[Text/Observer Network Wang Yi] German Chancellor Mertz called for the establishment of a unified European stock exchange to help European companies raise funds and grow locally, so as to avoid being forced to go public in new york, USA, and avoid "becoming a vassal of the two major economic centers of the United States and Asia".
The Financial Times pointed out on October 16th that Germany was one of the key member states that hindered the integration of EU capital markets before. Now, Mertz's remarks are regarded as a signal of Germany's support for the integration of EU capital markets.
“We need a unified stock exchange so that successful companies like BioNTech do not have to be listed on the New York Stock Exchange,” Mr. Murts said in a speech to the German Bundestag on April 16, local time, “Our company needs a sufficiently large and sufficiently deep capital market for better and faster access to financing.”
He also warned that the development of Europe in the coming years will determine its fate in the global economic landscape, “the coming weeks, months, and even years will determine whether Europe will continue to exist as an independent economic power or become the midwife of the two major economic centers of Asia.”
The Financial Times said the statement was worth the consensus reached between Germany and France to agree to cooperate to accelerate the European Capital Markets Union (CMU), including transferring part of the regulatory power to a unified European regulatory authority, which meant Germany had given up its long-standing opposition to the transfer of regulatory power from the German Federal Financial Regulatory Authority (BaFin) to EU institutions.
The EU’s capital market integration program has been hindered for years, largely due to countries such as Germany, Luxembourg and Cyprus opposing the centralization of regulatory powers to the European Securities and Markets Authority (ESMA) based in Paris.
Former European Central Bank President Draghi clearly pointed out in his report that the EU should establish a capital market union and a unified regulatory mechanism similar to the US Securities and Exchange Commission (SEC) to reduce regulatory fragmentation and improve investment efficiency to help the EU re-compete with China, the United States and other countries.
Three people familiar with the matter previously revealed to the newspaper that German Deputy Chancellor and Finance Minister Klimbayer had agreed to explore areas in which centralized supervision could be implemented in joint preparations with France.
Murts, who served as a consultant to the American Belgrade Group and as a director of the German Stock Exchange Group, is regarded as a senior figure in the field of capital markets, promoting the establishment of a unified European stock exchange and is also interpreted as part of his efforts to revive the German economy and get rid of the country’s three-year growth stagnation.
In terms of markets, major European exchange operators have responded positively to Mertz's call. Euronext CEO Stéphane Boujnah said in the statement that Euronext has always firmly believed that "in Europe, it is better to succeed together than to fail separately" and said that the company is "ready to promote the next phase of integration in the European market, build a deeper liquidity pool and provide financing for the growth of European enterprises".
Burner said that giving ESMA regulatory powers would help address the “disparity between regulatory and supervisory standards,” stressing that “Europe needs to move decisively towards unified regulation.”
In a statement, the German stock exchange also supported Murts’ claims, saying that “the EU has more than 500 trading platforms, forming the world’s most decentralized and untransparent market, with only about 30 percent of stock transactions taking place on transparent open markets.”
The agency believes that market fragmentation has severely restricted initial public offering (IPO) activity in Europe and weakened companies 'ability to raise funds locally.
The Financial Times mentioned that the European Commission is currently drafting a proposal to give ESMA more regulatory powers within the year, including the supervision of systemic financial institutions such as central counterparties, central securities depositories, trading platforms and cryptocurrency exchanges. However, Germany still opposes ESMA's involvement in encrypted asset supervision.
On the eve of the upcoming EU summit next week, Merts also outlined a broader European reform vision, calling for deeper integration, reducing excessive regulation, and implementing proposals from Draghi and former Italian Prime Minister Letta to further remove barriers to the circulation of goods, capital, labor and services within the EU.
According to Drugi’s report, the growth gap between the EU and the United States is largely due to weak European productivity growth, “productivity is the core prerequisite for competitiveness... Europe can only regain growth momentum through profound change.”