convergence or some degree of centralization can support the national supervisor. So here, I think in terms of procedural efficiency, in terms of data collection, in terms of horizon scanning, these roles that ESMA already does very well and empowering these more at European level so that, for example, great investments in data resources, in systems resources where there's less pressure on that at national level because, of course, resources are limited at European level but also at national level. So the more there can be this efficiency and convergence in systems and operations, I think there was really great value in the European intervention at that point. And if I may, I think a second point I would raise is I think the European level is important for smaller national markets when it comes to newer risks and newer threats.
So for example, one would look at the work ESMA has done on fintech and innovative behaviors in markets and risks to the retail community. That sort of pooling of expertise and advice, I think, is a very efficient way of supporting national regulators and empowering them to be more effective at national level. Thank you.
Thank you. Mister Kozakovich?
Nikolaj Kosakewitsch
Yes. If I understood the question right, it was to see if we could find the differences in the individual markets and whether there's a need for national level efforts as opposed to European-led efforts. I think it's a combination of the two. We look very often to Stockholm to find the most effective capital market. They have been extremely successful in raising capital for innovative companies and for SMEs.
So there's a lot to be learned, and I think there's a lot that went into the miss package and the proposals that is originating originally from Sweden and the Stockholm capital market. So yes, we can look for inefficiencies on a local level. We cannot only rely on the suggestions proposed in the MISP and some of the suggestions discussed previously and addressed in the SIU. We also have to do things on a local level, all the way down to local taxation, effective investment and savings accounts, financial literacy, and a much greater participation from retail investors in the public markets, and very much also institutional support for SMEs. And that goes across almost all of Europe.
Stockholm has led the way. And I think the rest of the European capital markets can learn a lot from Stockholm when it comes to supporting SMEs.
Damian Boeselager
Thank you. Then we have mister Corsetto from this, yeah, for one and a half minutes.
Giovanni Crosetto
Yes. Thank you very much, and thank you for this very insightful addition. And I will start with a question to Professor Moloney. And we are asking, how will ESMA can ensure it can effectively deliver on this new expanded mandate, which is entailing significant new responsibility and the direct supervision of the largest European market participant. And you talk a lot about the opportunities.
I will ask you if you could elaborate a little bit more about the risks, the pitfalls, the complexities that could arise in this new framework. And with respect to the second, I will ask mister Depo regarding the definition of system in the settlement finality regulation. The definition proposed by the new rules no longer refers to the arrangement between three or more participants. And regarding this new definition of the system in the regulation. Do you agree with this new approach, or do you think that the designation of bilateral system should be allowed only in exceptional circumstances as set out in all the framework that is the settlement finality directive?
Thank you very much.
Damian Boeselager
Missus Ross, I think the first question was for you, Craig. Missus Maloney, sorry that I misheard.
Niamh Moloney
Thank you so much for the question. I mean, indeed, there were very significant benefits and opportunities from reordering the Straub of Visri model somewhat. But I think it is useful, of course, for the process to underline some of the risks and complexities that are to be managed. For me, perhaps there are four, maybe. I think one is a risk we discussed a great deal because I'm old enough to remember, at the time of the negotiations when ESMA was being set up back in 2010.
And it is that backstop risk, the fiscal risk that may arise if a major systemic actor faces difficulties, and if, at the extreme end, there may be a need for some kind of bailout, some kind of intervention. And of course, there are ways of managing that. We know there is a very distinct model, of course, in the single supervisory mechanism, but that is not at play here. So I guess the first risk to be managed is in a tail situation where something very significant had happened, do we have some kind of coordination mechanism whereby, if needed, there was a way of providing fiscal support to a systemic actor? I guess my second risk to be managed, and indeed could be managed through the process, is the somewhat operational nuance and complexity that may arise.
And perhaps one example here, the proposal, I think, quite correctly focuses on significant actors to move to the ESMA. And indeed, that reflects subsidiarity. It reflects proportionality. But, of course, what is meant by significant changes over time? And the proposal provides indeed for a three-year window where an actor might move back to a national regulator.
And one can see that it is a very complex point in the process. There is indeed that mechanism in the banking side, in the single supervisory mechanism, but that is a different kind of mechanism. The national authorities and the ECB are very closely tied together in a system at the head of which is ECB banking supervision. This is a different arrangement whereby the NCAs are in their sphere, ESMA is in its sphere. So this would need, I think, some careful coordination.
Damian Boeselager
Thank you. Sadly, we will now have to go to Mr. Depaul. Or maybe not, sadly, but we would like to hear you.
Edwin De Pauw
Thank you. So first of all, generally speaking, to avoid market specifics in the transposition of EU directives, it makes a lot of sense to develop a regulation rather than a directive. And specifically regarding SFR, I think it's healthy after 30 years to look again at the text and to see if it's still fit for purpose. However, it is important also in developing the SFR that we avoid unintended consequences by introducing some very prescriptive definitions that do not meet market reality. And I think the example you are giving corresponds to that type of example.
As indeed, now strictly speaking from a European perspective, we are not concerned about the definition of systems of three participants or more, because you can imagine we have many more. But indeed, one could ask the question if an arrangement between two parties still corresponds to a system. Very similarly, we also have a concern at Euroclear about a change in SFR, which now defines the ownership rights at the level of the legal entity, which actually means if you try to consolidate CSDs and you use what is typically being done at branches, that you get potentially a conflict of law between ownership established at the level of the legal entity and other regulations, which still remain at the level of the branch. So I think my general message with respect to SFR, I think this needs to be really looked at by technicians who really understand the consequences of all the changes that have been made, to really make sure that we don't have unintended consequences for the market.
Damian Boeselager
Thank you. I'll jump in quickly for our green shadow, who said they had to leave. I have rather limited knowledge, so I'll just ask a very broad question to you, Mr. Source on the resources that you need for the new tasks that are described here. Do you think there are sufficient resources allocated?
Where are the biggest gaps? And maybe to Mrs. Maloney, a rather, let's say, theoretical question on how much will the current proposals help to address the Draghi billions, so the basically innovation investment gap that we see. Where do you see the biggest levels within this proposal? So Mrs. Voss.
