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European Commission Communication on longterm financing strategy published

The European Commission (EC) has published a communication on measures which it will undertake in order to improve and facilitate the long-term financing of the European economy. 

This communication is the most substantial contribution to date from the EC on how to stimulate the European recovery following recent sustained sluggish growth.

It includes a number of different proposals for action and is significant, as it impacts all asset classes. The communication sets out a comprehensive framework for the EC’s work in the next 12-24 months and shows that the EC recognises the impact of legislative reforms on the ability of the financial sector to support the economy, and now has the appetite to address problems that stakeholders have identified.

Below is a summary of the concrete actions:

  • Adopt at the latest, in September 2014, the Delegated Acts for Solvency II, including a number of incentives to stimulate long-term investment by insurers
  • Conduct a study on whether, following the improvements introduced by MiFID II for non-equity securities, further measures are necessary to enable the creation of a liquid and transparent secondary market for the trading of corporate bonds in the EU
  • Review of the Prospectus Directive by the end of 2015
  • Further work on securitisation including differentiation of “high” quality securitisation and exploring a possible preferential regulatory treatment
  • Review the covered bonds treatment in the CRR by the end of 2014 with a view to building the basis for an integrated European covered bond market
  • Conduct by the end of 2014 a study on Private Placement markets in Europe
  • Undertake in 2014 a mapping of the EU and national legislation and practices affecting the availability of SME credit information, with a view to considering possible EU approaches to the credit scoring industry and assessing the feasibility of harmonising/increasing the comparability of SME data across the EU
  • Consider the viability of a single portal for information on infrastructure investment plans and infrastructure projects by national, regional and municipal authorities
  • Evaluate the feasibility of collecting and, where possible, making available comprehensive and standardised credit statistics on infrastructure debt
  • Consider a proposal for the revision of the Shareholder Rights Directive to better align long-term interests of institutional investors, asset managers and companies
  • Consider a Recommendation aimed at improving the quality of corporate governance reporting, a report on incentives for institutional investors and asset managers to take better account of ESG in their investment decisions, and a study on fiduciary duties and sustainability

Next Steps

As a newly-elected European Parliament settles down to begin their term in June 2014,  the five-yearly term of European Commissioners will also be drawing to a close in the summer, and new Commissioners will have to be approved by the European Parliament before they can begin to drive through legislative reform.

Therefore whilst the EC may continue to work on these stated actions throughout 2014, it may not be clear until Q4 of 2014 which particular reforms are likely to take priority. This strategy however has the potential to set the tone for the new term of Commissioners and MEPs.

Read further detail on the communication and proposed actions (pdf 221kB).

Last updated 01/07/2016