So good afternoon to all of you, that is the second high-level policy session, and we're going to discuss capital market union, CMU. So this morning was about banking union, this afternoon is about capital market union, and the two speeches by the commissioner and the vice president were, I think, very good transitions from one domain to the other. A lot has been said already on capital market union since the term was coined, I guess, what, three years ago, maybe, just in the wake of the banking union decisions. A lot of thought had been given to both the theory of it and the practice of it, starting with the commission, obviously. So we've heard the commissioner and in a second we'll hear what John has to say about the next steps in implementing capital market union. Also on the ECB side, and clearly the report we're publishing today is part of it. It's just a latest example of it, but also on the academic side and on the part of the industry. So we now have a much clearer vision of what are the challenges, what are the issues, what are the steps in which order, the sequence, what's easier, what's less easy, and I hope all this accumulated wisdom will fuel our discussion. So why is the ECB interested in capital market union? You've heard the vice president explaining why it's important also from a monetary union standpoint. What I would like to add to that, consistent with what he said, but to cover the whole field of what we're going to discuss in this panel, is that certainly one way to look at capital market union is as a complement to banking union, or as a twin sister or brother to capital, to banking union. Complimentary to banking union, aiming at improving resilience by providing different kinds of financing channels and different instruments and different institutions being part of it. So it is clearly a complement to banking union, but it's also, it's more than that. It is also about completing the single market. So it is just another block built on the longstanding process of completing the single market in capital and financial services, and many of the discussions we're having today as part of CMU are in fact just new versions of discussions we've known very well, the Giovanni barriers and the like, which have been around for many, many years. So don't look desperate John, you'll make it, you'll make it. So it's also about completing the single market in capital, so it's about the single market, and it's also about strengthening the economic and monetary union, as the vice president explained. That's about providing new risk sharing channels in the economic and monetary union, which will complement the existing ones and hopefully also the more risk sharing through decentralized markets, through private markets, also the less risk sharing will be needed through public intervention. So in a sense to put it in a simplified way and in a simplistic way, the more capital market unions, the less need for fiscal union, because a lot of what we want to achieve through fiscal union can be achieved through decentralized mechanisms by providing better resilience to shocks in markets. So it has much broader benefits than the pure capital market dimension. The less serious we are about capital market union, in a sense, the less we need to discuss fiscal union, which is also a political answer to all those who fear the political cost and political difficulty of some of the ramifications of capital market union, and we're going to discuss it. Insolvency law is a formidable discussion, very difficult in many countries. Tax harmonization would be even more difficult, but it has something to do also with capital market union, et cetera. All of this is extraordinary difficult politically, but think of the alternative. If we don't do capital market union, we'll have to jump straight directly to a discussion on fiscal union, which will be even more formidable from a political standpoint. So that's our message also to the political authorities, of which we are not, that if they fear that discussion, beware the alternative, which would have to be serious about fiscal union. So better focus on that part of the discussion. So I think I will stop here. I just wanted to tease you and raise the bar in terms of what we expect from our participants. So I'm very glad to have here a very diverse and also formidable. I said the challenges were formidable, but the respondents are also formidable. So we have five speakers who will introduce a discussion by alphabetical order. So we'll start with John Berrigan, who's a deputy director general in DG FISMA, in the European Commission. We'll then move to David Folkaslando, who's chief economist and head of research at the Deutsche Bank. And then Guillaume Prasch is the managing director at Better Finance and will bring the investors and users angle into the discussion. Hauke Stas is a member of the executive board of Deutsche Börser. She has a lot to tell us about capital market union in practice, and in particular when it comes to growth industries and SMEs and everything we want to particularly spur and develop through capital market union. And last but not least, Rick Watson is the managing director of AFME, as we have the Association for Financial Markets in Europe. So we cover the broad range of stakeholders in that discussion. And with a due delay, I give the floor to John. Thank you, Benoit. OK, I would like to, in my introductory remarks, pick up on some themes that Victor mentioned in his, and you have echoed in your comments and Victor raised in his speech. So I'd like to start by looking at this evolving rationale for CMU. Then talk a little bit about the strategy and address this issue of ambitious CMU versus not ambitious CMU. Then I will make a few comments on the status report. I promise not to give you a long list of achievements. The commissioner did not do this morning. I will take my cue from him. And then if I have time, I will approach some of these more fundamental issues that Victor raised about insolvency, frameworks, securities, holders, rights, taxation. If I don't have time, I'm sure I'll get a chance to come back in Q&A. So I will try to be disciplined. In terms of rationale, I think it's important to remember that CMU is not entirely new. It's a resumption of efforts to integrate EU capital markets that predated the crisis. To some extent, this effort was cut short by the banking crisis in 2007, 2008. And we're now returning to that after the crisis in the banking has at least been put through its acute phase and not claimed or through all phases of the crisis. The rationale, of course, has evolved. So it has evolved to reflect and sense the experience of the crisis. So it's no longer just focused on efficiencies and the benefits of scale and scope economies and competition and wider choice, which were very much the focus before the crisis. We tended to leave stability a little bit on the back burner before the crisis because we had this impression that the markets could manage this risk on its own. We were proven wrong on that. So when we come back to the single market for capital and integration, we have now to expand the rationale, not just on efficiency through scale and scope, et cetera, and not just on choice, but also on stability. And capital market union benefits stability in two ways. One, it addresses this over dependence in Europe on bank funding. So it's a diversification tool in itself, a sort of macro diversification tool that makes the economy less subject to shocks coming through one dominant funding source. And also, as we have heard from several speakers this morning and also from Victor now, it's also important as a means to enhance the quality of risk sharing and therefore reduce vulnerability to idiosyncratic shocks. Of course, I agree with Victor that although CMU is itself sort