Verena Ross
Thank you very much for the question. It is extremely important that there are adequate resources to deal with the mandates that are given to any authority, whether it's a European, a national or wherever it is. I think the commission has put forward in the legislative financial statement clear proposals for the potential staffing and financial resources that would be needed. The question of whether they are sufficient will really depend on what the scope of the legal text is in the end, in terms of the responsibilities that will directly come. But I think the overall broad scope of having sufficient resources also to prepare for taking on the supervisory mandates, financial resources for some of the IT developments at EU level. And these things are extremely important, and that is fairly reflected, I believe, in what the commission has put forward.
Thank you. Ms. Maloney?
Niamh Moloney
Thank you very much. Going to your first comment in terms of the draggy ambition that he has given indeed to all of us. My sense is that the supervisory reforms are the less impactful ones here because indeed there is not so much evidence that the design of kind of institutional questions plays directly into growth and competitiveness. The job of supervision is to ensure against financial stability risks, market efficiency risks, and so on. But for me, there is potentially very exciting potential in some of the reforms around the fund space, because here, of course, this is how regular households invest in the capital markets.
So the more that can be done for diversity and ease of access to the investment fund market, that's potentially a very important lever. So I point here, for example, to the easier fund passport, the passport on authorization. I think this is a really interesting and novel development. The removal of constraints on cross-border fund marketing and, for example, the depository passport. I think these are very practical interventions that could make it easier for households to invest in funds.
Damian Boeselager
Thank you so much. For the ESN, Mr. Droze, I think he has left. So we can go to the second round of EPP, Isabelle Benjamin.
Isabel Benjumea Benjumea
Thank you, Charles, speaking Spanish. Thank.
Thank you very much to you all for this extremely interesting hearing. Integration of our capital markets was an idea, an inspiration previously, but now it's an urgent need. We're not starting from scratch. We have investment savings, good ideas, excellent talent, and businesses. But what we are lacking is true political ambition to make progress.
Some facts and figures that might be valuable to bear in mind. In the US, capitalization is roughly 200% of GDP. In the EU, it's barely 73%. So we're facing a package that is extremely needed, and we welcome it. But I have three questions I'd like to ask.
Firstly, the package includes 18 legislative texts. Which one is the main text that we need to revise, reform, and in which way? Second point on supervision. The commission and the parliament to date have agreed not to talk about single supervision, but about harmonized supervision. Is harmonized supervision sufficient in order to make progress?
Finally, I'd like to ask you about best practices and experiences in the UK and the US, given that we have experts coming from both sides. Could you share some of those with us, please?
Isabel Benjumea Benjumea
The supervision one, of course, to miss Bernard Ross, the one regarding The UK and The US to the representative of Nasdaq and LSE, the one on which is the piece of legislation that we should really focus on among the 18. I would let you choose who can answer that.
Verena Ross
Thank you very much for the question. I think I have to say the translation was not entirely clear. So I assume you spoke about convergence and direct single supervision, and the need for both. Is that right?
Isabel Benjumea Benjumea
My question is regarding right now in the negotiations, we are talking about harmonized supervision. Is it enough?
Verena Ross
Okay. I think what we are seeing is that there's a clear distinction made here. Where is it actually important to take a step further, going from what we currently do on supervisory convergence, where the responsibility is with the 27 national authorities? And what we do at ESMA level is to try to drive convergence in supervisory outcomes. That is quite a lengthy and resource-intensive process for all of us at national level and at EU level.
So while that clearly will remain the task for the majority of the supervisory world and for financial entities in asset management, in investment firms and so on, the idea is to go to a single central supervision for certain very specific players that are significant, systemic, and are genuinely cross-border operating across the European Union. And to my mind, that makes a lot of sense. That's targeting that tool of central supervision really where it is most needed, where it brings the most benefit. For the rest, it is sometimes a cumbersome and difficult process. It will never get to the same consistent result that you do when you go to single supervision.
But it is fair, I think, and it will always remain to my mind that mix of a hub and spoke approach where some things are just done more effectively, more efficiently at a national level, but other things we can really make a step forward if we put an EU level supervision into place. And that would then require good cooperation arrangements, but ultimately, clarity on where the decision is taken and who is responsible.
Damian Boeselager
So I think I would give the other questions to Mr. Kozakovich. I think there was something about which one of the 18 texts is the most important.
Nikolaj Kosakewitsch
Yes. I was supposed to speak about some of the best practices from the U. Best practices. I think that's probably the most relevant. So if you think about what's stated in the miss package about the DLT and how fast the U.
S. Have been able to or will be able to adopt a very significant technological innovation like DLT is for everything post-trade. That has to do with the market structure of the U. S. Because they have a single CSD, they have a single CCP for cash equity clearing.
So obviously, they have a competitive advantage and can adopt these new technologies a lot faster. I think that's what we can learn a lot from in Europe, and NASDAQ has actually tried to do that with another exchange group to put together the rails for doing tokenized settlement of ETPs or investment products that are not the traditional ETFs, but specifically warrants and certificates. So I think that if Europe can learn something from the U. So, it is that as soon as we have technological leapfrogs and we have new technologies that everybody can understand and agree to, will be significant in our improvement of European capital markets or not even capital markets, markets in general. We should adopt them and embrace them.
And we should do everything to empower its implementation, instead of putting our foot on the brake. And that's sort of what we're doing with the DLT in its current form, but we recognize that the miss package is a significant step forward and a genuine improvement of the adoption of DLT in the post-trade space.
Damian Boeselager
Thank you. Then we come to the last speaker of the political speakers, Mr. Fernandez.
Jonás Fernández
Good afternoon. Thank you, chair. I'll be speaking Spanish. My first question is for Professor Maloney. You mentioned that in the current proposal of the supervisory framework that the commission has tabled, there are a number of inconsistencies where Esma's acting as a referee and as a player.
And you referenced a number of other inconsistencies. I'd love it if you could go into greater detail on that. And Verena Ross, what other inconsistencies might be in that proposal? And then, DePaul, you mentioned that with this proposal, in the case of CSDs, new barriers within the internal market might be created. That was in your first intervention.
Can you tell me what barriers you were referring to? What can we do to resolve those? And what new barriers there might be when it comes to the CST?
Damian Boeselager
I think in the beginning, you asked Miss Maloney. Correct? Yes. So let me start with this.
