Ireland in prime position to become significant hub for EU capital markets if reforms take place – BPFI proposals ahead of Euro Elections
Call for policymakers to develop single, harmonised capital markets union and revive securitisation market enabling Ireland to position itself as go-to location for leading global market makers
Tuesday 21st May 2024 – Ireland is in a prime position to become a significant hub for key capital markets activity within the EU, according to Banking and Payments Federation Ireland’s (BPFI) EU policy recommendations for 2024-2029, published today ahead of the forthcoming European elections.
Today’s EU proposal launch sets out a range of key financial services-focused recommendations. The document calls on EU policymakers to pursue several critical reforms for a single, harmonised capital markets union in Europe to address the bloc’s flagging competitiveness. It also highlights how Ireland can position itself as the central EU location for key trading and capital raising activity. It further identifies opportunity for Ireland as a key location for the arrangement and structuring of securitisation in the EU, provided much needed reforms are adopted.
Commenting on the publication and its recommendations Brian Hayes, Chief Executive of BPFI said: “What happens at an EU level matters hugely to Ireland both from a jobs and growth perspective. 80% of all Financial Services legislation in the EU emanates from co-decision making of the European Parliament and the EU Council. The upcoming EP elections take place against significant change globally and at a time when the EU is falling behind other regions of the world in the global markets. As we look to the next mandate of the EU institutions and the measures now required to ensure the bloc can regain its competitiveness, there is a huge opportunity here for Ireland particularly in respect of the Capital Market Union agenda.”
“One of the key challenges faced by Europe is capital markets fragmentation especially when compared to the US. The EU’s share of global trade is now lower than it was twenty years ago, while its stock market capitalisation is less than half that of the US, in percentage of GDP, and also lower than that of Japan, China and the United Kingdom. In order to increase competitiveness and attract global capital to support the large-scale funding needs of Member States a single, harmonised capital markets union is viewed as essential. The EU has tried before to promote CMU and success so far is limited.”
“This revival of the CMU initiative places Ireland in a prime position to become a ‘go-to’ location for key capital markets activity within the EU given we are already a significant hub for leading global market makers providing liquidity in equities, ETFs, derivatives and fixed income. These firms are already ensuring EU markets function by providing essential liquidity across all major EU exchanges and by supporting bond issuance, like the EU’s crucial NextGeneration programme.”
“It is also critical that the EU looks to revive the securitisation market to support further lending to the European and Irish economies. We know that EU governments require €700bn annually to meet climate and digitalisation objectives and getting the securitisation market working is an essential source of new funding. The level of securitisation issuance in the EU is very low compared to the US (€200bn Vs €3trn), leaving significant headroom for growth in this area. For Ireland, having a well-functioning securitisation market is particularly important given the role non-banks play in the mortgage market.”
Mr Hayes concluded: “As the stage is now set for the next set of legislative priorities at EU level, this will have a huge impact domestically and Ireland’s position as a leading centre for financial services must be protected and strengthened over the coming five years. Europe’s flagging competitiveness must be addressed, and we are calling on the Irish government and prospective MEPs to support measures in Europe that will restore EU competitiveness, secure long-term EU growth and ensure a level playing field within the EU so that Ireland can remain an attractive jurisdiction in which to operate.”
Other key priorities outlined in today’s recommendations include making the EU sustainable finance framework more user friendly and ensuring a digitally secure and innovative financial services sector. The full BPFI EU Policy Recommendations 2024 – 2029 can be downloaded here.
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Note: Banking & Payments Federation Ireland (BPFI) represents the banking, payments and fintech sector in Ireland. Together with its affiliates, the Federation of International Banks in Ireland, and the Fintech & Payments Association of Ireland, BPFI has over 110 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.
Contact: Fiona Murphy, Head of Communications, 087 9740046, Fiona.murphy@bpfi.ie or Jillian Heffernan, Director of Communications, 087 9016880, jillian.heffernan@bpfi.ie.
