Committee on Economic and Monetary Affairs Ordinary meeting
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ECON European Parliament
Follow its sittings
Jonás Fernández
Muchas gracias, chair. Hablaré en castellano. Y en primer lugar me gustaría felicitar y agradecer a la ponente la elaboración del primer informe, de este inicial draft report, que yo creo que es una buena base para iniciar las discusiones y las conversaciones en el seno de este comité. Quizá empezar por un pequeño apunte, porque a veces la historia se nos olvida, o no la historia, la historia muy cercana, tampoco me voy a poner muy, no me voy a ir muy atrás. Durante la negociación del paquete de CRR-CRD durante la última legislatura, la posición del Parlamento era una posición que habíamos acordado entre los principales grupos, y había algunas medidas dirigidas a mejorar el funcionamiento de la Unión Bancaria.
Esas medidas pasaban, por ejemplo, por aplicar el output floor al nivel consolidado o facilitar el uso de los waivers de capital y de liquidez en el conjunto de la Unión Bancaria. Y estas medidas fueron rechazadas por el Consejo. El Consejo no deseó ni quiso aprovechar la implementación de las últimas recomendaciones de Basilea para dar un impulso adicional a la Unión Bancaria. Y en virtud de ese rechazo por parte del Consejo, lo que acordamos con el Consejo es pedir a la Comisión, era pedir a la Comisión la elaboración de este informe, de esta comunicación que conocimos antes del verano. Quiero decir que la comunicación de la Comisión es el fruto de una cesión del Parlamento ante el Consejo en la medida en que nuestras propuestas para avanzar sobre la Banking Union no encontraban una mayoría suficiente entre los Estados miembros.
Y como ese es el inicio de la comunicación que conocimos y el inicio del paquete legislativo que previsiblemente conoceremos el próximo año y de alguna manera también el inicio de la reflexión del informe que la diputada Benjumea nos ha presentado, no puede engañar a nadie o no puedo, en fin, creo que sería evidente constatar que la posición de mi grupo durante la negociación de este informe será la misma que la que defendimos en aquel trílogo y será la misma de la que defenderemos cuando tengamos una propuesta legislativa, que es avanzar en la Banking Union. En este ámbito, la ponente ha introducido algunas reflexiones que valoro positivamente y que tendremos ocasión de detallar en enmiendas que presentaremos y centraremos, como digo, nuestra aproximación en este asunto. Porque si queremos liberar capital, por ejemplo, tenemos capital atrapado dentro de las fronteras nacionales. Si queremos mejorar el funcionamiento de la liquidez, tenemos liquidez también atrapada entre los Estados miembros. Y detrás de estas capturas de capital y liquidez, podríamos decir, en nuestra opinión está la ausencia de un sistema de salvaguarda que permita que todos los supervisores estén razonablemente tranquilos con lo que las entidades bancarias hacen en sus determinadas jurisdicciones.
Y para dar esas garantías, creo que el debate sobre el EDIS, el debate sobre el seguro de depósitos, vuelve a estar en el centro de la discusión. Solo a través de un EDIS seremos capaces de garantizar unos niveles de seguridad para todos los supervisores, unos niveles también que permitirán liberar capital para fortalecer la competitividad y el crecimiento de la economía europea. Y por lo tanto, en estas líneas irán las enmiendas que presentaremos para reforzar el informe. El informe trata otros asuntos, al igual que la propia comunicación de la Comisión Europea, todos ellos interesantes y sujetos a discusión. Mi grupo estará en esos debates teniendo en cuenta también que como la comunicación es una, el informe también es uno que vamos a elaborar en este comité, pues confiamos también en que la propuesta de la Comisión sea también una.
Y con esto concluyo. Muchas gracias.
Thank you. Tomasz Kobin for PPE is not here, so Giovanni Crosetto for ECR.
Giovanni Crosetto
Thank you very much and thank you very much to Isabel Benjumea for your presentation. I think that the five priorities that you shared with us represent the crucial points that we have to face in this very important legislative review. So thank you very much. In particular, I very much welcome the emphasis that you place on proportionality and on the need to calibrate prudential and supervisory requirements to the size, business model, complexity and actual risk profile of each institution, as also highlighted in our position paper on banking competitiveness. I believe that this principle should be particularly relevant for small, non-complex and predominantly domestic banks, whose activities are fundamentally different from those of large, internationally active institutions.
The fact that a bank does not operate across borders should be a meaningful element when assessing its regulatory and supervisory treatment, rather than simply applying the same framework irrespective of its actual activities and risk profile. This is also important when we look at the completion of the banking union. Completing all three pillars remains an important objective, but this should not mean that we lose sight of proportionality and of the diversity of the European banking sector. In this context, I believe we should evaluate revisiting the discussion on the third pillar, including EDIS, and consider whether its design can appropriately reflect the different characteristics and risk profile of smaller, non-complex and predominantly domestic institutions.
Finally, I believe that competitiveness should not be considered only as an objective for banks themselves. It should also become a principle guiding the regulatory and supervisory architecture. European and national supervisory authorities should take into account how their requirements, controls and priority affect banks' capacity to invest, lend and compete. Financial stability must remain paramount, but it should go hand in hand with proportionality, efficiency and competitiveness. So, if we want European banks to become more competitive, we should also ensure that the regulatory and supervisory environment in which they operate is itself competitive, proportionate and fit for purpose.
So, thanks again and thanks also for your approach. Thank you.
Gilles, je m'exprimerai en français. Apparemment, il y a un problème de catch-up qui n'est pas encore fait. Donc dans ce cas-là, je vous donnerai la parole en catch-up juste après, à la fin des autres.
OK, mais je ne suis pas shadow, je voudrais juste intervenir au nom du groupe.
Merci. Alors ce sera aussi en catch-up.
Entendu, Madame la Présidente.
Merci de votre compréhension. Mr. Som for the Left.
Jussi Saramo
Thank you, Madam Chair, and dear rapporteur, colleagues. Thank you very much for the draft report. We share some of the analysis in the draft. The regulatory framework governing the capital requirements of EU banks is indeed complex and sometimes too multi-layered. Simplification, however, should not lead to lowering overall capital requirements or deleting the tools that national competent authorities have at their disposal to address country-specific risks.
There is no proof that higher capital requirements would lead to lower bank lending. On the contrary, only banks that are well-capitalized can support the real economy. So room for simplification, however, it exists. And Basel III rules have been a small step in the right direction, but they still underestimate risk and allow banks to use their own internal models to calculate their liabilities. This weakens transparency, creates complexity and might lead to reckless behavior.
So, we think that bank regulation can indeed be simplified. We are, however, concerned that the communication put forward by the Commission will lead to amendments that, under the guise of competitiveness, only serve shareholder value and weaken the resilience of banks in an increasingly turbulent world. We know that European banks, they are making very high profit.
And we have to find ways that we can really give more tools to the real economy and not just making the profits of the bank owners bigger. Thank you.
Thank you. Je donne maintenant la parole à Monsieur Gilles Boyer pour Renew.
Gilles Boyer
Oui, merci Madame la Présidente. Je voudrais remercier notre rapporteur pour son projet de rapport et je voudrais aussi saluer la communication ambitieuse de la Commission que la commissaire Albuquerque nous a présentée l'autre jour. On constate que les débats que nous avons eus ensemble sur la mise en œuvre du paquet Bâle III restent actuels. D'abord, trouver le bon équilibre entre la stabilité de notre système financier auquel nous sommes tous attachés, tout en préservant la compétitivité des banques européennes face à leurs compétiteurs, en particulier américains et asiatiques. La tentation est toujours de nous regarder, mais il faut, je crois, aussi regarder ce qui se passe autour de nous, nous adapter à une situation mouvante et changeante.
Et c'est ce que nous essayons de faire dans les réglementations bancaires. Évidemment, la nécessité de compléter l'Union bancaire a été maintes fois réaffirmée. Et je crois qu'à juste raison, nous rappelons tous la nécessité d'adresser, comme on dit en mauvais français, la question home-host qui a tendance à monopoliser nos discussions intérieures et d'ailleurs à nous affaiblir aussi vis-à-vis de nos compétiteurs. Nous aurons l'année prochaine un travail législatif à mener. Et je crois que ce rapport doit montrer la voie, ouvrir la voie vers une simplification de nos obligations en capital, une simplification de nos obligations de reporting pour permettre à nos banques de rester évidemment bien capitalisées, de sécuriser ce qui doit l'être, mais d'assurer aussi une efficacité et d'assurer aux citoyens européens un bon accès au crédit.
Je vous remercie.
Thank you. And I give now the floor back to the rapporteur.
Isabel Benjumea Benjumea
Thank you, Chair. I will continue in Spanish. Muchísimas gracias a los señores Fernández, Crosetto, Saramo y Boyer por sus muy interesantes aportaciones. Tal y como decía al inicio de mi intervención, tenemos una oportunidad este Parlamento de trabajar en un texto que sea un texto ambicioso, que consiga un amplio respaldo y que de alguna manera marque ese pistoletazo de salida y ese marcar un poco el terreno de cara a las actuaciones de la Comisión, las actuaciones legislativas de la Comisión que van a ocurrir en el año 27. De todo lo que han dicho los colegas, a los que les invito a presentar sus enmiendas y que, como he dicho antes, pues tengo mucho interés en trabajar con ellos y con los otros grupos políticos que no han podido participar en el debate, decir que si algo ha caracterizado a este Parlamento es en su firme defensa de la Unión Bancaria, de ejercer una labor de presión fuerte sobre la Comisión y sobre el Consejo, que no debemos dejar fuera fuera del espectro al Consejo.
Hay muchos avances que no se están consiguiendo precisamente porque están paralizados en el Consejo y, por lo tanto, este informe puede servir de nuevo para ejercer esa presión que creo fundamental. Y en relación a los temas concretos, yo creo que el diagnóstico de la situación del sector bancario lo tenemos claro.
Las recetas para mejorarlo, para hacerlo más competitivo, pero sobre todo para servir a la economía europea, a nuestras empresas, a nuestros emprendedores y a la ciudadanía en general, es las distintas recetas en las que tenemos que trabajar. Estoy convencida de que con el equipo negociador seremos capaces de llegar a un acuerdo que espero que sea lo más amplio posible en las próximas semanas que tenemos por delante de negociación y animar a que presenten esas enmiendas para que podamos trabajar de la manera más constructiva posible. Muchísimas gracias a todos.
Aurore Lalucq
Thank you so much to all of you and the deadline for amendment is October 7 and the voting day is scheduled for November 10 ahead of the submission by the Commission of the upcoming legislative proposal and was the purpose of this initiative report. So we are confident that the Parliament's position will be taken into consideration by the European Commission. Thank you so much to all of you.
Bonjour à toutes et à tous. Je m'exprime en français. Je voudrais aujourd'hui souhaiter la bienvenue aux présidents et aux présidentes des trois autorités européennes de surveillance au sein de la commission des affaires économiques et monétaires du Parlement. Vous êtes invités aujourd'hui à rendre compte de vos activités et à partager l'expérience de vos autorités respectives au cours de l'année écoulée. En particulier, nous importe de vous entendre sur votre rôle dans l'élaboration et la coordination des normes techniques européennes et nous souhaitons également connaître vos priorités organisationnelles pour les douze prochains mois.
Madame Verena Ross pourra également rendre compte de la surveillance tournante du comité des trois agences européennes de surveillance qu'elle occupe et expliquer en outre les modalités qu'elle entend mettre en œuvre en tant que deuxième vice-présidente du Comité européen du risque systémique.
Les députés membres de la commission des affaires économiques et monétaires ont reçu le 23 septembre 2026 les déclarations écrites sur les principales activités des autorités au cours de la dernière année fournies par les présidents et présidentes des trois autorités. Je voudrais peut-être en profiter pour vous dire un mot sur les changements récents au sein de nos ESAS car c'est un départ et une arrivée à laquelle nous assistons aujourd'hui avec cette audition jointe. Je souhaite donc la bienvenue à Monsieur Michaud, cher François-Louis, nous vous avons reçu un certain nombre de fois dans cette commission dans vos précédentes fonctions et nous avons à cœur de poursuivre l'excellente coopération que nous avons avec l'EBA notamment dans un contexte de réformes très attendues dans l'année à venir et on vient d'en débattre à l'instant et qui seront particulièrement scrutées et discutées par les députés de cette commission. Mais ce sont aussi des remerciements chaleureux que je tiens à formuler ici auprès de Madame Ross, chère Verena, pour le travail accompli au sein de l'ESMA mais même précédemment au sein de vos précédentes fonctions parce que c'est tout un parcours dévoué au sein de la réglementation, de la régulation et de la supervision dans le domaine bancaire et financier. Et il y a très peu d'experts aussi investis que vous sur le sujet depuis autant d'années.
Donc je voudrais vous remercier et je crois qu'on peut vous remercier tous infiniment. Et en plus, je pense que vous pouvez être fière de la façon dont vous laissez l'ESMA pour de nouvelles aventures parce qu'on n'a jamais autant parlé de l'ESMA que ces dernières années et que ces derniers mois et il y a encore de nouvelles perspectives dans le cadre de l'Union pour l'épargne et l'investissement pour cette belle institution que vous avez brillamment représentée et brillamment portée parfois dans des conditions pas forcément évidentes parce qu'on vous en demande de plus en plus, pas forcément avec les moyens des fois qui suivent. Et je crois que vous êtes un peu tous les trois dans le même cas, j'en profite pour passer des messages alors qu'on a besoin de vous notamment pour mettre en œuvre la Saving and Investment Union. Donc au nom de la commission des affaires économiques et monétaires et à titre personnel aussi, je voudrais vous remercier infiniment parce que ça a été une collaboration très efficace et en plus de ça très agréable. Voilà, il faut le souligner.
Donc merci infiniment. Et maintenant je vais reprendre le cours de cette audition pour vous dire que vous avez dix minutes pour un opening statement et puis ensuite je passerai évidemment la parole à Monsieur Michaud et à Petra Hielkema au fond qui auront tous les deux cinq minutes. Et je suis ravie de les avoir ici avec nous et je voudrais tous les trois les remercier infiniment pour la très bonne coopération que nous avons. Et nous avons notamment pu aller à l'EIOPA la semaine passée avec la commission des affaires économiques et monétaires et ça a été vraiment une discussion extrêmement constructive et extrêmement utile. Je voudrais remercier Petra pour cet échange.