Niamh Moloney
Thank you so much for the question. On your point about the referee and the player, I guess it's because it seems to me ESMA plays an incredibly important and successful role in making mutual recognition work. So the European system of financial supervision, again, unlike banking union, is ultimately based on mutual recognition, home and host supervisors. And asthma through clever, innovative, dynamic over the last sort of 10, 15 years or so has really kind of made that work, I think. But as asthma would perhaps become more of a supervisor itself, it seems to me it's difficult to play both those roles well.
So how can you referee the game when you are one of the biggest players on the pitch? So, for example, can ESMA easily do peer review in the same way? Might perhaps tensions arise with national authorities where there might be some sense, well, who peer reviews ESMA, for example? So is there a way of hooking that into the proposal in some way? Currently, under so much of the single rule book, ESMA is required to give an opinion on important regulatory decisions, short selling, product intervention, commodity derivatives, many places the co-legislators have given ESMA this power.
Again, what happens if ESMA is taking those kinds of decisions? How do we ensure ESMA is taking the correct decision? And it seems to me, if one looks elsewhere in the system, the European Banking Authority does that role for banking supervision, even indeed up to the ECB as the banking supervisor. So I think it's something just to be aware of. Can we keep supervisory convergence working as well as it currently does for less significant actors, while ESMA is also still a very big supervisor?
You. Mr. De Paul?
Edwin De Pauw
I assume you were referring to the DLT innovation part when you referred to the new barriers. So the point we want to make is that currently, the DLT pilot regime is very much designed to allow for experimentation, and I think that is right. However, we, a market infrastructure, when we want to move into DLT technology, want immediately to move a business into that technology. So we want to really do that at scale. If we are not fast enough to accommodate the market infrastructures, who today are already regulated entities to allow to move large businesses like we will do with Noise P, €300,000,000,000 of assets, then you will see that we will again have national regulation popping up, and you can end up with, again, nuances in the different member states on how to implement a market infrastructure leveraging DLT infrastructure.
The other aspect, I think, which we need to pay attention to is interoperability. It's interoperability between what is probably the evolution of multiple DLT platforms within Europe. And I think there, what is in the midst is that there is a need for standards to ensure interoperability. And we, as Europe, together with Leafstream and DTC, have already published the paper. I think it's a good starting point.
But there is also the interoperability between the DLT systems and the traditional systems. Because if you want to preserve a single pool of liquidity, you also need to make sure that you can keep those together. You can that whilst some part of the market is moving to new technology, the other part is still on the current systems, and you want a single pool of liquidity. I think that's in the benefit of the investor, but also the benefit of the issuer.
Damian Boeselager
Okay. Thank you. This concludes our round of speakers. Now we have a catchy eye. There's fairness in the room.
Okay. I saw a catchy eye by Mrs. Stotti. Is that correct? One minute.
Regina Doherty
Thanks, Chair, for your indulgence. I have two questions. In the last few months, we've seen a really rapid inflow into EU capital markets, particularly record highs in France and Spain, with a really strong row of growth. So to me, it's clear that the lack of central supervision is not a fundamental barrier to growth. And so can I ask the panel why it's judged then that moving towards centralized supervision is the direction of travel that's appropriate, as opposed to more cooperation among our national competent authorities?
And secondly, Chair, the emergence of the E6, I think it risks creating more fragmentation than itself. So it seems clear to me that it will only increase the fragmentation that we're trying to obviously reduce among the entire markets. And I just wonder what your opinion is, please.
So who did you ask?
Esma, maybe first of all,
Damian Boeselager
Okay. Then maybe you can also include Mr. Fernandez's question in your answer.
Verena Ross
I will try to capture all of this. So first of all, I just wanted to clarify that this point of being, on the one hand, responsible for direct supervision and, on the other hand, being responsible for enhancing supervisory convergence among the national supervisors is something which we already combine in our current mandates. And indeed, we've done peer reviews where we've included both ESMA direct supervision and national supervision and had peer review teams, which were composed of ESMA staff and national competent authorities, to make sure we have all those who are not involved in the actual supervision on the ground to independently judge whether the supervision is good, whether it is done at ESMA level or an NCA level. Similarly, I think opinions and things like that will no longer be needed if it is actually ESMA deciding because it will be a collective European decision. The opinions are there to ensure that actually there is a common view on what the national authority at the moment is deciding and whether other supervisors might have a different view, and therefore, we have not consistent outcomes, potentially.
So that's on that point. And then coming to the point, we have, at the moment, indeed, luckily, quite a lot of investor inflow into the European Union markets. That, to my mind, is more driven by the current geopolitical environment. But the key is that European capital markets, on the whole, remain clearly not as attractive as, for example, the European The U. S.
Capital markets for foreign investors. And I think it is about making them more attractive, because you can really operate in a single market in Europe that we need to address. At the moment, if you want to invest, you invest in an instrument in one market, then you have to clear and settle that in that particular silo, then you want to invest in a different. So you really that is difficult, particularly for outside investors to deal with. And even for European investors, that can be a real disadvantage.
Damian Boeselager
Thank you. So now we have been very German in our time allocation, which is very good, which means there's time left. I don't for the next agenda point, not all the shadows are here yet, so we can take additional questions for the people who are in the room on this hearing still. I see Mr. Roseto.
Giovanni Crosetto
If I thank you. And, yeah, I will have a question for Miss Valena Ross about the possibility of introducing a depository passport. And many objections and concerns, more than objections, were raised because the depository regime is only partially harmonized. And in light of this view, depository passport should be introduced only once the authorization process for performing depository services activities and the supervision of depository services have been fully harmonized. And, this should be important to ensure a uniform approach in the EU, and to avoid the risk of regulatory supervisory arbitrage.
And I would like to ask you how do you see this kind of risks and your position about these concerns. Thank you. Miss Voss?
Verena Ross
Thank you for the question. And indeed, the topic of depository passports was last discussed, and some of you might have been involved in the AIFMD review at the time. At that time, it was not put in place. But I think, as Esma, we welcome that it has been brought back on the table now, because passporting is a fundamental principle of the single market. It exists pretty much for all financial services.
Of course, it helps if you harmonize the regulatory framework to then have passporting working and functioning in an agreed, and common way. But to our mind, having passporting also for depository activities is a positive step forward.
Mr. Feller?
Markus Ferber
Yes. Thank you very much. My question goes to Mr. Déport. At the moment, the post trade infrastructure like Euroclear is required to report essentially the same data, transaction records, settlement instructions, position information to multiple supervisors in multiple formats under multiple legal regimes.
