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Euro Finance Week Initiatives Announced by European Central Bank

Peter Taberner

European Central Bank (ECB) executive board member Yves Mersch has outlined two major initiatives that will discussed at Euro Finance Week in Frankfurt.

In a keynote speech, Mersch said that the capital markets union (CMU) will boost private risk-sharing across borders, making public risk-sharing less necessary and giving greater protection to taxpayers.

The ECB and the Eurosystem has fully welcomed the action plan on the CMU published in September.

Mersch opined that for the capital markets to be homogenised, strong market infrastructure is necessary for capital to travel freely.

The Eurosystem has been proactive he said, with the development of TARGET2 and, most recently TARGET2-Securities, or T2S.

TARGET2 is a long established which processes a inter bank payment system, which also is a cross border arrangement.

CMU will be facilitated more easily due to TS2, as this will allow the banks to hold a centralised pool of capital, that can be moved around where it is needed most.

TS2 has also ensured that barriers to cross border clearing and settlement have been removed Mersh enthused, as a harmonisation agenda was part of the development of TS2.

Mersch also believed SMEs, so starved of financing after 2008 crash, will benefit from the CMU.

The ECB and the Commission are fully in favour of measures, that will alleviate this problem and facilitate a better funding system for them.

Polices that reform integration, innovation, and retail payment systems, have all been put forward to accompany CMU proposals.

Euro Finance Week Initiatives Announced by European Central Bank

Visions for 2020 Revealed

Mersch also said that a second key initiative is currently underway, which is the strategy for market infrastructure that is to be delivered over the next five years.

One of the three main pillars of this creation, are the to explore the synergies between TARGET2 and TS2.

This will be achieved by the consolidation of technical infrastructure, to ensure that TARGET2 can benefit from the state of the art features of the TS2.

The second goal Mersch outlined is to develop a pan-European instant payments solution.

As consumer expectations have changed in the digitalised world, many will now expect a  cross border bank transfer to go through at the same pace as an email.

The harmonisation of collateralisation techniques and procedures, is the third main pillar Mersch alluded to.

Collateral management has become increasingly important following the financial crises.

“The Euro system will look to harmonise and optimise its own internal procedures to make assets available for banks for intraday credit operations in TARGET2 and for monetary policy operations.” Mersch explained in his speech.

Construction Production Down in Euro Area

Economic activity in the construction industry fell by a month on month 0.4% from August to September, according to first estimates from Eurostat.

The industry remained stable as a whole in the European Union, as building construction was reduced by 0.1%, but that was mitigated by an increase by the same figure for civil engineering.

In August 2015, production in construction grew by 0.5% in the euro area, and fell by 0.5% in the 28 member state bloc.

A year on year comparison, showed that construction grew in both the euro area, and the European Union by 1.8% and 0.6% respectively.

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