Voilà, sans plus tarder, chère Verena Ross, je vous donne la parole.
Verena Ross
Merci beaucoup pour les mots très chaleureux et beaucoup appréciés. Honorable Chair, dear members of the European Parliament. I will start first speaking to you today in my capacity as Chair of the Joint Committee of the European Supervisory Authorities. Alongside Petra and François-Louis, I present to you the main activities and achievements of the Joint Committee since our last hearing. Allow me to begin by recalling the important role that the Joint Committee plays within the European system of financial supervision.
As principal forum for cross-sectoral cooperation between EBA, EIOPA and ESMA, it helps ensure that supervisory authorities work together in a consistent and coordinated manner across banking, insurance and securities markets. Over the years, this role has become increasingly significant as financial markets are more interconnected than ever before. Effective cross-sectoral cooperation is no longer simple a simple matter of good coordination. It has become essential for safeguarding financial stability, protecting investors and consumers and supporting a stronger, more integrated and competitive European financial system. Today, I would like to focus on three main areas where the Joint Committee has concentrated its efforts over the past year.
Let me begin with digital operational resilience. Over the last few years, cyber threats, operational disruptions have become much more frequent, more sophisticated and increasingly capable of affecting multiple sectors simultaneously. As financial institutions become ever more dependent on digital infrastructure and third-party technology providers, operational resistance has become one of the defining challenges of today's financial supervision. Against this background, the entry into application of DORA marked an important milestone for European financial markets. A first major step was reached with the designation of the critical ICT third-party providers under DORA, marking the beginning of direct European oversight of those providers whose services are critical to the financial sector in the EU.
The Joint Committee also published this year its first report on major ICT-related incidents under DORA, allowing supervisory authorities to identify common vulnerabilities, detect emerging trends and strengthen the overall resilience of the financial system. These achievements represent an important step forward, but they also remind us that digital resilience is not simply a supervisory objective, it is increasingly become a question of European sovereign autonomy, strategic autonomy. Allow me now to turn to a second very important priority for the Joint Committee: simplifying the regulatory framework. Achieving the balance between financial stability and European competitiveness requires a framework that remains robust while avoiding unnecessary complexity and administrative burdens. The Joint Committee has played an important coordination role as EBA, EIOPA and ESMA have made important efforts to advance on simplification and burden reduction, and I'm sure my fellow colleagues will speak more about that.
Simplification and burden reduction also drive our approach to some of the ongoing Joint Committee work, such as delivering mandates under PRIIPs. My third point is on consumer protection, which has remained at the heart of the Joint Committee's work. Digital innovation, including artificial intelligence, are creating significant opportunities for consumers, but it is also exposing them to increasingly sophisticated forms of fraud, particularly those involving crypto-assets. Over the past year, the ESAs have continued to strengthen their joint efforts to improve financial literacy and raise public awareness. We published easy-to-understand educational fact sheets for consumers on fraud and scams involving AI and crypto.
Building consumer confidence is essential. Citizens will only make greater use of digital financial services and participate more actively in European capital markets if they trust that these markets are transparent, well-supervised and offer a high level of protection. The ESAs held their 12th Joint ESAs Consumer Protection Day in Riga, in Estonia, in November last year. The event attracted more than 350 attendees and included a speech by the chair of the committee here, Irene Tinagli.
Beyond the three priorities, the Joint Committee continues to deliver on a broad range of cross-sectoral mandates that remain essential for the effective functioning of the European supervisory framework. These include work under PRIIPs, Single Access Point, securitisation, sustainable finance, financial conglomerates, and we obviously maintain close collaboration with other European authorities. Honourable members, allow me to conclude by looking both at what we have achieved and the challenges ahead. The work of the Joint Committee continues to demonstrate the value of close collaboration between the European supervisory authorities in addressing increasingly complex cross-sectoral risks, whether strengthening digital operational resilience, promoting supervisory convergence, enhancing consumer protection or contributing to a more simple and proportionate regulatory framework. Our common objective remains the same: to reinforce resilience, integrity and competitiveness of European financial markets.
We will continue to do all of this and look forward to continue working with all of you. I want to conclude by emphasizing how much we value the close and constructive dialogue with this committee. We look forward to continuing our cooperation. Thank you very much and happy to answer any questions with my colleagues later. And let me now turn to the ESMA part, where I again want to thank you very much for allowing me to present today an overview of ESMA's work over the last year.
It has been, it is going to be my final ECON hearing as chair of ESMA, so it also provides an occasion to take a step back and reflect not only on the past year, but more broadly on the progress made in European capital markets over my tenure and the challenges that still lie ahead. One thing that has not changed since last year is the fact that we meet again at a time of considerable uncertainty and vulnerability. Geopolitical tensions remain elevated, trade disputes continue to generate uncertainty, technological changes accelerating. All this reminds us just how quickly risks can materialize and how interconnected our economies and markets have become. These developments inevitably affect also the securities markets.
Against this backdrop, one conclusion is clear: the European Union needs deep, efficient and attractive capital markets now more than ever. Capital markets are not an objective in themselves, they are the means to financing innovation, supporting growth, strengthening resilience and providing opportunities for European citizens to participate in the economy's future success. Over the past year, ESMA has focused many of its efforts on advancing the EU capital markets. We have continued implementation of important reforms that were agreed by the co-legislators, helping to translate legislative ambition into tangible improvements for market participants and investors. Significant progress has been made on establishment of consolidated tapes, which improve market transparency.
We have advanced on implementation of the European Single Access Point, which will make information about European companies easier to find and compare. We have continued preparations for the move to T+1 settlement, an important step towards enhancing efficiency and the international competitiveness of the EU markets. At the same time, we've delivered extensive work on EMIR 3 and supported the implementation of the Listing Act, alongside a broad range of supervisory and single rulebook activities across the markets under ESMA's remit. Beyond regulation, our continued efforts both on supervision need to be mentioned, both in the areas where we supervise directly and where we promote supervisory convergence amongst national authorities. We have helped to strengthen trust and consistency.
Collectively, all this work is helping to reduce fragmentation, improve efficiency of our markets and strengthen the attractiveness of the EU. While advancing on our common objectives, we are conscious that existing frameworks need to remain proportionate and effective. We have heard loud and clear market participants' calls to reduce burden created by overlapping requirements, duplicative reporting obligations and unnecessary complexity. Over the past year, we've launched a number of flagship simplification initiatives. We published recommendations on streamlining transaction reporting frameworks, advanced proposals to simplify fund reporting requirements, examined how the retail investor journey can be made more straightforward and effective.
We've also adopted principles on risk-based supervision designed to help ensure that supervisory attention is focused where the risks are greatest, avoiding unnecessary burdens elsewhere, making a much more proportionate approach to our supervision. Of course, simplification should not mean weaker standards. Investor protection, market integrity and financial stability remain non-negotiable. But regulation must achieve these objectives in the most efficient, effective and proportionate manner possible. Innovation is transforming our financial markets.
Digital technologies, artificial intelligence and tokenization are creating new opportunities, new business models and new risks. The past year marked important progress in our work on crypto assets. Following the entry into force of MiCA, the focus has moved from rule-making towards supervision and convergence. Our objective is straightforward. We want innovation to flourish within a framework that provides clarity for firms, safeguards for investors and confidence in the markets.
The same principle applies more broadly. New technologies have enormous potential to improve efficiency and expand access to financial services. But innovation can succeed where there is trust and where there is the possibility to scale. Legal clarity, effective regulation and supervision are therefore not obstacles to innovation, but they're essential enablers of sustainable innovation. When ESMA was established 15 years ago, it was much smaller than and had much more limited responsibilities.
Since then, European capital markets have experienced profound change. We have navigated the sovereign debt crisis, Brexit, the pandemic, all periods of significant market stress, and more recently, a rapidly changing geopolitical and technological landscape. Throughout this period, ESMA has continued to evolve and mature. Our responsibilities have expanded, our experience has deepened and our role within the European supervisory framework has grown. This evolution has only been possible because of the confidence that co-legislators, and this committee in particular, have placed in ESMA over the years.
In return, we've worked hard to maintain that trust. Today, ESMA supervises an increasing number of entities directly at EU level and plays a central role in promoting consistent supervision across the Union. This requires trust and the close partnership we've developed with national authorities around the ESMA board. ESMA's growing role reflects a broader reality. Capital markets have become more integrated, more digital and more cross-border, and as our markets evolve, so must our supervision of their activity.
This is why the ongoing discussions on the market integration and supervision package are so important. The EU needs deeper and more liquid markets.
The EU needs more investment opportunities for citizens. The EU needs stronger channels through which savings can support growth, innovation, and competitiveness. The discussions currently underway provide an important opportunity to advance those objectives, and ESMA is ready, once again, to earn the confidence placed in it and deliver effectively and efficiently on any new responsibilities you might decide to entrust to us. Dear Chair, dear ECON members, throughout my tenure, I've been convinced that the EU's economic future depends, at least in part, on our ability to build truly integrated and well-functioning capital markets. Progress has been made.
Foundations are certainly stronger than they were 15 years ago, but the task is by no means complete. The challenge now is to maintain momentum and push forward with ambition and urgency, to continue removing unnecessary barriers and to ensure that Europe's regulatory and supervisory framework supports the increasingly integrated market we seek to build. As always, ESMA, and I'm sure its new chair, will stand ready to support the European Parliament and contribute our expertise to the important work that lies ahead. Thank you very much.
Well, thank you so much, Verena, for all that you've made and for this close cooperation with the ECON Committee. And ESMA has a strong role, a key role to play within the ASU, and we will discuss it, of course, in this committee and during the trilogues. So thank you so much. I will now give the floor to François-Louis Michaud.
François-Louis Michaud
Thank you very much, Madam Chair, and thank you very much, Member of European Parliament. I'm very, of course, happy to be here. That's my first hearing, as you mentioned, in my new role. So I'm very trustful that I will be able to manage in the excellent steps from my predecessors. But I'm also very, you know, of course, very, very happy and would like to thank you again for your trust in that new role.
And of course, I was very lucky because I started with two excellent colleagues here, and that was a perfect, perfect start. I want to go first with a simple message, which is that EBA is there to support you as co-legislators and is very eager to continue the good cooperation and the support that it's been giving. But we'd like also to even increase the support and get into very technical discussions and support your activities as much as we can. You mentioned our resources. Our organization is in good shape, and we're very happy because all the audits and so on have yielded good results.
But then we're also a bit under pressure with the new mandates we're getting, which we try to deliver in the best possible way. But still, we manage to redeploy and make the best possible use of those resources in order to also fit with the evolving priorities of the Parliament and the co-legislators. So that's important. We've been created as a small, agile organization, and we also approach the new context with that spirit. When we look at what the EBA has been doing over the past 12 years, 12 months, sorry, and the next 12 months, I think there will be a lot of continuity because we've been basically working a lot on the simplification and competitiveness topics.
We've also continued to build up the DORA and MiCA frameworks and also onboarding some new tasks like the MiCA, the small role we get, sorry, in the context of EMIR 3 on top of MiCA and DORA. And we have also, of course, tried to continue expanding our role as a service provider to the community of authorities. And we gather a lot of data. We are a data hub for banking activities, and we have now developed a number of partnerships with other organizations, be it European ones or national ones, so that we can also serve them, develop analytics for them, and be at their service so that we full, you know, reap efficiencies and we leverage on the wealth of data we have.
The resilient banking sector that we have now after 10 to 15 years of reforms is of course a plus. It is in a very good shape. We've published our risk dashboard last week and it shows again that capital buffers have continued to increase, liquidity is still very abundant, profits are there, meaning that many banks, especially the big ones, they've closed the gap with their US or UK competitors in a number of domains. The price-to-book valuations are much higher now, the differential is narrower, there's also the equity prices have also been progressing, etc. So by many accounts, the banking sector looks good and is able to withstand the shocks that may lie ahead of us in a world which is not any safer.
And that's important. On the other hand, we are asking ourselves, is that going to continue or how long can they basically continue on that good path? And when we look at that, we see that there are a number of headwinds that need of course to be analyzed and to be of course dealt with. And one of them is fragmentation, and that was mentioned before. The single market remains pretty fragmented, which is a problem for their retail activities because they are mostly bound within their national borders and they cannot necessarily have the scale they need to invest in new technologies or to attract the best possible talents they would need to continue operating in the best possible manner.
When we look at wholesale activities, the situation is also pretty similar. There is a huge competition and banks are not even providing the bulk of the financing now in the EU to non-financial corporations. It's coming mostly from non-banks. And there, the part that's coming from banks is also not only coming from EU banks, but also coming from US or UK competitors. So I think we need to take that into account to see what's needed for banks to operate in the best possible manner.
And that's why we've been very busy trying to see what are the frictions that can be removed in the current single rulebook. And we've made a number of proposals earlier this year. We've deprioritized 15% of the mandates, saying that we'd like to rediscuss that with the co-legislators because we believe that they are not totally urgent or necessary or providing the supervisory value that was envisaged. Secondly, we've also proposed to slash reporting by 15%. And in June, we've also proposed two things: first, to simplify the capital stack for banks in general, and also to simplify the stress test that we will be running in 27 for the EU 27 as a whole.
So I think with those things that we continue and that we will pursue next year, I think that should help and support addressing a number of the frictions which are at the moment faced in the single market. And we hope that this will free up the resources that are needed to finance all the transitions that the EU is faced with. And on that, of course, we've been looking at the Commission's proposal with a lot of interest because I think they are touching on every single important topic. And we hope that we can support in the best possible manner and also support you in your efforts in dealing with those challenges. And I'll stop at that.
Thank you.
Thank you so much. And now I will give the floor to Petra Hielkema for EIOPA. And thank you again for the mission that we had last week. It was really, as we told you already, a great time for us to have this possibility to exchange so many things, by the way, with you and your team. So thank you again.
Petra HIELKEMA
Yes, thank you, Madam Chair. And thank you to all who made the effort to travel to Frankfurt and visit us. That was a good dialogue, but we also just appreciate the fact that you made the effort to visit us with a delegation from the ECON Committee. It's also a pleasure to be here today. Thank you for the invitation.
It's my first time in my second mandate, and I'm also very happy that in that capacity I can continue the dialogue with you all.
And let me say that we really see that the insurance and pension sector is having a role in the savings and investment union, strengthening the resilience of our society. It's more prominent than it was when I started in my first mandate. And they can do so. The industry in EU is robust, with good solvency ratios, with good capital buffers. So that is, I think, a good starting point.