The commission's proposal introduces a centralized ESMA data hub, designed to change that. You report once, the regulator distributes. In principle, they should reduce costs and improve data quality, but the history of EU-level data infrastructure projects gives some grounds for caution about how quickly these things actually work in practice. So how significant is the current reporting burden in concrete terms? And what would you need to be true about the design and government of the ESMA hub for it to generally deliver on the report's one promise rather than becoming an additional layer on top of the existing obligations?
Mr. DePaul.
Edwin De Pauw
So yes to all of that in the sense that, indeed, if we need to report the same data in different formats to different regulators, it's noise, and it's not something we welcome. If the outcome would be that on top of doing that, we would have another regulator to whom we need to report the same data in another form, we would not welcome that. But I think the key point for us is not that. The inconvenience is that even if often the regulation is an EU-level regulation, it's not always interpreted the same way. When you do new product developments and you need to seek advice if that requires certain licenses or not, you do not always get the same answer.
And then also, is the inspection part, which is already allowed today, if different competent authorities would want to come for an inspection. If they could do that in a coordinated way, that would also already help. So from our perspective, that's why I'm saying we do not have a preference for the supervisory model. I think there is already a lot that can be achieved by coordinating, converging between regulators before you get to the point where you see I need a single regulator. So I think it's more the objective than how that is important for us.
Damian Boeselager
Okay. Then my final question as a chair would be that I offer you concluding remarks of a minute. And the challenge would be if you can single out the one most important message that you have about this package to us, that would be very much obliged. So if you feel ready, feel free to take this minute. If you say you have said everything that you wanted to say, that's also fine for us.
Nikolaj Kosakewitsch
Should I volunteer to start? Okay. Yes. I didn't get a chance, in my opening remarks, to talk about the digitalization of financial markets. So I just want to emphasize that the strategic importance of DLT and tokenization for the future competitiveness of European capital markets. Tokenized instruments and DLT-based infrastructures have the potential to lower cost, to broaden investor access, and to support new forms of capital formation, including for SMEs and growth companies.
But I do want to emphasize what Mr. DePors said as well. They need to coexist with traditional security settlement systems. They need to operate with full fungibility. And it is extremely important that the issuers have full control of their proxy, know who their investors are.
And that's why we need to safeguard against these parallel universes of tokenized securities or even replicas of securities or even derivatives do not trade in dark parallel universes, and they can operate side by side and fully fungible with traditional securities.
Damian Boeselager
Thank you. Any of the other speakers? One minute. Mr. De Pau.
No, Mr. Maloney, if you so. Okay, go ahead.
Niamh Moloney
It's a really important package. I think my message would be that simpler is generally better. So to avoid complexity where the co-legislators can and very much supportive of the direction in terms of enforcement, if I may, very important measures in the package about mutual recognition of penalties. So I think that's a very important lever to pull on. Thank you.
Edwin De Pauw
Yes. For me, I think, first of all, the glass is half full. We tend to see the glass empty and compare it with the U. S. I think there are already big markets in Europe.
You look at the euro bonds, you look at the ETFs. So we should not be too pessimistic, either. And then the second point I wanted to make is that let's focus on those topics that really make a difference. Let's make sure that what we propose is proportionate, that what we propose reflects market demand. We have not elaborated on that, but I have a few comments on the hub and spoke model today, where we seem to introduce additional costs for the market infrastructures, therefore for the users, therefore for the investors.
I think we first need to focus on creating those flows, and then on the pipes that need to handle the flows. And today, we seem to introduce quite some investment costs for the market by putting the horse after the car.
Ms. Roth?
Verena Ross
Finally, three quick messages. So I agree on a lot of what has been said on the DLT and the new developments where we need interoperability and avoid national fragmentation as we've created in some of the traditional markets. Secondly, on data and simplification and decomplexifying, I think it's extremely important that we go to that principle of reporting once, and all the regulators, central banks and users as authorities should use that data rather than trying to collect their own data on top of it. And finally, I think the point about the whole package is we need to make a significant step forward and simplify and improve the effectiveness of the European capital markets, and it's urgent. So let's get it done.
Damian Boeselager
Thank you for your time, for your thoughts, and for your contributions. Thank you for the questions. We will take a mini pause for 4 minutes until five p. Okay. I would ask everyone to find their seats.
Please find your seats. Mister Van Overtfeld. Okay. We now turn to the presentation of the draft own initiative report on the digital assets by Robert Stefan Oberfeldt and the consideration of amendments. The aim of the own-initiative report is to outline Parliament's position on the major challenges posed by digital assets and to take a proactive approach on these matters.
And I will now give the floor to Chairman Overthold for 6 minutes.
Johan Van Overtveldt
Thank you, Chair. And let me first of all thank the shadow reporters for their constructive input on the meeting we had last week in Strasbourg. In the report, we explored the impact of the emergence of digital assets on the financial service sector and what that means for the regulatory framework. As the sector is changing quite rapidly, a discussion on the consequences seems more than useful. Moreover, the council is also in a parallel work stream aiming to produce a report by June.
So it would be quite good if we could put the two reports next to each other. Some principles are useful as a starting point for the report. The aim should be a system-wide, activity-based and technologically neutral point of view. While distributed ledgers may overhaul the financial infrastructure, it does not change any economic functions in, say, such as trading, clearing and settlement. New technologies always come with new challenges.
The regulatory framework can hardly be called technologically neutral for all future developments, and needs to adapt to changing realities. It needs to find a balance between spurring innovation and preventing too much pace for regulatory arbitrage, and I would even say financial turmoil. On the one hand, several risks remain for the digital assets sector from a macro prudential perspective, data capabilities need to be strengthened to get a better sense of financial risks and the interconnectivity with other parts of the financial services. Multifunction groups that create links between different types of crypto assets should be the subject of scrutiny. Crypto assets are also still all too often used to evade anti-money laundering regulations.
One aspect of stablecoins in need of legal clarity is the topic of multi-issuance, which only came under attention after the enactment of MiCAR. On the other hand, the usage of distributed ledgers in the financial services sector could enhance efficiency and connectivity. Tokenization also allows to use distributed ledger technology for existing financial assets, with the potential of reducing costs and improving transparency. Much trial and error will still be necessary to discover the advantages, whereas vulnerabilities will need to be closely monitored. If the future is to move the financial structure or the financial infrastructure to distributed ledgers, it is important to get this exercise right.
