Amendments to financial regulation to facilitate economic recovery post Covid-19

Key points:

The EESC

• supports the proposals for amendments to the directive on regulation of the financial markets. The amendments seek to substantially simplify the documentation and requirements regulating the financial markets and to lessen the administrative burden on banking and financial operators and so free up resources for investment in economic recovery.
• finds that every effort must be made to i) facilitate investment in the real economy; ii) foster the granting of loans to individuals and SMEs, and iii) encourage the recapitalisation of companies in the Union and the strengthening of the role of securities markets.
• welcomes the simplification of some of the burdens imposed by financial regulation on eligible counterparties and professional investors, but underlines that regulatory simplification must not reduce the safeguards for savers and less experienced investors.
• backs the Commission's aim of bringing down compliance costs and avoiding wasting material resources by significantly reducing the production of paper documentation on investment in favour of digital tools.
• especially welcomes the aim of making securitisations dealing with non-performing exposures easier to allow banks to free part of their balance sheets and so boost their lending capacity at a time when this capacity is vital.
•  finds that the regulatory framework securing non-performing loans currently in force contains rigidities that could have a negative impact on the real economy, and in particular on SMEs, in the current economic context that is undermined by the pandemic.
• is of the opinion that particularly rules relating to the timeframe for banks to dispose of non-performing exposures must be managed with care, to avoid putting companies in (further) difficulty if banks are persuaded to get rid of these loans within too brief a timescale.