Together, insurers and pension funds hold 13.7 trillion assets under management. And with that, they are not only helping address resilience and protect resilience in EU, but they are also long-term investors. 92% of EU households hold at least one insurance policy. Often one motor insurance is mandatory, but still they have insurance, and occupational pensions institutions cover 76 million people. But behind this figure is much more.
Behind this figure is people that really expect that they are protected and that they have financial security throughout their life. They rely on that, and so do businesses. And that really matters in a European Union where people are aging. Public pensions for sure will always remain the cornerstone of retirement and redistribution and with that equity, but demographic changes and pressure on public finances make supplementary pensions increasingly more important. They can improve retirement outcomes and they can support long-term investment.
EIOPA therefore really welcomes the SIUF focus on supplementary pensions, and the Commission's proposal on IORP II and PEPP build on our advice. And I'm very much encouraged by the Parliament's draft reports that are moving in a similar direction in many aspects. But financial security is not just about retirement. And this summer again showed the scale of climate risk impacting our citizens and businesses. Yet only one quarter of natural catastrophe losses is currently insured.
And that means that the rest of the cost falls on households, on businesses, and on public budgets. So EIOPA has explored ways to see if we can share costs better by looking into innovative data sources, for example Copernicus Earth observation data to improve risk assessment, increase awareness, and help prevention among citizens and businesses. But this is not a challenge that supervisors can address on their own. Closing protection gaps and particularly the NatCat gap involves a whole ecosystem: consumers, builders, insurers, reinsurers, financial markets, city councils, national governments, and finally maybe an EU layer. They need to act in concert to strengthen mitigation and adaptation, to reduce moral hazard, and ultimately to increase protection.
Now while we were doing that, we also continued of course to monitor the other risks that can impact, including cyber risk and healthcare. For that comes right after an aging society and pensions, you have also healthcare costs. But we also hear and see that there is a younger generation that is suffering more from mental stress and with that needs also care in that area. So across all these areas, one objective underpins our work: that citizens must be able to rely on the promise that was made to them. And that means that the product that they bought needs to deliver value and needs to help companies be resilient and protection for citizens.
So we revised our value for money benchmarks, we continued our mystery shopping and we prepared for the retail investment strategy so that citizens can invest with confidence in products that are transparent on what they promise to deliver. And we also continued our work on the prudential framework, delivering on all the legal instruments that were necessary under Solvency II and the IDD. Now, with Solvency II and IDD in place, there is a very robust starting point. However, a prudential framework on its own cannot eliminate failure altogether. And after all, failure is also part of a healthy and innovative economy.
So what matters most is that when failure occurs, it's managed in an orderly way and that policyholders are adequately protected. And it is in this context that we also provided an advice on insurance guarantee schemes to the Commission, aiming at a common minimum level of protection while respecting national specificities. Now, while we did all that, simplification was a key priority. Among other things, we have shortened guidelines, we have streamlined and reduced reporting obligations, we've strengthened proportionality and we have reduced the frequency of stress testing. But simplification cannot stop there.
I would say that much of what we have done so far was low-hanging fruit. Important steps still need to be made. So we're deepening our dialogue with supervisors and the industry to further identify unnecessary complexity and practical solutions that do not necessarily require maybe a legislative change, but that are needed and will not weaken financial stability or policyholder protection. And finally, EIOPA also supports the EU competitiveness agenda. We contribute to it through regulation and supervision that is predictable, proportionate and fit for purpose, backed up by robust impact assessments.
Could we step up there? Yes. Are we doing that for sure? Do we need to do more? I think so, and we will.
So in the international arena, we also continue to bring a strong EU voice to the discussions at the international table, working with other authorities outside of EU to promote consistent global standard and a level playing field for our European insurers. Now let me conclude with a brief perspective on supervision. Earlier this year, we published our strategy. It builds on ensuring financial stability, ensuring societal resilience, and do that in a smart and simple way while operating in unity. And that means that EIOPA and national supervisors need to work more closely together, sharing info earlier, addressing common challenges more swiftly and effectively.
But operating in unity alone is not always enough. Cross-border businesses continue to see differences in supervisory practices, powers and capacity, and that in itself, that fragmentation, has a cost. So we need to consider greater harmonization and how we can do that, and we need to also ask where a centralized approach may be needed. These questions are a part of a wider debate on the single market and the SIU, and we stand ready to contribute to that with our experience and expertise for a stronger and more resilient Europe. So Madam Chair, I thank you very much for your scrutiny, I very much thank you for your engagement, and I look forward to continuing our dialogue today and in my second term.
Thank you.
Thank you, Petra. And now Q&A session, I give the floor to Markus Ferber for EPP for one minute and a half.
Markus Ferber
Ja, vielen Dank. Zunächst möchte ich mich ganz herzlich bei Verena Ross bedanken für die doch 15 Jahre Zusammenarbeit. Ich erinnere mich noch gut, als wir uns zum ersten Mal in meinem Büro in Straßburg getroffen haben. Ist eine lange Reise, die wir da miteinander gemacht haben. Ein ganz herzliches Dankeschön dafür für die wirklich vertrauensvolle Zusammenarbeit.
Aber nun zu zu meiner Frage. Die Kommissionspräsidentin hat in ihrer Rede zur Lage der Union am 16. September einen Pakt gegen Gold-Plating gefordert. Sie hat die Mitgliedstaaten ausdrücklich aufgefordert, ihren Teil zur Vereinfachung beizutragen. Und bei allen drei Statements ist das Stichwort Simplification ja auch gefallen. Im Finanzsektor entsteht Gold-Plating aber nicht nur in den nationalen Gesetzen, sondern auch über nationale Aufsichtsbehörden.
Und Sie verfügen ja über die Peer-Reviews über ein Instrument, um hier solche Abweichungen auch sichtbar zu machen. Sind Sie bereit, deswegen die Frage an alle drei, als Beitrag zu diesem Pakt jährlich öffentlich auszuweisen, wo nationale Aufsichtsbehörden über die europäischen Vorgaben hinausgehen und gegen solches Gold-Plating vorzugehen? Dankeschön. It was a question to all the three, as I said it. I hope it was translated.
Petra HIELKEMA
Ja, herzlichen Dank für die Frage. Ich würde antworten auf Englisch. I think you ask a very good question. I said it already in my intro that we need to do more, and gold-plating pops up all the time. So I think the first step what we need to do, and we're working on a on a round table in EIOPA, is what do you exactly mean with gold-plating?
Because we need to find out what that is. Am I willing then to use the powers I have to address that concern? Yes, for sure. But I would like to highlight that there are different forms of gold-plating that we need to address. I think one is simple.
If you have Solvency II maximum harmonisation, if someone is doing something on top of that, I have powers. I would like to know that, so we can enhance the dialogue with industry, and then we can definitely look at that and and see where EIOPA can actually identify that something is more than you should be doing, and we will. If it is minimum harmonisation, and that is frankly anything in conduct supervision, it's more difficult, because minimum harmonisation does not forbid that a member state does something additional. But at the same time, this is exactly where my industry is telling me that that they have costs, and that it is not simple. And somehow we need to solve that.
So I think we first need to identify where that is. Gold-plating sounds that they're always doing a lot more. But what I learn more and more for the industry is that they not per se do more, but they they all do it slightly different. And that in itself is a cost. So I'm identifying that problem.
I want to have that dialogue. Convergence in peer reviews can help, but maybe thinking in the conduct sphere more about maximum harmonisation or regulations and and being actually clear at the EU level where we want the harmonisation to happen could of course even address it better. But we will play our part.
François-Louis Michaud
Yes, I'm happy to continue, and ich werde auch auf Englisch sprechen. No, I think it's a it's a not only a good question and a fair question, but it's not only a national versus European question. It's also I think a European versus European and European versus national. So I think all dimensions need to be taken into account. You know, we've got authorities also who tend to write rules and go beyond also at the European levels, and we ourselves we could have been tempted with that in the in the past, right?
So that's something that we need to take as a discipline for all the community, I think, European, national, together. I think it's also so peer reviews could be one instrument. But I'd say there is more than that also that can be used. We can also go through there are different sensors we can use to go about that.
We come across such things from time to time in the context of the peer reviews, but we also come to that in the context of the Q&As, the questions we receive, which can come from the industry or sometimes from supervisors. It's also coming from the benchmarking we are doing across authorities on the data we can publish on that. So I think the way we are willing to tackle that at the moment at the EBA is by providing much more transparency about what exists, both from a rules perspective and from a data collection perspective. And here we've started, I mean, we had that already in the past, a very sort of embryonic version of that, but we have something that's called an interactive single rulebook that in theory should bring together everything that applies to banks, starting from level one up to Q&As. And beyond that, I mean, if it says very clearly that this is maximum harmonization, there should be nothing else.
So banks, with this transparency, we also hope that there will be much more market discipline and better conversation between banks, their supervisors, and also between us and the supervisors to discuss about things which do not fit with that hierarchy of norms. And the same holds true for data, where we are also in the process, and that was part of the recommendations I mentioned before and which we are working on, we've started building a big repository of data collections and data reporting, whereby we will be collecting everything that's legitimate and that's collected by authorities, and beyond that, we should be discussing how it should not happen at all. So I think by that we can probably take a big pick at it.
Verena Ross
Given I'm coming last, I can build on what my colleagues have already said, but so I think it's clearly a question where this is a responsibility that's both at EU and at national level. It makes our job as European supervisory authorities a lot easier if you're talking about maximum harmonization regulation rather than directives, where clearly national authorities have to follow also what the national laws might be that come in addition to what the European regulation says. And therefore anything where we can move from directives to regulation, I'm just thinking under MiFID on the fund regulation, it's clearly really important to move that step because that gives us as European supervisory authorities a much better handle on that. At the same time, I think it is also clear that when you try to drive convergence from the European level, that will always still mean that supervisors will look at the same circumstances in a slightly different way, and you will have entities that have to meet then the seven, eight, or nine different supervisory expectations that are built around that. And therefore I think again MiFID is taking the right direction to say in some areas let's cut through that and actually have EU-level supervision to just make it simpler and easier.
And then on your last point on have we actually looked at this in peer reviews, indeed we have. An example which I would cite is where we've actually looked at the prospectus peer review and we have shown what different national supervisors do, and some clearly do an awful lot more, take a lot longer to approve a prospectus, go through many more governance steps than others. So we have clearly been very transparent about that. Often it's hard for us to actually make the change unless there is a national legal law change and a change of attitude by the supervisor. Thank you.
Thank you, and just remind you that we have only 15 minutes left before the monetary dialogue. So now I give the floor to Evelyn Regner for the S&D.
Danke schön, Frau Vorsitzende, Frau Helkema, Frau Ross, Herr Michaud, danke schön für Ihre Erläuterungen, insbesondere Frau Ross, was Sie gesagt haben zur Arbeit des Joint Committee.
Evelyn Regner
Das war jetzt wirklich erhellend und ist sehr, sehr wichtig für uns. Gut, dass es Sie gibt, gut, dass es EBA, ESMA, EIOPA gibt. Wir wissen alle, und man kann es gar nicht oft genug wiederholen, dass Sie quasi ein Produkt dessen sind, dass nach der Finanzkrise wir Banken retten mussten, Versicherungen retten mussten, den Finanzmarkt stabilisieren mussten, und daher ist es unglaublich wichtig, dass es Sie gibt und Sie Ihre Funktion mit möglichst viel Kompetenz auch ausüben können. Zu meiner Frage: Wo sehen Sie in Ihrem jeweiligen Bereich die größte Gefahr, dass bei der Vereinfachung zu viel aufgegeben wird, und welche Regeln dürfen aus Ihrer Sicht auf keinen Fall angetastet werden? Und dann möchte ich ebenfalls eine Frage stellen zu AI.
Wir haben es mit AI zu tun, die ausbricht, in Systeme einbricht, schwächt damit das Finanzsystem. Neue KI-Modelle können selbstständig komplexe Angriffe programmieren und tausende kritische Sicherheitslücken und Bankensoftware aufdecken. Also Sie haben in Ihrer Darstellung über das Joint Committee hier einiges gesagt, aber in den USA haben sich die Fed und Banken schon getroffen. Wie können die Supervisors hier unter die Arme greifen? Also ich glaube, hier können wir gar nicht intensiv und eng und engmaschig genug zusammenarbeiten.
Und schließlich eine letzte Frage, weil Sie, Frau Ross, insbesondere meine Frage geht zwar auch an die anderen, aber vor allem auch an Sie, Frau Ross, auf die Consumer Protection, auf Konsumentenschutz hingewiesen haben. Oftmals sind Banken, Versicherungen so unterwegs, dass sie auch, scheint mir das als Konsumentin oft auch technisch überfordert sind. Das heißt, dass es oftmals technische Fehler gibt und Konsumentinnen dann oftmals keine E-Mail-Adresse mehr haben, mit wem sie in Kontakt treten können, keine Telefonnummer haben und dann nur an automatisierte Mails verwiesen sind und eigentlich gar nichts mehr machen können, um ihre eigenen vertraglichen Pflichten zu erfüllen. Was können Sie als Supervisor hier tun?
Verena Ross
Okay, I will try to answer for all three. So first of all, I think when you look at simplification, the one thing that I think we all three said, which needs to be maintained, is the focus on what of the core objectives of what regulation and supervision is trying to achieve. And that's resilience, consumer protection and financial stability, orderly markets and so on. So I think anything we can simplify, but we should be very careful where we fundamentally undermine those core objectives. Secondly, on AI, we are doing a lot as the ESAs trying to work with our national authorities to make sure that we help firms to try to focus on where the strengthening of the operational resilience is most important.
We're trying to share lessons. We try to make sure that we cooperate also with other authorities in the EU who go beyond financial sector because this is clearly a much broader issue. And finally, I will be very quick on the consumer protection. That is indeed being affected by the digital transformation that is happening. But at the same time, I think we need to be clear that digital transformation can also help consumers to have better access to financial services.
You can simplify some things by going digital. So we need to make sure that we find the right balance here, on the one hand enabling better engagement with consumers and on the other hand making sure that we protect from fraud, from the risk of not being able to actually coordinate with your financial services provider.
So it is really about trying to ensure that we protect investors and consumers but at the same time enable them to use the digital innovations that are there that can actually help them to move forward.