This is foremost an opportunity to enhance Capital Market Union, a very important goal in these times. Finally, the future of digital finance is not only taking shape in Europe. It is imperative for Europe to be part of the global conversation on this topic. Both in terms of risk management and in terms of transformation of the financial infrastructure, it will be necessary to discuss international cooperation, standards, interconnectedness, equivalence, and, of course, also regulatory requirements. We are very interested in hearing the priorities of the group to take the compromises forward.
Thank you.
Damian Boeselager
Thank you, Mr. Van der Wilhelferd. I give the floor to Mr. Berger for three minutes.
Stefan Berger
So thank you, Chair. And, first, I would like to thank Johan van Oberfeld for his great work. The draft report was already very good. The EPP can support most of it. I think only a few amendments were necessary.
And I'm sure in the end, we will find a good compromise. And of course, the biggest issue, as you mentioned, is paragraph 12, the question of multi-issuance. And, for me, instead of complaining about the lack of legal certainty and calling for new legislation, maybe it's enough to mandate the commission to provide clarification through guidance or through Q and A. For me, it's enough. And the reason why I believe this or why I believe that this is much better than new legislation is the fact that Mika already provides sufficient safeguards.
If any token or coin grows to a significant size, additional safety measures apply. So we are prepared. And last but not least, the ECB said that the capitalization of our crypto is simply too small to pose any relevant risk to the market. But in the end, of course, we can talk about the question of what kind of reactions the commission has to do, of course. So let me finish.
I'm sure, in the end, we will find a good compromise.
Mr. Fernandez?
Jonás Fernández
Thank you. I will speak again in Spanish. First.
And foremost, I'd like to thank and commend the rapporteur for the draft report. That has been raised for discussion here today, and also last week in Strasbourg during the shadows meeting. There are different nuances and points of emphasis between the different groups. That said, I think we do share a certain number of opinions, and almost all of them have been included in the draft report. And I think through amendments, we can fine tune those aspects, as well as with the different meetings and discussions that we'll be holding.
So in that vein, I firmly believe, after having listened to the Rue rapporteur and all the other shadows last week, I am sure that we'll be able to reach an agreement. Putting our heads together and working through these different nuances that we still have in certain areas. Personally speaking, and on behalf of S and D, we welcome crypto assets as an opportunity to improve efficiency on capital markets, financial markets, to promote new lower cost services, as well as to facilitate transparency on the market. And above all, I'd like to say that digital assets will allow us to address the fragmented markets that we're really suffering from in Europe. We spoke about the fragmentation of capital markets earlier in the hearing.
And digital assets could serve as a catalyst to move towards this consolidated single market for capital markets. But with all of these pros in mind, there are cons as well. There are some caveats. As the rapporteur announced as well, there are strategic deficiencies and some gaps in these services. There might be problems relating to money laundering.
And so I think we're all aware that in the world today, there are things happening outside of our supervisory powers. There are things happening in the dark pools, and it's important for us as legislators to improve that framework and to boost transparency. And I think we can achieve a good rapport if we work through all of these different things. We're basing our work on good international cooperation. We're facing global markets where certain jurisdictions don't want to cooperate on this point, but Europe must place great emphasis on cooperation.
And then on my car and multi assurance, I think the legal framework is clear, and the ECB agrees there. I would opt for not requiring new legal frameworks that, like my EPP colleague suggested, but we do need to really bear in mind the ECB's opinion on this, and then they have made their opinion known in different publications recently. But as I say, over the next few weeks, I'm sure we can strike an agreement in the spirit of cooperation. We do have different nuances in our perspectives, but I'm sure we can reach common ground. Thank you.
Damian Boeselager
And then for renew, Gilboye will be replaced by vice-chair Ludwig Odo.
Ľudovít Ódor
Thank you, chair. And on behalf of Gilboye, I would like to thank the rapporteur and his team for their work on this draft report. And this report is an important opportunity to address key areas where a clear regulatory framework is still lacking. It should serve as a starting point for a broader political discussion on the future of digital assets and their potential contribution to the savings and investment union. That said, there remains clear room for improvement.
While the draft report and the first compromise amendments are broadly acceptable, they lack ambition and could be further strengthened. On substance, we support a strong language on know your customer requirements and transaction monitoring for crypto assets to address AML/CFT risks. However, we regret that equivalent standards are not applied to tokenized financial instruments. We welcome the clarification that tokenization does not alter the legal nature or the economic characteristics of financial instruments. At the same time, we regret that our proposal to further clarify crypto asset categories has not been taken on board.
Such clarification would help ensure consistent application across member states, particularly for hybrid products combining features of crypto assets and traditional financial instruments. Regarding stablecoins, while their core function is well captured, the report does not sufficiently recognize their potential, particularly as a complementary payment solution enabling faster and lower-cost cross-border transactions. This potential must, of course, be balanced against risks to financial stability and monetary sovereignty. We do, however, welcome the call for legal clarification on multi-issuance. We also support the need for international standards, as stronger global coordination in the regulation and supervision of digital assets is clearly essential, and the priority that seems to be shared across political groups.
I would like to thank the reporter once again, and Gilles is confident that in a constructive spirit and with a willingness to compromise, we can bring this work to a successful conclusion. Thank you very much.
Maria Ohisalo
Thank you, chair, dear colleagues, dear operator. Thank you very much for the draft report. I think this own initiative report comes at a crucial moment after the first challenging phase of implementing the markets in crypto-assets regulation and ahead of its review in '27. We have a real opportunity to shape the future of crypto regulation in Europe. Because if we fail to implement our EU crypto assets legislation properly, I think we risk handing over parts of our financial system to unaccountable actors from foreign stablecoin issuers to big tech giants like Meta and Amazon.
And this is not just a question about market stability. It is a question of democratic control over money in Europe. And the green CFA amendments focus on four key priorities. First, enforcement of the existing framework. While MICCA is a major step forward, there are clear gaps in the implementation.
