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The Commission has published a Green Paper to discuss ways to regulate the shadow banking sector, an essential source of liquidity outside the regular banking system.
The EESC believes the players in the sector that include hedge funds, money market funds and structured investment vehicles should be subject to the very same regulatory and prudential requirements as the financial system as a whole.
The Committee insists the entire financial sector must assume social responsibility by moving beyond mere speculation and by serving economic growth.
The EESC welcomes these proposals on sovereign bond-backed securities (SBBSs), which fit into the broader context of completing the Banking Union and building a Capital Markets Union (CMU). Moreover, the proposals also have the potential to make a positive contribution to financial stability and resilience. The EESC has been strongly advocating a weakening of the link between banks and their home countries ("sovereigns") and therefore welcomes that SBBSs aim to contribute to this. The EESC considers that in conceptual terms, the idea of SBBSs is an attractive one and feels that the only way to find out whether banks will switch from bonds from their home countries to SBBSs for their investments and whether investors will be prepared to buy "junior" tranches in sufficient quantities to justify the creation of SBBSs, is to test this new financial instrument - the SBBS - on the market.
The EESC welcomes this legislative proposal which ensures the effective resolution of failing financial institutions within the EU, and supports the introduction of harmonised rules regarding intra-group financial support. The Committee also stresses that the Central Banks, including the ECB, have to be involved in the assessment of the recovery and resolution plans, while remaining independent. Professional advice of consumer organisations, trade union representatives, etc., should also be sought. The Committee encourages a greater degree of certainty for the institutions by introducing explicit and more clearly defined rules. The opinion demands more clearly defined rules for the Special Manager (SM) as a highly intrusive early intervention measure, and points out the need for additional clarifications regarding both the bail-in tool and the Resolution Authorities (RAs).
The EESC wants the conditions be created for an efficient, modern financial services sector with appropriate regulations, which grants access to capital providers by companies seeking investment, especially SMEs and high growth companies, and finds it of utmost importance to overcome the current fragmentation of the markets.
Since a Capital Markets Union (CMU) is to a significant extent a reality for large companies, the EESC stresses the need for measures that will also allow SMEs to benefit from it, for example through accepting simplified standardised criteria for registration on regulated markets, and providing a definition of an emerging growth and high growth company and devoting special attention to the needs of such companies on the capital market.
The euro area needs to step up its external representation. This will strengthen its relative weight in international financial institutions and give it a more prominent position in international financial markets. The EESC endorses the rationale behind the two Commission documents and agrees with the main elements of the three-phase scenario to gain a single euro area chair at the IMF by 2025. At the same time, however, the EESC proposes that the Commission also draft scenarios for making stronger and more effective the links with other relevant international bodies, taking particular account of their remits. The EESC also recommends clearly and explicitly defining the roles of euro area external representation and their dovetailing with those of the EU as a whole, with a view to preserving the integrity of the single market.