Petra HIELKEMA
Just very briefly on the simplification and when we say keep it robust. If I make that more concrete, I would say don't touch anything that's valuation because by valuation and data we can actually see the risk. We need to be able to see the risk. Second, think very good before you touch capital. Capital buffers don't solve a problem but oh they buy you time.
And we need time to solve problems sometimes, particularly in the world that moves faster because that is the time you can inform clients, you can find a solution and make sure we keep it stable. And then ultimately there is a risk appetite. And and there you could differ from how much risk you want to take but you need to take that decision consciously and holistically. If you reduce it in one place and you you put it up in one place, then the sum is still the same. But if you make it more risky everywhere, you end up with a lot more risk.
François-Louis Michaud
30 seconds then okay. I'd continue on capital as well. We've published in June a report that says we can streamline a lot the way it's designed, the capital regime for the banks with the micro-macro resolution parts, but we should not touch the the calibration, the overall calibration. So we should make sure that all authorities remain able to carry out their supervision and they need their respective levers. We can make it less complex.
We should not throw away capital which's been hardly won. There might be also something to be said about coordination amongst authorities and how they work together and what's the accountability to to this audience and to co-legislators about how we've been delivering our our roles and tasks.
Thank you. For PPE, Thomas Kubin.
Tomáš Kubín
Thank you, Madam Chair. Ich schalte jetzt zum ersten Mal ins Englische um. On behalf of our coordinator Mr. Gieri, dear chairs, first of all, I would like to have a general question to all of you. We hear a lot about the potential EU-level benefits of deeper integration of the European capital markets and banking sector, freeing up capital, improving efficiency and strengthening the competitiveness of European banks. I understand all of this.
As when it comes to the potential costs and negative effects for individual member states, particularly smaller countries, the discussion becomes remarkably quiet. Therefore, I would like to ask you if you have any detailed impact assessment on the possible negative impacts of centralizing the capital markets and the banking systems on the single single member states, especially the ones with smaller capital markets and banking ecosystems. Furthermore, what safeguards would you foresee to prevent those possible negative effects? Secondly, in your statement, Mr. Michaud, you mentioned that the EBA's work on the capital stack and described the simplification of overlapping buffers and requirements as low-hanging fruit. I agree that unnecessary complexities should be removed.
However, the Commission in its latest banking competitiveness communication intends to be more ambitious and move towards holding and managing the capital at consolidated group level. So my question is, how does the EBA assess the potential negative effects of such a shift on host member states? Do you have a country-by-country assessment of what greater capital centralization could mean for local lending capacity, the resilience of subsidiaries and the ability of host supervisors to respond to a crisis? Furthermore, what exact safeguards would you suggest ensuring that financial stability of host member states in case the Commission decides to move forward in this direction?
Thank you.
Verena Ross
Yes, I will be very quick. So on the deeper capital markets that you spoke about, I think it's absolutely right that we need to look at what is the overall benefit that we can collectively as Europe get out of deepening our financial markets and reducing the fragmentation that we still see. That is important for the competitiveness of Europe. I think what we need to recognize is there are national capital markets at the moment that function well. We need to continue build on that.
There are regional initiatives. I was the last week in Warsaw where they talked about the regional initiatives in the Central and Eastern European countries, the Baltic countries. All of those are important initiatives. But we need to continue to remember that in the end, the scale that our companies need, they maybe they start locally, but if they want to scale up and grow, they need capital markets and investors that actually think beyond the national market. And so from that perspective, and also from the perspective of individual investors who want to have an exposure that's much more diversified, it's important to keep building on the strength of the national markets, but building the scale and the ability to interoperate at European level.
And only then will we be able to have a competitive European capital markets that actually deliver for our economies.
François-Louis Michaud
Thanks a lot. So yes, we are also of course very, very clearly focused on trying to see what could be the adverse consequences of of further centralization. But let me first say that banking is very much about scale. So first and foremost, we need to make sure that if banks are to continue their operations, they get the scale they they need. And as I was saying before, both from a wholesale market perspective or from a retail perspective, they are reaching the limits at the at the moment, competition being very, very harsh in the wholesale market and and then also in the retail within the domestic boundaries, they fail to get the profitability they need to be able to sustain their activity in the medium to long term and do the necessary investments which are needed to to further develop their their business models and best serve their customers.
There's this number that was very often quoted in recent weeks. The IT investment of one of the largest US bank is 18 billion, net profits of the two small biggest EU banks are 14 and 12 billion. So it's a we are here talking about really different things. On the on the other hand, we believe that diversity is important. So we should also preserve a good diversity in the banking system in the EU because that's also a source of strength.
So it's not about there shouldn't be consolidation only, there should be different business models serving different types of communities with their different governance arrangements. That's also something that in our view regulation should be neutral enough to to preserve. We are now working on the facts about this very sensitive question on on waivers and home host. So we are building up the facts. We have a discussion scheduled at the board next week on that topic.
So I'll I'll stop short of entering into the details, but we also plan to publish some hopefully some some good numbers in the coming month by the end of the year for sure.
Petra HIELKEMA
Yes, and then maybe from an insurance perspective, I would say that it's a fair question to say what does it cost a member state, but I would look at the bright side. There's a lot not insured. There's very little supplementary pensions. There is still a huge gap when it comes to homeowner protection. And if you have the scale of EU and the ability to sell products in that scale to consumers, you'll have and you have less fragmentation, you have cheaper products that will help affordability of citizens.
Your question, are in insurance then, I translate it now to insurance, are the policyholders in host countries sufficiently protected? I've been saying this before, I would answer with not entirely. I think there's a lot organized. We have one passport, one license, you sell in 27 countries, so one is the home, the rest is host. If there is trouble, EIOPA will act.
And ultimately, if you have your citizens more resilient, that will benefit your economy. So from that angle, I see a lot of opportunity for for scale also on the insurance side.
We will start platforms, we'll ask data on-site. We have used in my first term all the powers we have, from peer review to inquiry to breach of Union law, etc. But the reality is that any power that we have ends in the same way. It's a recommendation adopted by the board and then addressed to the national competent authority that needs to act. And the reality is if they don't act, we cannot enforce and the detriment will continue.
And we have such cases, very limited, but we have them. And I think both the fragmentation and so not scale at EU level and the inability to protect the host are two things where we could, if we can change that, we would have a better market. Thank you.
Giovanni Crosetto
Yeah, first of all, on behalf of my group, thank you very much Verena Ross for your service and your work. And since time is running out, maybe I will make only a question to Mr. François-Louis Michaud. Given the fact that EBA has announced a technical workshop on 28th of October focused on regulatory simplification for small and non-complex institutions in the context of the mandate set out under Article 519. That mandate requires EBA to prepare a report assessing the overall prudential framework for small and non-complex institutions, in particular assessing those requirements also in relation to banking groups and specific business models and taking into account the relevance of small and non-complex institutions for maintaining financial stability and credit provision in local community. Could you please give us some preliminary indication of the direction of this work and can you reassure us that EBA has given careful and specific consideration to the dimension of particular business models and their role in credit provision to local communities?
Thank you very much.
François-Louis Michaud
Sure, very quickly, I think this whole topic is about making sure that banks can indeed serve their communities and that we can cut the red tape so that they can be relieved from some compliance costs which are at times pretty important. So we are looking at that in two ways. First, we see whether we can enlarge the population first of those banks which are entitled to this regime by changing some thresholds, what would be the impact of that. And secondly, we are also trying at what we can do to slash requirements within that context and we go through all the parts of the rulebook, credit risk, governance, operational risk, etc., to see what it would mean and where are the areas where we can find more proportionality but in a pretty aggressive manner. And we try also to use that in a context where we say, okay, if we were to start the regime without having anything, no single rulebook at all, what is it that we would be?
It's like bottom-up if we were to build it up and that will be a counterfactual to what we can achieve by reducing. So in that way, we believe we can have a good proposal to provide in the coming weeks and I'll be happy to elaborate on that at the workshop that you mentioned.
Gilles Boyer
Merci, Madame la Présidente. Nous avons un problème de timing, mais peut-être juste je voudrais poser une question moi aussi à Monsieur Michaud, si vous le permettez, en lien avec la communication récente de la Commission sur la compétitivité bancaire. Et étant donné les divergences historiques qui ont été rappelées d'ailleurs entre les pays home et les pays host, pensez-vous qu'il sera possible de mettre en place la législation qui permet à la fois d'améliorer la compétitivité des banques européennes et de créer un véritable marché unique bancaire tout en répondant aux craintes souvent légitimes des pays host de se retrouver seuls à gérer d'éventuelles crises ? Et que mettez-vous en œuvre pour associer les autorités nationales home et les autorités nationales host pour surmonter les obstacles historiques ? Merci Monsieur.
François-Louis Michaud
So, you are absolutely right. This is an important topic and this will be, this is already front and center in the discussions about this, this agenda. I think we should not only stop at that, by the way, because the competitiveness objectives include many other things. And I think this is one key element, especially within the Banking Union. But if we think at the 38 proposals by Commission, that's only one of them.
And I think that now that we are looking into the facts also very precisely, carefully, we see that there is indeed some liquidity being trapped within certain banking groups. But this is not what prevents them from lending. So there are, there is also capacity in the system. If you look at the size of the capital banks have, there is like 500, almost 500 basis points above capital requirements on average that allows bank to, that allow bank to, banks to lend. So I think this notion that this is preventing them from expanding should also be put slightly in perspective.
Now, we should build on the institutions we have been creating, especially within the Banking Union with the SSM and with the SRB to make sure that those are there to support, you know, the homes and the host. EDIS, of course, it will be, should be an important part of this setup. But we can also already rely on the deposit guarantee funds which are funded and which are there. There should be arrangements being found between national and local host and consolidating authorities. I believe that the fact that within the Banking Union the supervisor is the same should help in a way.
Everybody is at the table, both the home and the host, they participate in the same decision, so that should facilitate for them the sort of way forward. We also can make sure that, you know, other business models can flourish. And there is also a free provision of services in the EU that has been there since the beginning and that some new players, neobanks, are using with quite some success. And there what we find is that what's important is also to remove other barriers to integration which are not necessarily of a prudential nature. Like, you know, taxation and insolvency rules, consumer protection rules are also a big impediment to obtaining scale in the banking sector.
So I think all those things should be also discussed beyond simply the home-host sort of focus point.
Thank you. Well, it was our last speaker for this session. I want to thank the three of you for today and for the good cooperation that we had so far and that we will continue to have. And one more time I wanted to thank Verena Ross for her commitment to banking and financial supervision on behalf of the ECON Committee. Thank you so much for everything today.
Aurore Lalucq
Eh bien, je suis ravie d'accueillir aujourd'hui pour la troisième fois cette année dans le cadre du dialogue monétaire la présidente de la Banque centrale européenne, Madame Christine Lagarde. Les dialogues monétaires comme celui-ci, ainsi que la visite annuelle des membres de la commission des affaires économiques et monétaires que nous avons eu la semaine passée, et merci de votre accueil à vous et à vos équipes, et les rapports d'activité sont essentiels pour l'exercice du contrôle démocratique du Parlement européen sur la Banque centrale européenne. Ces éléments font d'ailleurs partie intégrante de notre accord avec la BCE sur les relations interinstitutionnelles dans le domaine des activités de la Banque centrale. I will now turn to English with some elements on the content of today's monetary dialogue during which we will mainly discuss two topics. First, the quarterly assessment of the ECB's monetary policy stance.
Second, artificial intelligence and inflation dynamics, implications for ECB monetary policy. Just before our ECON committee meeting today, both topics were discussed during the usual monetary dialogue preparatory meeting with two experts of our monetary policy expert panel. First, on monetary policy. The euro area annual headline inflation is expected to be 3.3% in August 2026, up compared to 2.9% in July. Core inflation is expected to decrease slightly from 2.5% in July to 2.4% in August.
In this context, on September 10th, the ECB Governing Council decided to raise the three key interest rates by 25 basis points for the second time in almost three years after having raised them in June and kept them unchanged in July. The key policy rate, the deposit facility rate, has been raised from 2.25% to 2.50%. Je vais maintenant repasser au français sur le second sujet qui est l'intelligence artificielle et la dynamique de l'inflation avec les implications que cela peut engendrer pour la politique monétaire de la Banque centrale européenne. Je crois qu'on peut affirmer sans trop de risques que l'intelligence artificielle va transformer en profondeur notre économie, y compris dans ses processus de production, dans les modèles d'affaires et dans les structures économiques, et que la transition vers l'intelligence artificielle peut accroître l'incertitude pour les décideurs de la politique monétaire, y compris la Banque centrale européenne, notamment en ce qui concerne l'extraction du signal et la transmission de la politique monétaire à l'économie. Dès lors, dans le contexte de la course mondiale à l'intelligence artificielle, il est plus que jamais opportun de débattre des effets potentiellement inflationnistes de la transition vers l'intelligence artificielle et de ses implications complexes pour la conduite de la politique monétaire dans la zone euro.
Par ailleurs, la venue de la présidente Lagarde aujourd'hui s'inscrit dans un contexte mondial de tensions entre les besoins de financement des États, notamment par la dette, et ceux des entreprises, en particulier des Big Tech américaines, où une certaine concurrence semble apparaître. Pour financer leurs investissements dans l'IA, les hyperscalers devraient émettre plus de 1000 milliards de dollars de dette dans les prochaines années. Et ils se tournent désormais vers tous les marchés, y compris le marché obligataire européen où Meta doit faire son entrée cet automne. Au moment où les coûts d'emprunt des États aux États-Unis comme dans d'autres pays, comme dans d'autres États membres de la zone euro retrouvent leur niveau de la fin des années 2000, les propres services de la Banque centrale européenne s'interrogent sur la capacité des marchés de la zone euro à absorber des flux de dette aussi massifs et concentrés. Nous sommes donc extrêmement heureux de vous avoir aujourd'hui avec nous, Madame la Présidente Lagarde, pour discuter de ces deux sujets absolument essentiels et qui agitent légitimement les discussions médiatiques et aussi politiques.
Et je vous donne la parole pour 10 minutes ou plus si nécessaire. Bienvenue encore au sein de ce comité.