We need stronger action from the commission and supervisory authorities to ensure the rules are properly enforced. This includes tackling circumvention by non-EU actors, establishing a functional blacklist of noncompliant entities, and addressing persistent anti-money laundering risks, especially in stablecoins. Second, stablecoin multi-issuance is a critical and unresolved issue. The commission has not addressed it adequately, despite clear risks to financial stability and EU sovereignty. Multi-issuance schemes with third countries are not regulated under MICA as it stands.
And from a precautionary perspective, they should not be authorized or should be suspended until a proper regulatory framework is in place. And third, we must recognize that the digital euro is a key part of Europe's response to the risks posed by private digital currencies and support parliament's efforts in this direction. And fourth, regulatory gaps and the future MiCR review. This report should clearly identify what needs to be addressed in the upcoming review to ensure the framework is comprehensive and really fit for purpose. And I'm looking forward to constructive and good cooperation with the other political groups here.
Thank you.
Jussi Saramo
Thank you, Mr. Chair. I would like to thank the Raboteau and his team for the good work on the draft report. Considering how rapidly things are moving at the moment in the world of crypto assets, this is indeed a very important report. We should be very cautious about making bold claims on the potential of crypto and other digital assets. Unfortunately, cryptos function primarily as a tool for speculation, in addition to facilitating various forms of crime from money laundering to terrorism financing and sanctions evasion.
With regard to stablecoins, the business model serves the interests of issuers who seek to maximize their issuance of coins and generate revenue from interest-bearing assets. Furthermore, stablecoins are increasingly being used as a means to advance geopolitical interests and undermine the European monetary and fiscal systems. And while there may be genuine use case scenarios for decentralization and tokenization, we must ensure that public central bank money remains the backbone of the financial system. So we have, therefore, tabled amendments that address these concerns, but negotiations already started in a very good atmosphere, and then I'm sure that we will have very good results. Thank you.
Damian Boeselager
Is there any interest in Catch the Eye on this important matter? Then I would give no, it doesn't seem to be the case. Then I would give the chance to the operator to conclude as long as you like.
thank.
Johan Van Overtveldt
Thank you all for your comments. We've duly taken note. And maybe a few words on the way forward. There will be a technical meeting next week, Wednesday. And we will make sure that the new compromises that we are working on right now, amongst others on the basis of what has been said here this afternoon, will be ready for all of you largely in time.
Thank you. Thank you. The vote.
Damian Boeselager
In Econ, this file will be scheduled on Tuesday, June 23, 2026. And now we can come to the next point on the agenda, which is the draft opinion on the regulation establishing the European fund for economic, social, and territorial cohesion, agriculture, and rural Fisheries and Maritime Prosperity and Security for the period of 2020 to 2034, or in short, the NRPP regulation by the rapporteur, Mr. Brahler, and the consideration of amendments. This file is one of the most important elements of the MFF because it marks two-thirds of it, roughly. And Econ has been entrusted to provide an opinion to the three leading committees, Bud, Agri, and Reg.
A total of 278 amendments have been tabled, some of them by me. Among other aspects, the opinion and the amendments focus on the governance of the national reform and performance plans, the framework for assessment of those plans, the macroeconomic conditionality, and the role of the European Parliament. And I would now give the floor to Mister Barjada for six minutes.
Thomas Bajada
Thank you. Dear colleagues, we are at an important crossroads that will define the upcoming seven years of the union about what kind of union we actually want, what our priorities are, and hence, what our union should invest in. What our committee has in front of it is an opportunity to establish the governance, the economic governance priorities for the upcoming multi-annual financial framework, something which I am seeking to focus on in our opinion, especially on aspects related to the economic design of our member states. Although this, dear colleagues, I think we must remain vigilant. While most of us support a higher standard of targeted EU-level investment accompanied, where relevant, by socially justified reforms, caution must be exerted regarding the degree of conditionality we may wish to impose.
Firstly, the design of national plans and the relationship to country-specific recommendations within the European semester process. And secondly, the disbursement of funding based on compliance with macroeconomic conditionality rules. I recognize that the commission is seeking ways to enforce national reforms it considers necessary, and to strengthen the application of EU fiscal rules. However, the commission's proposed link between the design of national plans and CSRs requires clarity and refinement. The commission's proposal is not sufficiently clear on how the acceptance of nationally designed plans would depend on a member state's implementation of the CSRs.
Additionally, I remain critical of the undemocratic nature of the commission's establishment and monitoring of the semester process, and linking this to one of the most important instruments of our union for our people, our communities, and our regions creates several concerns. To that end, in my draft report, I have proposed strengthening the role of local stakeholders and regions at all stages of the process, including in deciding on which challenges need to be addressed and which CSRs should be taken into account in the NRPPs. Additionally, I introduced a chapter on the assessment of the plans, seeking to provide clearer direction on how the commission should structure its evaluation. From the amendments they built and the discussions held with shadows, it is clear that this is one of the most politically sensitive parts of our opinion. But I am convinced a compromise is possible, and as rapporteur, I believe that CSRs should only affect NRPPs in those areas where EU funding is directly involved.
As I see it, not every euro of funding must be tied to a CSR. Yet, recommendations remain useful when relevant, proportionate, and within scope. That should be, I believe, our point of balance on this item. Let me now turn to another major issue, which is the suspension of payments based on macroeconomic conditionality and excessive deficit procedures, which I believe, as currently proposed, goes too far. I would like to note that EU fiscal rules already contain an appropriate system of fines.
The commission proposal goes beyond what exists in current legislation, and the commission proposal lacks needed safeguards and gives itself a high level of discretion regarding the proportionality of measures applied. From amendments and discussions across political groups, I sense that we all agree on one principle: final beneficiaries should not be penalized for matters for which they hold no responsibility or involvement. Yet, I perceive that the debate on whether to maintain such conditionality or remove it altogether remains a highly political debate. Looking at this from a distance and as rapporteur, I believe that we all must bridge differing priorities and concerns, and seek a balanced solution. One, where some form of conditionality remains, but where sufficient safeguards ensure that sanctions are appropriate, proportionate, do not lead to double punishing, and ultimately do not harm end beneficiaries and EU citizens.
And finally, a third political divisive point is the governance of the fund linked to the design, approval, and monitoring of the national plans. Some believe that a strong European Parliament involvement is the best way to reduce the perceived democratic deficit in the governance of this instrument. Some amendments include a parliament vote on each national plan through a delegated act. Others, me included, are not convinced that parliament has the competence to take such decisions. Through my draft opinion, I suggest giving a decisive role to national and regional actors, including regional and municipal authorities, economic and social partners, and those who directly represent the interests of beneficiaries.
I believe these actors should have a direct role in both the design and the monitoring of the plans. I will welcome colleagues' suggestions that regional actors should be allowed a direct role in the management of these funds. In conclusion, I am looking forward to holding constructive proposals from my fellow shadows towards building a balanced compromise that can first address the varying concerns, but at the same time, ensure a strong equal opinion that presents our advice on economic governance to be able to assist the main reporters on this new funding structure. Altogether, we are all here to deliver a funding structure that enhances the well-being of our citizens, families, businesses, and ultimately, the future of our union. Thank you.
Damian Boeselager
Thank you for the presentation of the report and also of the political issues, and then I will give the word to Isabel Benjamin for 3 minutes.
Isabel Benjumea Benjumea
Thank you, Chera. I'll be speaking in Spanish. The
European Commission tabled a new model for the MFF based on simplification of programs and the elimination of administrative barriers as well as unnecessary bureaucracy, all of this with a view to strengthening our competitive capacity. These are matters that the EPP supports and has defended for a long time now. However, we think the solution does not involve emitting the next-generation funds and national plans. Firstly, because that model has given rise to many problems, it hasn't made implementation more agile. It hasn't had the expected economic impact, and reforms that member states are being required to do haven't actually delivered the results expected.
Second point, there have been serious problems when it comes to transparency and traceability of the funds, as well as the real assessment of the impact of reforms. Thirdly, nationalizing EU programs and giving national governments full power is a serious mistake. We cannot nationalize European policies, nor can we lose sight of the strategic aims. We cannot lose EU programs and put their success at the behest of national governments. The ECA court of auditors has borne out these points in its reports, and we have therefore tabled a number of econ amendments to address these problems.
We've also included the need for delegated acts to defend parliament's position, as well as an obligation for national governments to consult with their national parliaments, and, of course, the importance of tying reforms to CSR's country-specific recommendations. Finally, we defend budgetary efficiency and simplification, but we must protect the European character of your EU money, and we need to ensure monitoring and assessment of resources used. I'd like to sincerely thank the rapporteur for the work done and for his willingness to cooperate. I think we are heading down the right avenue, and we hope to continue working together to incorporate these different matters in the final text. Thank you.
Damian Boeselager
Okay. Let me see if any of the other shadows are in the room. Sorry. Are you replacing any of the shadows? Okay.
Then please go ahead. Thank.
Jaroslava Pokorná Jermanová
you. I will continue to check. First of all, I wanted to say the proposal of the European Commission does not reflect its mandate, that is to create financing that would be transparent and fair and guarantee fair treatment of member states. In reality, it would be a blank check for the commission to pay, to issue funds based on subjective political criteria. The commission would be able to decide without any control, without any possibility to be recalled, and to decide which member states will receive funding.
This is unacceptable for patriots. The best solution would be for the commission to withdraw its proposal. We understand the grand coalition in this parliament would disagree, so I would like to present our priorities. Failure to meet horizontal conditions or country specific recommendations must not never lead to suspension or freezing or reduction of funding. At the same time, all member states have to be able to appeal the Commission's decision.
Different chapters and headings should be adopted independently in order to guarantee legal certainty, predictability, and continuity in EU funding. The chapter on social and climate plans should not become obligatory in national reform plans, as only seven member states have adopted such plans. The economic committee of the parliament unfortunately included more complex layers of requirements and actors and stakeholders, are difficult to implement in practice without dealing with problems in horizontal conditionality. And on the contrary, it gives the commission Dish further powers to demand information and measures from the member states. The last version would give more powers to the European Parliament, including access to the plans before they are adopted by the commission, which would politicize further the budget.
Therefore, patriots are unable to support this text unless our main priorities are reflected.
Damian Boeselager
Perfect. Then I'll pass the floor to myself as a shadow for the Greens Ifa Group. I have a couple of remarks that you're also already aware of, Thomas. The first one is that, of course, for our group, the horizontal principles matter most. So the question of strengthening the rule of law and the fundamental rights criteria is crucial.
Strengthening the rule of law criteria means including the topic of democracy because in the past, we have seen that there's also a democratic backstudying, only rule of law backstudying that's relevant for the disbursement of funds. And it also means that we should look at the mechanisms of unfreezing funds as we had negative experiences that we, even as a parliament, brought before the courts to look at. The second point is about the EP involvement, which you also mentioned to us. It's clear that we as parliament need to somehow ensure compliance of the member states and actually of the European Commission with what has been decided in co-decision. We have made some negative experiences in the RAF that some member states did not actually comply fully to the extent that we think is necessary.
And so to have a control mechanism of some sort, I think, would make sense, and maybe an en bloc vote on the submitted plans, at least at the beginning and at the midterm, could be a way forward. Third, we obviously support the involvement of regions within the constitutional limits. So we, I think, need to look at what is possible to prescribe in terms of a hard vote or not. And we definitely very much support that it is a binding requirement to the Conditio Ziniguanon to have regional involvement, but also potentially local and national level, as you have also mentioned. Clearly, I think for all the involvement also from stakeholders and within the partnership principle, it has to be made sure that this is not a box ticking exercise, but an actual involvement and that has real repercussions if it's not followed.
That is true for the drafting of the plan, but also for the implementation and planning of the implementation. Fourth, we very much believe in the necessity to clarify the structure of the commission's proposal. There's Article two, which we call the European objectives. Article three, specific objectives. Article 22 requirements.
We would say we should add an Article 22A with the assessment of these requirements by the European Commission, as we also had that in the RF. And we believe that an annex would be needed to clarify what is actually needed to fulfill these requirements in a qualitative way. This would give us, as parliament, the chance to actually decide which of the fulfilled criteria is and which could be potentially more softly assessed, as there is, I think, a very long list of specific criteria in Article 22, but also in Article three. The fifth point would be a cross-border target. We do think that European funds should contribute to the European connection, and maybe that's something that we could consider.
The sixth point would be to support your points that you made on macroeconomic conditionality. And maybe on CSRs, there are elements to be discussed. I think the overall link of reforms and investments is crucial and is part of the architecture, but how specifically that can contribute to the objectives of the NRPP is something to decide. I think there are some issues which we would lead to the lead committees, which also makes it easy for me because I'm also in one of the lead committees negotiating. But, I think, some issues are econ and some issues maybe for other committees, opinion giving and elite committees.