Christine Lagarde
Je vous remercie beaucoup, Madame la Présidente, et je vous redis le plaisir que j'ai à me retrouver dans cet hémicycle. And I will continue in English because I see that some of you are a bit surprised to see me starting in French. So the topic that you have chosen today goes to the heart of Europe's economic future, you rightly mentioned that. Artificial intelligence has the potential to transform how we produce, how we work, how we innovate. Firms are set to devote around 10% of total investment to AI in 2026, that is a result of a telephone corporate survey that we conduct on a regular basis.
And AI-related borrowing already accounts for roughly a quarter of credit worth to firms. AI should could significantly enhance Europe productivity, competitiveness, and living standards. But, because that's the rosy picture, it will also affect and to some extent it's already affecting investment, labor markets, and inflation, and it therefore also matters for monetary policy. Europe has a real opportunity to harness this technology, but success is not automatic. We need to seize the benefits while managing the risk appropriately.
In my remarks today, I will first discuss the outlook for the euro area economy and explain our latest monetary policy decisions. I will then elaborate on how artificial intelligence may affect inflation and the wider economy. So turning to the first topic, the current situation from an economic standpoint and our monetary policy decision, I would say that despite headwinds from the energy shock, the euro area economy proved resilient and solid real GDP growth in the second quarter of 2026 was evidence. You will have received the one-pager which has a number of graphs, but one of them certainly on the front page is referring to growth. So growth was broad-based across most countries and sectors.
This pattern is expected to have continued in the third quarter as well. Manufacturing is performing solidly, supported by higher government spending on defense and on infrastructure. Consumer confidence has rebounded from the low levels in the spring, helping services in particular to recover. And increased AI-related activity is visible in digital services, business investment, and exports. The labor market remains robust.
Unemployment stood at 6.4% in July, although growth in employment and the labor force continues to slow.
Productivity has gradually picked up. Over the medium term, consumption should be supported by gradually falling energy prices and a robust labour market. Business and housing investment should increasingly bolster growth, while exports should benefit from stronger foreign demand. The baseline of our September ECB staff projections expect the economy to grow by 0.9 in 2026, 1.4 in 2027 and 1.5 in 2028. Again, you have elements on that on the two pages that you have received.
Headline inflation increased to 3.2% in August from 2.9% in July. Energy inflation rose to 14.3% after 10.3% in July. This increase reflects in particular a strong contribution from refining margins, on liquid fuels in particular, as well as higher energy commodity prices. At the same time, food price inflation decreased to 1.1% in August from 1.2% in July. Inflation excluding energy and food edged down to 2.4% owing to a fall in services inflation, only partially offset by an increase in goods inflation.
So far, wages do not show a material response to the energy shock. Compensation per employee, which measures nominal wage growth, stood at 3.3% in the second quarter, down from 3.6% quarter in the first quarter. Sorry, 3.6% from the first quarter. The baseline of the September ECB staff projections see headline inflation averaging 3% in 2026, 2.5% in 2027 and 2.1% in 2028. For inflation excluding energy and food, the baseline foresees 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028.
Inflation expectations over shorter horizons remain at elevated levels, but most measures of longer-term inflation expectations, longer term, stand at around 2%, supporting the stabilisation of inflation around target in the medium term. The outlook continues to be surrounded by high uncertainty with upside risks to inflation and downside risks to growth. Looking at our monetary policy stance. In line with our commitment to ensuring that inflation stabilises at our 2% target in the medium term, we decided to raise the three key ECB interest rates by 25 basis points at our monetary policy meeting earlier this month. So let me try to explain the rationale behind this decision.
When facing energy shocks, the ECB has a very clear strategy. We do not react to energy prices. We react if we see risks of higher energy prices becoming embedded in inflation. We assess these risks through a comprehensive assessment grounded in three criteria. First, the inflation outlook, where we look at our forecast for inflation and the risks surrounding it.
Second, the dynamics of underlying inflation, which today is mostly about how higher energy prices are feeding through to other prices and to wages.
Third, the transmission of our monetary policy to borrowing costs and to economic growth. So looking at these three criteria that I have just described for you, we see higher inflation ahead, but no signs yet that it is becoming embedded. The inflation outlook will be higher in 2027 and 2028 than we expected a few months ago, mostly due to higher energy prices. But we do not see evidence at this stage of energy prices feeding into higher wages. And while growth has been resilient since our last meeting, long-term interest rates have risen notably, which will slow growth and reduce pass-through by more than projected in our September exercise.
So taken together, this means that we remain in the middle path for monetary policy, the middle path that I had laid out earlier this year. This means that while the shock is too large to look through, we view a measured response as appropriate to keep inflation in check. So let me turn now to artificial intelligence, and I will continue to use English, although tempting to translate into French. So AI is a transformative force. It can reshape production processes, business models, and structures across the entire economy.
But its overall macroeconomic effect is uncertain. Its impact will work through several interconnected channels, encompassing both the demand and supply sides of the economy, and will unfold over the course of time. I will focus on two of the channels most relevant for the outlook for inflation: first, productivity and investment, and then labor markets and income distribution. So looking at productivity and investment, AI has the potential to help firms produce more, and over time, higher productivity could lower costs. All else equal, this should reduce inflationary pressure in the long term.
But the size and speed of that effect will depend on the adoption in the economy. There are some encouraging signs, but there is also additional work to be done. A recent ECB survey finds that by late 2025, 38% of euro area firms already reported at least moderate use of AI, yet only 7% reported significant use. So those numbers date to 2025, and they have significantly evolved over the course of the last few quarters. Unlocking the full potential of AI will require substantial investment.
Europe needs investment in innovation, but also computing capacity, data centers, and energy. Firms also need to adapt their processes and train their employees. AI-related investment is rising in Europe, and more is in the pipeline for firms, but still lags way behind the United States. In parallel, European initiatives like InvestAI and the Scale-up Europe fund can help mobilize additional investment in AI infrastructure. 30 billion for AI gigafactories to develop advanced AI in the EU is a good start, but it's only a start.
At the same time, AI investment activity will also depend on what happens in financial markets and whether risks associated with booming AI funding will materialize. Global equity valuations are concentrated in a relatively small number of AI-related firms, which are also rapidly increasing their debt funding. A sharp reassessment of AI companies' prospects and the sustainability of their debt could trigger market corrections and spill over to euro area investors and the wider economy.
Second, AI will work through labor markets and income distribution. So AI will change both the tasks people perform and the skills firms need, and how the gains from AI are distributed will matter. Currently, about 50% of workers already use AI in their job. And so far, on balance, firms are continuing to hire. In fact, survey evidence suggests that firms making significant use of AI are more likely overall to recruit than firms making, sorry, than companies that are in a transition phase.
But it matters what firms are using AI for. Firms using AI to support research, innovation and new products tend to hire, while those using it primarily to cut labor costs are reducing employment. The central question is thus whether over the longer term or for the economy as a whole, AI will mainly complement workers or replace workers. This can then affect incomes, demand and ultimately inflation, but those impacts are still uncertain to predict. Historically, major technological advancements have not reduced employment, but right now the verdict is still out on whether AI may prove different.
So what should then Europe do to capture the AI growth opportunity while also ensuring sovereignty? First, Europe must enable innovation in AI. Innovative ideas and firms need large and integrated markets, deep and accessible capital, significant computing power and skilled workers, as well as abundant and affordable energy. I think you know where I'm going. That means reducing fragmentation in the single market, advancing the savings and investments union and accelerating the energy transition.
EU initiatives, including AI factories, testing facilities and regulatory sandboxes, can also help ideas move faster from research to commercial use. And there is room to innovate in many areas, from greener chips to more efficient algorithm. Second, Europe must build greater independence. Europe should strengthen under-developed critical parts of the AI value chain. Building European capacity will also ensure that we can rely on European tech for sensitive activities in line with the aim of the technological sovereignty package.
The goal is not self-sufficiency. It is to ensure that critical functions can operate under any circumstances. At the same time, Europe has an interest in a strong foothold in the global AI value chain, both for economic and geo-strategic reasons. Third, Europe must deploy AI intensively. AI adoption must spread beyond a small number of technology leaders, but diffusion alone is not enough.
Firms must also use AI deeply and effectively, and among other things this will require targeted support for retraining programs to address the critical shortage of AI-related skills and ensure that the workforce can adapt to this transformation process. Applying the AI strategy can support broader adoption, and we also look forward to the Commission's forthcoming initiative on industrial AI and priority sectors.
So in conclusion, for monetary policy the task is clear: we must closely observe and study how AI affects productivity, investments, labour markets, financial conditions and inflation so that we can continue our mandate of maintaining price stability. For Europe, the direction of travel is equally clear: we must create the conditions for AI to raise productivity and living standards and we must ensure that AI sovereignty is a key principle. The precise effect of AI remains uncertain, but uncertainty is not a reason for inaction. As Alan Turing, a pioneer of computing, once observed: "We can only see a short distance ahead, but we can see plenty there that needs to be done." This is equally true for artificial intelligence today.
Thank you.
Thank you, dear President Lagarde. We'll now give the floor to Markus Ferber for EPP.
Ja, vielen Dank Frau Lagarde, ich will mich auch auf die zwei Themen konzentrieren: Ihre aktuellen Entscheidungen und natürlich auch das Thema KI. In Ihrem laut Protokoll der Julisitzung...
Je suis désolée, mon français est très, très mal.
Non, mon allemand n'est pas terrible. Il ment, il est très bon son français.
Also, vielen Dank Frau Präsidentin, ich würde mich auch auf die zwei Punkte konzentrieren, die Sie in Ihrer, in Ihrem Statement dargestellt haben. Laut dem Protokoll der Julisitzung trägt die bislang begrenzte fiskalische Reaktion auf den Energieschock dazu bei, Zweitrundeneffekte einzudämmen. Hören Sie immer noch nicht, oder?
Shall I do it in English?
Il parle. Do you have another headset?
No, no, it's this thing, it's the headphone. Can I have yours? Does it work?
Okay, bit of plumbing here. So we don't need AI, we need hardware. We need audio.
Speaker 25
We need everything physical. Okay, let's try again. So, can the English interpretation can speak to Ms Lagarde, please?
Oh my god.
Speaker 26
Okay, let's make a test. Est-ce que vous pouvez parler pour la traduction anglaise pour tester ? Est-ce que vous pouvez parler pour la traduction anglaise à nouveau pour Madame Lagarde pour voir si cela fonctionne ? Super, magnifique, merci beaucoup.
I thought it was my ears.
Markus Ferber
Ja Frau Lagarde, herzlich willkommen. Ich habe auch zwei Themenblöcke, so wie Sie auch Ihre Rede gegliedert haben. Laut dem Protokoll der Julisitzung trägt die bislang begrenzte fiskalische Reaktion auf den Energieschock ja dazu bei, Zweitrundeneffekte einzudämmen. Aber die Disziplin ist ja keineswegs gesichert. Auch das Mitgliedsland, das ich am besten kenne, führt für den 1. Oktober oder seit ab dem 1. Oktober eine Steuersenkung zur Reduzierung der Spritpreise ein.
Sie haben ja angedeutet, dass das auch auf die Inflation sich auswirken kann. Wie lautet Ihre Empfehlung an die Mitgliedstaaten, um dem Energiepreisschock Herr zu werden und was gilt es zu bedenken, damit Ihre Geldpolitik hier auch entsprechend unterstützt wird? Und zum Thema künstliche Intelligenz: Ihr Chefvolkswirt Philip Lane hat im Juli ja auch mehrere Projektionen gemacht, wie KI auf die Preise wirken kann. Aber im Gegensatz zu Ihnen ist es damals ja noch relativ unklar gewesen. Es wirkt sich mal schwächer, mal besser aus.
Was ich feststelle, ist, dass wir im Bereich Produktivitätsgewinn unterdurchschnittlich sind, während die Amerikaner ungefähr 2 % Produktivitätssteigerung haben, nur wegen KI, wegen künstlicher Intelligenz, sind wir in Europa im 0,irgendwas Bereich, weil wir noch unterentwickelt sind bei KI. Sehen Sie nicht durch dieses größere Wachstumspotenzial auch die Möglichkeit, dass wir hier die negativen Effekte eindämmen können? Vielen Dank.
Christine Lagarde
I'm going to address the second question because the first part I haven't really picked it up. It was a bit messy. So if you don't mind, after I respond to your second part of the question, if you can repeat the first, it would be very helpful. So, on the AI impact, thank you very much to quote Philip Lane and I will certainly refer that to him, he will be thrilled. I think the key point is that there is great uncertainty.
And you have at both end of the spectrum those who predict that it will be minimal, you know, in the main 0.1% maybe, and others that are far more optimistic about the productivity gains that would result from the deployment of AI. So uncertainty prevails. Second, it's going to be a factor of how diffused it is, how much adoption there is and in which sectors. But our staff estimates that the productivity gain are likely to be, and again this is anticipation, anywhere between 0.3 and 0.4 percentage point per year over a 10-year period of time. So that's a significant productivity gain improvement that we would see as a result of the diffusion and broad adoption of AI.
We are probably a little less optimistic than our US counterparts, for instance, in terms of how much productivity gains we should expect, but it is a pretty high number. And if it materializes, it would significantly change a lot of things actually. Now your first question, if you don't mind repeating it, because I didn't...
I try in English. How do national measures in cutting or limiting energy prices bring inflation targets inside the system as you described the problem?
Christine Lagarde
So at the ECB, because we are focused on price stability and we are very attentive to inflation development, we have recommended along with the Commission that the triple T principle be applied, you know, temporary, targeted and tailored support be extended. And what we can see on a euro area wide basis is support that is in the range of 0.1 percentage point of GDP for the euro area. It is an increase relative to what we had seen three months ago, which we measured at 0.03.
So we are now at 0.1 percentage point. And from what both the Commission and ourselves can see, it is not necessarily temporary, not necessarily targeted. And there are measures that are across the board without specific emphasis on the most exposed and most vulnerable part of the population.
Evelyn Regner
Madame la Présidente, moi aussi je vais parler allemand. Die kann ich loslegen? Die Europäische Zentralbank berücksichtigt den Klimawandel bereits, weil er die Preisstabilität gefährdet. Sie haben nun ausführlich über KI gesprochen, dass sie die Produktivität steigern kann, aber wie wir wissen, kann das natürlich auch die Lohnunterschiede vergrößern. Beide Entwicklungen verschärfen also die soziale Ungleichheit und genau das schwächt Ihre Geldpolitik.
Denn wenn sich Haushalte stark bei Einkommen, bei Vermögen, bei Schulden und beim Zugang zu Krediten unterscheiden, kommen Ihre Zinsentscheidungen natürlich auch ungleich an. Das betrifft das erste Mandat, die Preisstabilität. Daher meine Fragen. Erstens, wird die EZB in ihren Inflationsprognosen künftig ausdrücklich ausweisen, welche Folgen KI und Klimawandel für die Wirkung ihrer Zinsentscheidungen haben? Und die zweite, die mir besonders am Herzen liegt, wann, ab wann ist Ungleichheit aus Ihrer Sicht für die Geldpolitik relevant und wie berücksichtigt die EZB sie innerhalb ihres Mandats?
Denn noch einmal, Ungleichheit ist damit nicht nur ein soziales Problem, sondern eine wirtschaftliche Bedingung, die über den Erfolg Ihrer Geldpolitik und damit über die Preisstabilität mitentscheidet.
Well, thank you so much. I just want to clarify with you that your question is also related to AI and the impact of AI or more generally interest rates and its impact on climate change and on redistribution and inequality.
Evelyn Regner
First, I had two questions. So the first one is really somehow how I try to interpret it the right way. In your prognosis, you will include the consequences of AI and climate change as you do it with climate change already. We know that on its effects on price stability, but the same thing with AI. That was my first question.
Christine Lagarde
Thank you so much and thank you for accommodating because it's not not ideal this thing. So it might have to do with my personal ears. I apologize for that. As you said, we do take into account climate change and the consequences of the necessary transition in in our projections and in the work that we do. And equally, we are also trying to anticipate what the impact of AI will be in relation to all aspects that I have referred to.
Volume of investment that will be needed, impact on, on labor, and inflation as a consequence of, of all that. So yes, we do take that into account in our, in our projections and, and we try to anticipate. We do that, uh, on the basis of all the literature that is published, on the basis of what the industrial sector, sectors themselves, uh, claim about their innovation and the, the rollout of it. We also take into account the corporate surveys, the consumer surveys, SAFE, all, all the ways we have available in order to really understand and suss out what, what percentage of investment will be dedicated to AI, what percentage of, of funding will be allocated to the training of employees, what expected impact will result from the use of, of AI. I tell you something that com- comforts me in a way, and that is the, because it moves extremely fast, both in terms of innovation, in terms of use, in terms of, uh, risks associated with all that, and, you know, cyber risk is one that preoccupies us, uh, a lot.
Productivity, we have some anticipation, but it's very uncertain.
But what I find encouraging is the fact that diffusion is moving at a fast pace as well. So I remember days when people would say, well, whenever there is a flow of data, you have to see AI. Well, it seems that the corporate world, whether it's at the SMEs to a lesser extent, and the large corporate to a, to a larger extent, are taking that on board and are investing in, in AI. So we have to include that in our, in our analysis and in our projections going forward. And if productivity increases as, as it is expected to increase, that, that would make a significant difference in terms of inflation and output.
So... inequalities is a, a really important aspect of what AI will produce and how the gains will be redistributed. And I think this is not necessarily a matter directly for the, for the central bank, but it's certainly a matter that should be taken into account by governments, by parliaments, in order to assess where the benefits will, will flow. And I think it's particularly relevant for government and for fiscal authorities, because the fiscal base that will be used going forward to generate revenue, if we observe a shift from labor and income to less labor, less income, more benefits, the tax base is going to matter and the shift in the tax, tax base, uh, will have to be redefined. But that's more for, you know, fiscal, fiscal authorities to decide. Thank you.
Evelyn Regner
Just, uh, thank you very much for your answer. Uh, maybe, uh, to go a little bit in depth on the question, uh, on inequalities, how and from which certain point the ECB can do something within the mandate of the ECB? You were referring to the fiscal policy, I completely understand, by the way, I will also quote you, uh, uh, towards our national governor, uh, right now. But my point is, in how far and from which point exactly this inequality as a consequence of those, uh, differences that are happening, you can take into consideration into the ECB mandate.
Christine Lagarde
I think we start from the view that, uh, our mandate prescribes that we address price stability as the first priority and primary objective. And in delivering on the price stability, we contribute at least to, uh, the expectations that people have about, uh, the environment in which they decide to hire, to invest, to develop training, and how they're going to allocate, uh, their capital. So that, that's our main contribution, uh, as a, as a central bank.
But equally, you know, because we take things into account in our projection, because we produce research and analytical work and we become part of the literature, I hope that we can also contribute to identify the risks and identify the measures that others will have to take. Thank you.
Thank you. For PFE, Enikő Győri.
Enikő Győri
Thank you, President Lagarde, welcome. We know very well that the EU is desperately looking for new sources of growth. We were discussing it with you last week and with your colleagues and thank you very much for the very informative talks. And here again, we are discussing as potential source like artificial intelligence, digital finance, simplification, which in my view should mean genuine deregulation and increasingly about deeper integration of our financial markets and banking sector. And this, I have to say, makes me worry coming from Central and Eastern Europe.
We hear a great deal about the potential benefits of this integration at EU level, like efficiency, better allocation of capital and more risk sharing. Yet, when it comes to the potential costs and negative effects for individual member states, particularly for smaller member states with less developed capital markets, nobody really says anything. So my question is, does the ECB deal with these potential country or region specific negative effects? Does the ECB systematically monitor on a country-by-country basis whether deeper integration could create vulnerabilities for local financial stability, credit provision or the resilience of national banking ecosystems? Because having a more centralized capital markets and supervision, I really would like to see the guarantees that it will not be valid only for the big ones, but even for the smaller member states and smaller capital markets.
Thank you so much.
Christine Lagarde
Well, thank you very much for your question and yes, it was very nice having all of you and the leadership of the president of the ECON committee last week in Frankfurt. You know, the savings and investment union is not directly the responsibility of the European Central Bank, as you know. It's the responsibility of you all, the responsibility of the Commission and ultimately there will be enough trilogue discussions around some of the topics and I know that you are all very concerned about the advancement of this project and you're all pushing hard so that at least the securitization, which seems to be the first step in that march towards savings and investment union, progresses as quickly as possible. You know, our sense is that if we want, I think it's everything is interrelated. If we want a strong, sovereign European Union and from my perspective, euro area, everybody has to do their share.
We are trying to do that in our position as European Central Bank. And to that end, we are trying to secure or preserve and protect the independence of the Central Bank. We are building the digital euro in its retail and wholesale form. Some of you have been very attentive and I know you have heard about Pontos followed by Apia and the necessity to actually digitally organize the settlement in European Central Bank money of tokenized assets between banks. And we will continue to progress along those base.
...push our repo lines, which have now been extended beyond the euro area, and we will be working on swap lines that will be more responsive to the imperative of having a sovereign euro area and a strong euro. Having said that, having a savings and investment union that is broad-based, that applies across borders, that reduces the fragmentation that we have currently. If I look at the supervision, for instance, only the supervision, with 52 different supervision authorities and probably as many interpretations of the directives, we are causing headaches and creating obstacles for those who want to invest in Europe and who expect a unified environment and single supervision. After all, that was the purpose of the SSM. So, go, anything that goes in that direction, I believe will deepen and will broaden the volume of capital that is invested in Europe instead of capital being extracted out of Europe to invest elsewhere in the world.
So, then the allocation and maintaining, you know, a broader but also well-spread volume of capital throughout the single market is something that needs to be taken into account in the formulation of the savings and investment unions. Thank you.
I understand your point, Madam President, but it doesn't help me in protecting my region, because my fears are still there, and let me give you a concrete example.
Christine Lagarde
No, but if you have a strong, I see your point, but I think the whole is going to be larger than the sum of the 27 capital markets that we have at the moment. That's my strong belief, and that's what I'm hearing from investors in many corners of the world.
Enikő Győri
Okay, let me give you a concrete example. The Commission's recent work on banking competitiveness envisages the holding and management of capital at consolidated group level. As an MEP from a host country, I'm deeply concerned that this would endanger the financial stability by allowing capital and liquidity to be moved away from national subsidiaries precisely when the host economy would need them most, as it was the case during the 2008 crisis. So, are you aware of any concrete impact assessment of the possible effects of such consolidation on small host countries, and what exact safeguards would be necessary to avoid such negative effects? And just a last sentence, Madam President, that your colleagues told us that having more, lower capital requirements, as they made certain studies, would never result in more liquid capital for SMEs.
So, actually, here I don't really understand the logic, and I think you're right, it's not ECB competence, but what is ECB competence is financial stability. Thank you so much.
Christine Lagarde
Thank you very much, and yeah, you're bringing me back to my days of 2008, where we were all running after capital. So, in the present situation, the issue of the home-host countries can be addressed by other authorities than the ECB, because we have in charge price stability and the SSM is in charge of financial stability, and we know that one doesn't go without the other. So, that's the reason we are sort of intimately aware of each other's imperatives. It can be addressed by way of a combination of waiver on the one hand and very strong guarantee on the other one. That's what is available currently, at least the waiver.
The on-demand guarantee, which would have to be extremely strong, is something that also needs to be worked out, and in my humble view, I think they can go hand in hand in order to address the concern of the host authorities that see a risk that the capital or the reserves that sit in the subsidiary are actually called upon by the home. I get that.
Going forward, I think the issue of bringing together the resolution authority and enough liquidity in resolution and having an authority that has the competence to actually direct the funding is also a way to address that concern. But it's there and it needs to be addressed for for banking union in particular to progress. But reducing fragmentation is also something that is needed. Sorry, I've been a bit long.
Thank you. Giovanni Enedis, this is what you said, Enedis. I'll take one more minute. Edis will be back in the in this debate today, I think. Giovanni Crosetto for ECR.
Giovanni Crosetto
Thank you. President Lagarde, thank you for being here today. Let me start by saying that I do not agree with your decision to raise again interest rate and I have already argued about that in our last monetary dialogue meeting. At our last exchange you indicated to me that you did not consider the ECB monetary policy stance to be restrictive as it was calibrated and you pointed to risk of de-anchoring in inflation expectations as a key consideration underlying the Governing Council decision. I have two observation.
First, your public communication has taken on a more restrictive tone with respect to our last meeting. We recognize the difficulty of communicating under uncertainty but I would invite you to share your view on whether the current communication tone is well calibrated to the data. Since that data, and this is the second observation, appear to tell a more reassuring story. Right now inflation expectation remain anchored and there are no clear sign of second round effects materializing in price dynamic and this is also suggested from recent European Parliament research services that this committee distributed few minutes ago, by the way. So, my question is do you consider that the current data justifies the stance and tone the ECB has adopted since our last meeting?
Thank you very much.
Christine Lagarde
Well thank you so much for being attentive to the decisions that we made and the way in which we have communicated and explained, tried to explain the rationale. I'm going to be a little bit repetitive but I think that we have tried to capture as well as possible the the reaction function and the instrument and indicators that we use in order to determine on a meeting by meeting and on the basis of data our decision. And I will refer you to something that I have said earlier, the three criteria, that's what we are what we are using. So inflation outlook where we look at our forecast of inflation and we had a very documented forecast in September which was produced by the entire Eurosystem. We look at the risks surrounding it.
Second we look at the dynamics of underlying inflation which today is mostly about higher energy prices but we're looking to see whether that becomes embedded in inflation and that is largely through second round effects and and in particular wages. Third the transmission of our monetary policy to borrowing cost and to economic growth.
But we are not seeing any sign yet that it is becoming embedded. And to give you an example, we look for instance at collective bargaining agreements and negotiations underway at some of the member states level, whether it's Germany, whether it's France, whether it's Italy, whether it's other countries, but those that actually have an impact on second-round potential second-round effects. And what we're seeing does not give us the sentiment that it is likely to result in second-round effect. It could, and if it does, we have to anticipate it as much as possible because when it's there, it's it's already a bit too late. But we're not seeing anything that tells us as of yet that this second rounds are likely to come.
The inflation outlook will be higher in 27, 28, as you will have seen, we have updated our our projections compared with what we had available in June in terms of projections. But we do not see evidence at this point in time of energy prices feeding into higher wages. As I said, this is important. And growth has been resilient, no question about it. As you know, we have updated our projections as well, both for 26 and 27 since our last meeting.
We have seen new developments, particularly at the longer end of the curve, and long-term interest rates have risen notably. That will have an impact on growth. It will probably slow growth and reduce pass-through by more than projected in our September exercise. So it's on the basis of all that that we made our decision and that we continuously monitor what is happening on the markets. I would add one thing.
We have also tested that against our three scenarios. And the decision that we have made is robust against all three scenarios: the benign, the adverse, and the severe scenario. So I hope I have addressed your question.
You need a follow-up very quickly?
Giovanni Crosetto
Yes, very quickly. In our I go a little bit straightforward, if I may. In our last monetary dialogue meeting, you said that the monetary policy stance was not restrictive at the time. Can you repeat it today, please?
Giovanni Crosetto
Madame Lagarde, in our last monetary dialogue meeting, said that the monetary policy stance was not restrictive at the time. And I will ask you if you can repeat it today, if the monetary policy stance today is not restrictive. I think it will be important.
Christine Lagarde
Well, you know that we do that by reference to a range that has been defined by staff as the neutral rate. And obviously... No, no, I'm not saying yes or no. I'm trying to explain because it's we're not in a business of yes or no. I mean, that that happens in other instances, but not here.
So we are defining that restrictiveness or no restrictiveness by reference to what our staff produces in terms of where is the neutral rate. That's what really helps us defining whether or not it is restrictive. And at this point in time, I would say that we are at the upper end of that range, which is 2 to 2.5%. And we are not driving our monetary policy with reference to the neutral rate. But we're driving our monetary policy and our reaction function, as I have just mentioned to you, using the three criteria on the basis of the data, on a meeting-by-meeting basis, and with in view the the potential risk of second-round effect and the risk of de-anchoring of expectations.
But we're looking at a multitude of data.
So I would really like you all to understand that it's not by reference to the neutral rate, it's not by reference to the price of oil or the price of gas or the price of electricity or even the price of fuel, but with reference to multiple data that we need to define our monetary policy. Thank you.
Gilles Boyer
Merci Mesdames les Présidentes, merci Madame Lagarde pour votre présence et pour vos explications aujourd'hui. De ma part, deux questions sur l'euro numérique. Je pense que vous auriez été déçue si j'avais choisi un autre sujet. Nous sommes actuellement en négociation pour finaliser notre position commune d'ici la fin de l'année. Ça fait longtemps que nous l'attendons, mais je, sans faire de promesses, nous espérons avoir trouvé un accord d'ici là, même si les divergences restent à ce stade importantes.