And there, we can maybe be, yeah, focusing on our topics. This would be the interventions. I don't know if there's anyone who would like to catch the eye of this important fund. That does not seem to be the case, so I give it back to you, Thomas.
Thomas Bajada
Thank you. I would like to thank you for the comments, and I have noted all the comments which you have already sent to me. And we are already having the first round of discussions with the shadows. We will have another round of discussions tomorrow, with the hope that we focus on the most decisive points in order to straighten out the discussion and the way forward in order to be able to close this opinion in time before the deadline for the opinion-giving committees. Thank you.
Damian Boeselager
Thank you so much. The vote is tentatively scheduled for June 3. And with this, we can suspend the meeting until 6PM when we have our votes. Thank you so much. Okay.
Please find your seats. Please slowly find your seat. Thank you very much. Okay. Dear colleagues, we will now pass to the vote.
We will start with a test vote. The green button means you would like parliament to be in Venice, and the red button means you would like parliament to be in Nice.
I open.
The vote. Open the vote.
Jonás Fernández
Sorry. Yes. Sorry, sir. We have one member who is coming. Yeah.
So I don't know if we can wait 2 minutes.
It's already three minutes after six. Nice.
Rihards Kols
try. Is it possible for technicians to increase the chair's audio? Otherwise, it's pretty hard to hear.
Damian Boeselager
Can the technicians try to increase the volume of the chair? Okay. As I understand, the first votes are not too controversial. I think it's good that we start. The first votes are the reconsultation of the committee on two payment files by Rokka Vote.
We begin with the payment services regulation by the rapporteur René Ripasi. I open the vote. I close the vote.
Wait. There are still votes. Okay.
Close the vote. Okay. This is adopted. 50 votes in favor. Two votes against, two abstentions.
Then we follow with the payment services directive by the rapporteur Morten Løkkegaard. I open the vote. I close the vote. This is also adopted. Congratulations.
50 votes in favor, 3 votes against, 5 abstentions. We will now pass on to agenda item 14 regarding the two votes on the co-decision files of the securitization package by the rapporteur, Ralf Siegretz. We will first vote on the report amending the Capital Requirements Regulation EU 575/2013 on prudential requirements for credit institutions as regards requirements for securitization exposures. We start with a block vote on amendments 54, 55, and 56 proposing to reject the commission's proposal. This is a final vote in the event that this proposal is adopted.
I will therefore take the vote by roll call according to rule 22.4.3. Please note that these votes will not be recorded if the rejection is not adopted. I open the vote. I close the vote. This is rejected.
So the proposal to reject the commission proposal was rejected. We will now proceed with the actual voting list. Compromise a, who's in favor? Who's against? Who abstains?
Adopted. Compromise B, who's in favor? Who's against? Who abstains? Adopted.
Compromise C, who's in favor? Who's against? Who abstains? Adopted. Then we come to amendment 57.
Who's in favor? Citation 7a, amendment 57. Who is in favor? Who is against? Who abstains?
Adopted. Amendment 58, who is in favor? Who is against? Who abstains? Adopted.
So we come to the final vote, in a roll call vote. The vote is open. The vote is closed. This is adopted with 33 votes, 25 votes against, and zero abstentions. And now we vote on the mandate to go into institutional negotiations.
Also by Rokovote, who's in favor? Oh, sorry. I open the vote. I close the vote. Also adopted.
Congratulations on the mandate. We will now continue with the vote on the second file, the report amending the securitization regulation EU 2017 2402 laying down a general framework for securitization and creating a specific framework for simple, transparent, and standardized securitization. We again start with a block vote on amendments 54, 55, 56, and 57 to propose rejecting the commission's proposal. This is again the final vote. The ROCO vote will not be recorded in case this is rejected.
I open the vote. I close the vote. The proposal to reject has been rejected, which is why we'll now go to the voting list. We start with compromise A. Who is in favor?
Who's against? Who abstains? Rejected. Sorry. Adopted.
Compromise B, who's in favor? Who's against? Who abstains? Adopted. Compromise c, who's in favor?
Who's against? Who abstains? Adopted. Compromise d, who is in favor? Who is against?
Who abstains? Adopted. Amendment 52, citation seven a, who is in favor? Who's against? Who abstains?
Adopted. 53, who's in favor? Who's against? Who abstains? Adopted.
We come to the final vote as a Rocker vote. I open the vote.
Close the vote.
Damian Boeselager
We close the vote. It's adopted. 33 in favor, 25 against, 1 abstention. We vote on the mandate. I open the vote.
I close the vote. The man that has also been adopted. Congratulations to the reporter. Thank you, colleagues.
No. Well, we continue with the vote.
And we continue with the votes. We now pass on to agenda item 15 regarding the vote on the regulation establishing the European Competitiveness Fund, the ECF, including the specific program for defense research and innovation activities by the rapporteur Danus Neuudova. We're going to proceed with the vote. We start with the proposal in amendment 93 to call on the ITRE committee to propose rejection of the Commission proposal. Again, this is a final vote in the event that this amendment is adopted.
I will therefore take this by Rokka vote, and please note again that the results will not be recorded. So this is on the rejection. I open the vote. I close the vote. The amendment to reject was not adopted.
We therefore move to the voting list with compromise A. Who's in favor? Who's against? Who abstains? Adopted.
Compromise B, who's in favor? Who's against? Who abstains? Adopted. Compromise C, who's in favor?
Who's against? Who abstains? Adopted. Compromise c, who is in favor? Who's against?
Who abstains? Adopted. Compromise, e, who's in favor? Who's against? Who abstains?
Adopted. The final vote will be by a roll call. I open the vote. I close the vote. It has been adopted.
We now pass to agenda item 16 regarding the vote on the econ opinion to the interim report on the EU-Switzerland agreement. Reporter is Markus Verber. We will now start with the vote on the compromise. Compromise a, who's in favor? Who's against?
Who abstains? Adopted. We open the final vote via roll-call. We close the vote. It is adopted with a broad majority.
Thank you so much, colleagues. The next Econ Committee meeting will take place in June. Thank you so much. The meeting is suspended.
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