Je voulais savoir côté Banque centrale européenne comment avançaient les préparations techniques et si la législation est mise en place rapidement, est-ce que nous pouvons espérer voir les premiers euros numériques dans nos nouveaux comptes à partir de 2029 comme cela a été évoqué ? Ma deuxième question porte sur les risques de sanctions extraterritoriales qui ne cessent d'augmenter. Un exemple récent avec les menaces du président américain contre les membres de la Cour pénale internationale et les sanctions qui ont été prononcées. Et je crois qu'un des objectifs de l'euro numérique est précisément, en tout cas c'est un des objectifs que nous nous fixons, de pouvoir aider les individus sanctionnés par un pays tiers et qui se retrouvent exclus de tout mode de paiement digital, ce qui est évidemment très pénalisant dans la vie de tous les jours. Je voulais savoir comment à votre avis pouvons-nous nous assurer que les banques européennes ne se trouveront pas elles aussi sanctionnées si elles fournissaient les services de l'euro numérique à des personnes visées par les sanctions de pays tiers, des citoyens européens visés par des sanctions de pays tiers.
Merci Madame.
Christine Lagarde
Merci beaucoup Monsieur le député Boyer. Je vais vous répondre en français, tiens, pour un petit plaisir de ma langue maternelle. D'abord merci de votre fidélité à l'euro numérique. C'est vrai que j'attendais toutes les bonnes questions de vous, mais l'euro numérique évidemment. Merci aussi d'indiquer que vous espérez vivement que le processus législatif sera terminé avant la fin de l'année 2026.
Parce qu'en fait notre calendrier repose sur vous. Si le processus est achevé avant la fin de l'année 2026, oui je vous le dis, en 2029 les euros numériques seront disponibles pour nos concitoyens. Si en revanche le processus dans lequel vous êtes engagé activement dure au-delà, ça rendra l'objectif de 2029 beaucoup plus difficile. Et moi personnellement je ne serai plus là en 2029. Vous j'espère que si, mais ça me désolerait qu'on aille au-delà de 2029, vraiment.
Avec le travail de préparation que vous avez engagé, la bataille législative dans laquelle vous êtes, j'espère vraiment qu'on arrivera à une conclusion avant la fin de l'année 2026 parce que ça permettra aussi de lancer le pilote, puisqu'on va passer par une phase pilote, dès la deuxième moitié de 2027. À votre sanction, enfin la question que vous posez à propos des sanctions, elle est aussi intimement liée au processus législatif dans lequel vous êtes engagé. Et il y a en particulier, vous savez que l'euro numérique pour nous bien sûr va passer par l'intermédiation bancaire, mais doit aussi être inclusif et en particulier doit pouvoir être utilisé par les 13,5 millions d'Européens qui aujourd'hui ne sont pas dans le système bancaire.
Donc avec la désignation par les autorités nationales d'une institution, que ce soit la poste ou que ce soit d'autres autorités qui hors circuit bancaire pourront permettre la distribution et l'utilisation de l'euro numérique. Ça c'est le premier élément. Le deuxième élément, c'est qu'il faut vraiment que l'euro numérique soit un droit pour nos concitoyens membres de l'Union européenne. Si et et à cet égard, il faut que ça puisse être à la fois disponible dans une application sur leur téléphone par exemple, comme ça peut l'être, donc les deux sont parfaitement compatibles, mais il faut que les deux soient là. Et donc ça c'est vraiment un un aspect législatif de votre travail, dans l'application euro numérique et bien sûr dans le le le wallet, enfin dans le porte-monnaie que les établissements bancaires en général mettent à la disposition de leurs clients.
Mais il faut que ce ce droit-là à l'euro numérique soit prévu par le texte. Et à ce moment-là, ça permettra effectivement, de la même manière que ça inclurait les 13,5 millions de concitoyens qui n'ont pas de de services bancaires aujourd'hui, ça permettrait aussi à ceux qui sont susceptibles d'être complètement exclus des services financiers en Europe d'avoir un moyen de paiement.
Et besoin d'un d'un follow-up comme on dit en bon français, voyez. Non, c'est bon. Et je vous rappelle aussi que dans notre projet, dans l'approche du Parlement européen, il y a des éléments pour protéger justement notamment les juges de la Cour pénale internationale auxquels vous faisiez référence, Monsieur Boyer. And now I give the floor to Rasmus Andresen for the Greens.
Rasmus Andresen
Thank you so much, President Lagarde, good to have you back in the committee. I don't know if it's the last time, but at least it's good to have you here. My question goes also in the direction of asking a bit more into the energy price shock we can see. And in fact, this shock basically is a fossil fuel price shock. And recently we could see some studies, both from DG ENER, but also from research institutes like the German Dezernat Zukunft, which found that oil and gas price shocks added around two percentage points to euro area inflation back in 2022, and that broader energy effects account for over half of the inflation surge back in '21 and '22.
Acting on climate change and fossil fuel dependence strengthens price stability, and also this is part of the ECB mandate, also colleague Regner had been touched that issue already. So my question is, how do you assess those kind of dependencies on fossil fuel and the impact for for price stability? And how do you address it also in the decisions you have to take as ECB ECB on when it regarding monetary policy?
Christine Lagarde
Thank you very much for your questions, and let me try to address it from two angles. First on on the facts, because energy costs represent a significant amount of the price increases that we are witnessing. We know that energy prices have have gone up, and that was particularly visible in over the course of of the summer. But we have to go a little bit deeper into that because the price of the Brent or WTI has increased by say 74% relative to pre-war moment.
The price of gas has increased significantly more than the price of oil. But what has increased even more is the price of diesel. And that you can really see through the refining margins, the impact of the reduced capacity of refining that is available in the world as a result of the Middle East crisis, as a result of the damages caused to the refineries there, and as a result of the out of operations that some of the refining capacities are in Russia. So the significant impact is currently on elements that are refined, and that is particularly sensible on crack, on diesel, on jet fuels, and that's what we are attentive to. So it really requires to look deep into where is the price increase located.
That's number one. Number two, energy prices matter, but they're not the only one. So the impact of energy prices not just on prices, but on growth is something that we look at. The impact of long-term rates is also having an impact on activity and as a result on inflation. The impact of El Niño on food prices, how and when it will impact.
All of that matters. And I would add a third factor, which is the lag time that we observe in relation to the price of energies. There is a time lag between the rise in oil and gas and electricity and the impact that it has on prices observed on the market. So we have to take all that into account to anticipate what will be the impact on inflation in general. And that's what we try to do.
Rasmus Andresen
That's what you try to do and I agree on that you need to take all of that into account. But I would ask you if you think also in the monetary policy operations you're dealing with, you're doing enough and you're addressing climate-related risk enough, or if you think, for example, that you could do even more as ECB, for example, by assessing the composition of asset purchases or also with changes to the collateral framework you're dealing with. My feeling is there is still a bit room for improvement and I would like to hear your thoughts on that as well.
Christine Lagarde
Sure. Well, we are not buying assets anymore. We are letting the portfolio of all assets held run through maturity, but we're not purchasing anymore. On the collaterals, thank you for raising that point because as you know, we have addressed the value of collateral by factoring into that value climate change impact. And we have now extended, as you know, this has become applicable as of last July in relation to the corporate portfolio.
We are now extending it to the credit claims, which is a much, much broader set of collaterals, and that will become applicable as of July 2027. So yes, we are factoring into our assessment of the value of collaterals climate change impact and the risks associated with it.
Jussi Saramo
Thank you, Madam Chair, and thank you, Madam President. It's always a pleasure to have you here. And now we have got very good answers, so thank you all. And I don't want to repeat what was said, so I'm trying to, I will probably be very short. In these uncertain times, what's happening in the Strait of Hormuz, between Russia, Ukraine, everything you just answered about the energy prices and the price of food.
No matter what, we are having a deepening cost of living crisis in Europe, which we as politicians, we see it. And in addition, we have the uncertainty of the AI investment boom.
But the decision of the ECB to raise interest rates of 10th of September, it doesn't seem to be neutral on this crisis. And while it seeks to curb inflation, it cannot address the root causes of all these price shocks, as was evident what you said before. But on the contrary, it risks undermining economic development and raising both the cost of housing, in Finland we see it immediately because of our system of banking system, and also the cost of green investments. And it may therefore also reduce our ability to withstand similar shocks in the future. So my question is that since we have experienced similar shocks in the recent past, does the Governing Council see the situation in the same way, or is there room for different choices?
We just heard that ECB is not buying assets anymore, but should it, like, are there any different options we could do? Thank you.
Christine Lagarde
Well, thank you very much for your question, and having been at the informal Euro and Ecofin Committee last week now in Dublin, it gave us a good grasp of what problems the Irish population is facing, particularly in relation to housing. That's not just Ireland, I think Spain is also facing the same issues at the moment where the price of housing has clearly increased significantly. So obviously we have to embrace these market issues, and I'm saying market on purpose because I think that there is an issue of supply and demand on those markets, and very short supplies for reasons that are idiosyncratic to each Member State. Obviously we're looking at the price of mortgage, and it is a fact that the price of mortgage has gone up a little bit because there is transmission of our monetary policy and because the cost of financing has increased both for the corporate, very limited, and to the households, very limited at least so far for the moment, but it's part of the story and part of what households and families are facing at the moment. Having said that, we need to look at, you know, the counterfactual.
We have to look at our reaction function, what can work in order to make sure that price stability is returned to the 2% target, and what would happen if we did not do such thing, and if price instability was to result from our incapacity to address those issues. And I think that on balance it's pretty clear that we have to stick to that mandate of price stability, we have to make the decisions on the basis of these three criteria that I have mentioned earlier on, we have to test that against our scenarios given the level of uncertainty, and it's a decision that honestly, I've said that once and I would happily repeat it, was a no-brainer for the Governing Council, so much so that they decided unanimously that that was the right decision to take. Thank you.
Thank you. Second round of questions, so you have one minute for the question now, and I give the floor to Luděk Niedermayer for EPP.
Luděk Niedermayer
Thank you, Madam Chair, I will do all I can. So, unlike my colleagues, I consider the ECB monetary action as well justified and explained. I guess the reason is the situation at the energy market, Hormuz, and also the speculation of those who are using the gas storages in the in the EU. As you said rightly, Madam President, the common wisdom is that the action of the government should be targeted and limited, but in reality we have seen like half of the member states using the tax policy. So I wonder how difficult is it for ECB to react because pass-through of high oil price will be different in different member states depending on the tax tax reaction.
And secondly, wouldn't it be better if there would be some coordination? And also, you know, there is interplay between VAT and consumption tax, because the governments have a windfall from high oil oil price through VAT. So there could be in theory some kind of numerical adjustment for that that would lead to more coordinated reaction. So how you how would you see this this possibility? Thank you.
Christine Lagarde
Thank you very much for you for your two questions. On the on the first one, we have tried we try to assess what is exactly the magnitude of the support packages that are decided on a on a broad basis in the euro area. And we look at member states' sort of definite announcements to really be on the safe side here. And at the moment, our assessment is that it represents 0.1% of GDP. I know it sounds small, on the face of it when you listen to member states' numbers you think it's a lot more, but I I trust the European Central Bank staff to really be very, very attentive to what is decided, what is strongly announced with likely result.
It is 0.1%. Their assessment, and obviously that is model-driven, is that the impact on inflation will be in the range of 0.1% as well. So yes, it does have an impact, that's what we anticipate in terms of inflation number. How much coordination should there be? I think there is a lot of goodwill.
When I sit in the Eurogroup meetings, all members say yes, we will coordinate, yes, we will talk to each other, yes, we will try to apply best practices. And the reality is that under political pressure at home, domestically, there is often an urge to move without much by way of coordination. So coordination is is nice to have, more lip service than reality. That's my sense. I mean, you know me, I'm I'm candid, I'm just telling you as I see it.
René Repasi
Thanks, Madam Chairwoman, Madam President, thanks for being here in the monetary dialogue. I would like indeed to follow up on Luděk Niedermayer's question, but being a social democrat with a slightly different angle. So you were indeed referring we discussed the higher energy prices, you made clear this is has a certain impact, but it's not yet embedded inflation. We have signs ahead of it, and we need to have a measured approach to address it. So it is not yet embedded, but there is a risk, so reaction should be done.
For now you rule out monetary policy measures as being maybe a bit too disproportionate measure in order to address the energy prices that we do see. At the same time, we see that, for example, the German Cartel Office, looking at the refining businesses, consider an abuse of a dominant position in the way of how prices were increased. And you referred also that the main effect can be seen in the refining margins globally, and Europe has a special special role to play in here.
So we do see that there is a certain artificial part in it that is rising those prices. They give an inflationary outlook whilst not being embedded, but the risk is there. So given that monetary policy measures are not really available or at stake, wouldn't you recommend that now state measures, so fiscal measures, should actually be adopted and in that sense actually tax policy measures that address those excess profits and whether therefore a coordinated European-wide windfall profit tax would not be the appropriate measure to address those risks so that they actually do not turn into inflation?
Christine Lagarde
Thank you very much. There's plenty in your question. First of all, I would not say that we are facing artificial price increases because I believe on the basis of all the information that we can harness, and it's scattered and some countries don't want to really discuss that too much, but it's very clear that refinery capacity are short of what is needed to actually produce in accordance with the needs and to respond to the market demand. That's that's a fact. So I don't think it's artificial.
It's a matter of supply being restricted by a shortage of refinery capacity. I'm glad that you mentioned the gas reserves and the fact that it probably contributes to having increased the price of gas more so than the price of oil. Second, I would disagree with you when you say that monetary policy is ruled out in order to address those issues. That's not what I'm saying. What I'm saying is that based on our monetary reaction function, we believe that a measured approach is appropriate and we believe that we are in a good position to respond to future development.
And our goal is not, and I've said that before so I'm happy to repeat that, interest rates do not move in lockstep with energy prices. We are looking at how energy prices risk being embedded in inflation. So we look at multiple data to identify to identify that. The heart of your question has to do with should there be a tax on windfall profit? And that is something for obviously other authorities than me to decide.
There has been a proposal led by Spain if I recall that was put to colleagues in that respect. You know, it's I would simply mention that defining what is windfall profit is not an easy job. But as far as tax is concerned, that's outside my remit. Thank you.
Thank you, and I now give the floor to Mr. Avtias for EPP.
Georgios Aftias
Dear colleagues, I will talk to Greek. Λοιπόν, σήμερα κυρία Λαγκάρντ θα θυμηθώ εκείνα τα χρόνια στην Ελλάδα. Ελάτε. Κυρίες και κύριοι συνάδελφοι, με την κυρία Λαγκάρντ γνωριζόμαστε πολλά χρόνια όταν η Ελλάδα έδινε τη μεγάλη μάχη για να κρατηθεί όρθια στην Ευρώπη και βοηθήσατε πάρα πολύ κυρία Λαγκάρντ. Πάω στο θέμα.
Αυτή τη στιγμή το βαρέλι ξεπέρασε τα 108 δολάρια και αυτή τη στιγμή η μεγαβατώρα στη χονδρική είναι διπλάσια του Ιουλίου και αυτή την ώρα οι αποθήκες καυσίμου στην Ευρώπη είναι μόλις στο 70% ενώ έπρεπε να είναι γεμάτες. Ρωτάω και θέλω να μου απαντήσετε με το χέρι στην καρδιά εάν η Ευρώπη αποφάσιζε για όλα τα κράτη να έχουμε τι;
Να έχουμε εξαίρεση αυτών των δαπανών από τους προϋπολογισμούς. Δηλαδή πληρώνει η κοινωνία, πληρώνει ο καταναλωτής, πληρώνει και το κράτος. Και κάποιος άλλος χαίρεται στο πέραν του Ατλαντικού. Ρωτάω λοιπόν αν υπήρχε εξαίρεση δαπανών για την ενέργεια, δηλαδή ό,τι πληρώσουν τα κράτη να αφαιρεθεί από το έλλειμμα, θα το βλέπατε ως θετικό μέτρο; Και κάτι άλλο.
Είπατε το 2029 δεν θα είστε εδώ, θα είστε πρόεδρος της Γαλλίας.
Christine Lagarde
I thought we were friends. So on, you raised several issues. And you know, the deeper we go into this energy markets, the more complicated and tricky it is. You are right to flag the difference in price increases between oil and gas. Oil having increased by about 74% relative to pre-war and gas by a factor of 170% more.
So the increase in gas has been far more significant than the increase of oil. And as we were discussing earlier, the price of refinery, refining has increased substantially as well because of the shortfall of capacity to refine. Now, I understand your question to refer to tax on the top of energy raw numbers, if you will, and whether that would be an appropriate thing to do. You know, everything has, everything cuts in two ways. Losing fiscal revenue on the one hand, removing the price signal that is important, particularly at a time when you want to transition from fossil energy to non-fossil and renewable energy, all of that has downside aspects to it.
So I think that the approach taken by the Commission, by many member states and certainly that we approve of, of having a targeted, temporary and tailored approach to the support that is needed by those that are most exposed, either because it's part of their job that they have to drive a lot and use a lot of gas or because of their revenue base, I think that's a better approach than to address it on a broad basis. Thank you.
Monsieur Pierre Pimpie, vous avez la parole.
Pierre Pimpie
Bien. Alors en fait, donc cela pourrait vous surprendre, mais moi je ne vais pas vous faire le reproche des 0,25 en plus sur les taux qui sont donc en fin de compte à 2,25, ce qui peut paraître peu donc si on voit les taux donc en ce qui concerne la Fed qui sont plutôt de l'ordre de 4,25 et puis ce qui peut aussi sembler peu si on voit le taux de l'inflation qui donc est plutôt de l'ordre de 3 et donc il se peut que ce soit plus. Et en fait donc je voudrais savoir s'il faut que l'on regarde cela plutôt comme un avis de prudence, j'oserais dire peut-être un aveu de faiblesse par rapport donc à des pays de la zone euro qui sont véritablement confrontés donc à des dettes très très fortes.
Et en fait donc quand on voit en France que les taux pour les OAT, les taux longs sont en train de flamber, enfin une flambée donc on se rapproche des cinq, donc en fait je crois que vous avez dit que vous n'envisagiez pas de nouveaux rachats de dettes souveraines, donc le QE. Donc est-ce que en fait l'inflation c'est une façon de traiter ce problème de dette qui reste très fort et qui s'aggrave au sein de la zone euro donc avec des taux réels qui sont en fait en dessous de zéro ? Je vous remercie.
Christine Lagarde
Merci, merci beaucoup de votre question. Je crois qu'il n'y a aucun doute que la Banque centrale européenne est concentrée sur son objectif qui est celui de la stabilité des prix avec objectif de retour à l'inflation à 2 % moyen terme. Ça c'est intangible et ça restera notre ligne de conduite. En ce qui concerne les taux, dans le monde entier et en particulier aux États-Unis parce que c'est ce marché-là qui est le plus profond et qui produit des effets secondaires si j'ose dire ou des effets indirects plutôt évidents, les taux longs ont augmenté, c'est un processus graduel qui est lié à de multiples facteurs mais qu'on a observé depuis déjà un certain nombre de mois. Qu'il s'applique plus particulièrement à certains pays plutôt qu'à d'autres c'est une réalité.
Je pense que ce qui est impératif c'est pour tous les pays de la zone euro puisque c'est ceux auxquels la Banque centrale est particulièrement attachée, il faut que les pays de la zone euro respectent leurs engagements en matière de finances publiques, respectent en particulier leurs engagements de soutenabilité de leur dette et ça c'est un impératif qui s'impose à tous. Merci.
Ľudovít Ódor
Thank you, thank you and welcome back, Madam President. I have three questions. The first one is coming from the monetary dialogue preparation from the experts that do you plan to work out scenarios regularly based on AI risk because there is a quite huge uncertainty regarding the outcome of those scenarios from rosy ones to completely black ones. My second question is to energy prices because if we are talking about AI, this also increases the demand for energy. So if we have two huge increases, one is coming from greening the economy, the other one is from AI and the cuts in supply, it can have relatively huge impact on energy prices.
And my third and last question is that actually if we if one of the scenarios is a disruption of workers and fiscal policy should react to that, are we prepared for for that? Do we have enough fiscal space to deal with that kind of scenarios?
Christine Lagarde
Thank you very much for some great questions.
So on on the monetary policy meetings that we have, we do not plan to publish scenarios systematically. We try to do that when it's really relevant, pertinent, when it it tests the the robustness of our decisions and and we want then to share with with observers, analysts and the markets. Do we take into account artificial intelligence risks? Yes, we do. I think my recollection is that we will have a seminar in the near future within the Governing Council of the Eurosystem at the ECB to focus on this in particular.
I don't know whether that has given rise to a specific scenario yet, but I would be very surprised if in the near future we did not have that as well. Energy prices, energy demand resulting from the development of data centers and of the need to have computing capacity in Europe. I remind you that, you know, if you look at the entire world, the US has about 80% of computing capacity, Europe has 5%. So there is no question in my mind that we will develop and increase computing capacity, which means more data centers, which means more energy associated with the development. I think if anything, it should really push us in the direction of developing renewable energy and moving into this this green energy that is that will be badly needed.
Will there be a transition? Will there be a moment when social acceptance of those data centers and the absorption of energy by data centers come about? It's possible. It's really possible and it's already the case in some member states actually. The disruption of of workers.
So based on what we see empirically in particular, we are not seeing displacement of workers. We're seeing less hoarding in the numbers. We are seeing in some sectors, in some segment of the corporate world some firing, but some hiring as well. So from a macro point of view for the moment, we are in positive net territory. But what I was saying, I think it was in the one of the earlier questions, is that if there is more replacement than strict enhancement, it will require to rethink the tax base on which tax is levied in order to reallocate.
That that's in my view an inevitable consequence of what is happening. If there is more enhancement than replacement, it would mean more training, reskilling of workers that will also have a cost. So I think that all those displacement or enhancement will have consequences, both at the public level for tax authorities to think it through and also at the corporate level for training programs to be financed. Thank you.
Jonás Fernández
Thank you, Chair. I will speak in Spanish. El pasado mes de julio la Comisión hacía público su comunicación sobre la competitividad del sector bancario. En sus primeras intervenciones ha hecho algún comentario sobre la situación de la Banking Union, pero me gustaría ofrecerle la oportunidad de que nos diera alguna opinión más. La Comisión habla sobre, en fin, sobre los mandatos de las agencias supervisoras, sobre la revisión del marco supervisor para internalizar la opinión de los distintos supervisores nacionales y de los europeos.
Es decir, yo creo que hay más elementos en esa comunicación que creo que merecen alguna reflexión por su parte o que al menos a mí me gustaría escuchar su reflexión. Gracias.
Christine Lagarde
Mr. Fernandez, you make my day because there was something that I really wanted to leave with you. And if you allow me, I'm going to dig my exact... But I really want to tell you. So, let me just grab that quickly because I think it's really important. Which page is it?
Okay. It's coming, it's coming. See, I have so many briefings, but there is one that I really like. No, it's not that one. No, it's the simplification measures that we prescribed.
Okay. I apologize for this moment. I think it will be discounted from my response time. So I just want to say a few words about this concept of competitiveness and particularly the principle of simplification, which obviously contributes to competitiveness and which is much advocated by the industrial sector directly concerned. You referred to the high-level task force that worked earlier this year and which has released a number of recommendations, which have also helped the ECB and the SSM assess the competitiveness proposals in the communication of the Commission, which we largely agree with, largely, or broadly, that's the term of art, we broadly agree with the recommendation.
I think there is one point of difference that I will be happy to come back to. But what I wanted to share with you, because I think it came as a bit of a surprise to me because it happens within the SSM, is examples of simplification that are happening now, because the SSM anticipated what was going to be a requirement and they have taken measures. So I'll give you a few examples. The SSM has discontinued, so cancelled, removed, wiped out, 40 of the 100 guidelines previously existing. It has halved, divided by two, the data points that banks need to report.
It has introduced fast-track procedures to approve banks' capital transactions. And we have reviewed our yearly supervisory assessment process to make it faster, more efficient and enhance the transparency to banks on the key risk drivers of supervisory requirements. So the allegation that this work was obscure, not transparent, confusing and overloaded with a lot of expectations, requirements and guidelines, that has already been taken into account by the SSM. So I'm advocating for the SSM here, but I think that it's worth of your time, precious as it is, to really appreciate that things are actually happening in real life, notwithstanding the communication of the Commission with which we broadly agree. I said that there was one point where we are still making suggestions and discussing with the Commission, and this is the instance within which the overall capital of banks would be looked at and views be formed, where the Commission would like to have a rather small grouping and we believe that the macroprudential forum is one possible instance, the ESRB might be one, there might be options.
But this is an area where we are still debating and making suggestions. Thank you.
Katzis, any request for the floor? On my list so far I have Mr. Nikolaou-Alavanos.
Lefteris Nikolaou-Alavanos
Ευχαριστώ κυρία Πρόεδρε. Σε 10 χρόνια οι τιμές των κατοικιών αυξήθηκαν 61%. Το στεγαστικό χρέος ισοδυναμεί με 76,5 του συνολικού ιδιωτικού δανεισμού. Στην Ελλάδα funds και servicers κρατούν περιουσιακά στοιχεία 80 δισεκατομμύρια ευρώ, χιλιάδες κατοικίες βασικά φτωχών εργαζομένων, βιοπαλαιστών, αυτοαπασχολούμενων, αγροτοκτηνοτρόφων. Οι κυβερνήσεις Τσίπρα-Μητσοτάκη ξήλωσαν κάθε προστασία της λαϊκής κατοικίας.
Τώρα οι συνεχείς αυξήσεις επιτοκίων κάνουν την αποπληρωμή των δανείων αδύνατη με το λαϊκό εισόδημα εξανεμισμένο από την πολεμική πράσινη ακρίβεια, ενώ οι πράσινες προδιαγραφές με κριτήριο τα κέρδη των ομίλων εκτοξεύουν τις τιμές κατοικιών και ενοικίων. Ολόκληρες οικογένειες, ηλικιωμένοι, ΑμεΑ πετιούνται στο δρόμο βάσει οδηγιών της Ευρωπαϊκής Ένωσης σε Ελλάδα, Ισπανία, σε όλα τα κράτη μέλη. Κυρία Lagarde, στον προηγούμενο νομισματικό διάλογο δηλώνατε ότι λυπάστε για εκείνους που φορτώνονται τα βάρη. Όμως είναι η Ευρωπαϊκή Κεντρική Τράπεζα και ο SSM που κατευθύνουν τράπεζες και servicers στο όνομα της μείωσης των κόκκινων δανείων να θέτουν ετήσιους στόχους πλειστηριασμών, ξεσπιτώνοντας εκατομμύρια ανθρώπους σε όλη την Ευρώπη. Έχετε κάποιο σχόλιο για αυτό;
Άλλαξε η τοποθέτησή σας από την προηγούμενη φορά που κουβεντιάσαμε;
Christine Lagarde
Well, on a personal note, I'm obviously sympathetic and saddened to see some people losing their house, and I've been particularly attentive to what is happening in Spain at the moment, but I know that this is also an issue in other countries as well. Now, as President of the ECB and head of the Eurosystem, what I have to do is make sure that there is price stability. And in order to provide price stability, one of the few instruments that we have available, given what I told you earlier about our monetary policy stance, the observation of multiple data points, and the expectations of inflation and the second-round effect risk, we have taken a decision of increasing by 25 basis points, 0.25%, our interest rate. And that obviously at some stage will travel through to borrowing costs. I would contend that this is not the major factor in the housing crisis of supply and demand in many countries.
The mortgage prices, based on our observation, has increased by 0.01% for households as a result of the latest increase that we decided back in June, similarly 25 basis points. So I don't think that this is where you will find the solution to what is obviously a crucial problem for the people, in other words, find a house and have stability and a roof over their head that is not always questioned.
Aurore Lalucq
Thank you. Any request for the floor? Non, eh bien c'est le moment de conclure ce dialogue monétaire. Je voudrais remercier à nouveau la Présidente Lagarde d'avoir répondu à toutes nos questions qui portaient beaucoup sur la politique monétaire plus que sur la question d'ailleurs, en fait, du risque aussi d'instabilité financière face à l'intelligence artificielle et du lien avec la dette et notamment les bons du Trésor. Merci infiniment.
On fait une pause et on revient à 17h45 pour un meeting in camera, et le prochain dialogue monétaire aura lieu le 30 novembre. Merci beaucoup.