of financial stability measure, and we think will improve resilience of the EU economy, we have to be careful that in creating it, we don't build other sources of risk. But there I think we have already put a lot of micro potential management in place. Victor makes the point that some of these tools are not being used, but the tools are there to be used and that's important to remember. And we are looking at the macro potential dimension and we will do so in our consultation on the macro potential review. So there I will just say very quickly that while I think we need to watch and monitor, we have to be very careful before we take action that we understand the implications of any action on that level for the functioning of the system. So that's about what I would say in terms of rationale. In terms of strategy and ambition, well, we've adopted a slightly different strategic approach to CMU to that before the crisis. We maintain a long-term vision of where the European capital market should go, but we have more focus on short-term deliverables. So I want to stress that we're not less ambitious in terms of where we want to end up, but we're more pragmatic I think in focusing on what can be achieved and in what timeframe. And the idea we have here, I think it was mentioned by the commissioner this morning, is that by delivering in the short term, we believe we can build momentum, we can build the credibility of the project and if we can build the credibility of the project, this will enhance the prospects of delivering the more difficult, the more fundamental reforms, some of which Victor has mentioned in his speech. This logic is because what we've learned from before the crisis is that the commission cannot deliver a capital market integration on its own. We can have all the plans we like, but if we don't have buy-in from the other stakeholders, from other institutions, from member states, particularly from the private sector, then this just remains a plan. You mentioned the Jovenin report had an ambitious but realistic timeline of three years. I'm 12 years older now and we still haven't delivered all of those barriers, but I'm sure we will get there eventually before I retire at least. So I think that's the method. So just to be clear, we are not being less ambitious, but we're being more pragmatic in the way in which we approach just the strategy itself. Now a few words on where we are. The action plan you know was adopted in September of last year. It had 33 measures across six key objectives. Why do we have 33 measures? Why do we have so many objectives? Well, it's because there's no particular silver bullet to create a single market in capital. You have to chip away at all the various deficiencies. It would be nice to have a nice clean narrative, a nice clean sequence, but it doesn't work out like that. You have to work across a broad spectrum of areas and that's why we have so many measures across so many key objectives. These objectives however have been structured in a way that approaches what we call the funding escalator. So the objectives start by improving financing opportunities for startups, for venture capital. So the entry phase, we will then facilitate generalized access to capital markets. We then want to promote investment in longer term investments in infrastructure. We of course want to foster the demand side. So we want to foster the re-retail and the institutional investment. We want to facilitate recovery in the banking sector. Now this has often been commented that we have this section in the CMU about bank balance sheets and strengthening bank balance sheets. But this recognizes the fact that no matter what we do, however we integrate capital markets, European economy will remain reliant substantially on bank financing. And so we have to take care that we can use the CMU to improve on that side along the lines that Benoit was saying. And then lastly of course, we have a quintessential objective which is to promote cross-border investment. And that's one which the commission has had for a long time. As I said, I prefer to avoid long lists of achievements even when they are achievements. So I'm not going to go through all that we have done or will do in the course of this year, which are our sort of short-term focus. What I will say is that we have taken a series of actions under each of these priority objectives. So under venture capital early, sort of at the startup phase, we have taken proposing a legislative proposal to enhance the functioning of passport or venture capital funds. The commissioner mentioned this morning the idea of a European fund of funds for venture capital. In terms of facilitating generalized access, we have lightened the load in terms of prospectuses. We're developing a work stream on SME access and SME growth markets. Promoting long-term investments, we have already recalibrated the capital charges for infrastructure under Solvency 2 and we're now awaiting advice from IOPA on investment corporates to do the same thing. Retail institution investment, we have a green paper out there on retail financial services. We had pretty good response to that over 420 responses. We are now monitoring those. I think this is an important green paper in terms of understanding how we might promote an equity culture at the retail level. We are also of course reviewing the scope for the European pension product that will also help on the demand side. In terms of facilitating recovery in the banking sector, the securitization proposal, which of course has been on the table since last year and we are awaiting an opinion from the Parliament in November. We would like to have had it sooner, but we will take it in November. And that will be important, we think, in helping banks to manage assets on their balance sheet. And then in terms of promoting cross-border investment, we are again studying barriers to the free movement of capital. We have an expert group set up on that. We have an expert group set up to further improve cross-border functioning of market infrastructure. So this is going back to everywhere in Jordanini, but picking up what is left. And of course we have a public consultation on the cross-border distribution of usage. So I think to sum up where we are and not giving you the long list, I think we've had a good start. I think as the commissioner said this morning we need to maintain the momentum because if we don't maintain the momentum this will just run into the ground. And it's important to maintain the momentum because the next steps are those slightly more difficult challenges. The ones that the commissioner refers to as higher hanging fruit, although I have to be honest, the ones we're reaching for are not all that low. So they're relatively low hanging fruit. And these are things like insolvency framework, taxation and security's holders rights as Viktor mentioned. I think maybe I will stop there and then come back to the issues in the question now. Thank you. Thank you, Sean. We'll have plenty of time to discuss among you and then with the audience, so don't worry. You can be short and we can come back to any issue. So David, the floor is yours. Thank you very much. This is an important topic and I'm very happy to be here to comment on it. It's easy to get lost in the top-down macro views and risk sharing and there's other monetary policy transmission and all those things when you think about capital markets. I would recommend, think of it bottom-up. You have borrowers and you have lenders and intermediaries and they all have different requirements and you gotta find a way to match them to meet those requirements. Lenders worry about the maturity, they worry about currency risk, they worry about other kinds of risks so about risk evaluation in general. Somebody who is 75 years old has a different saving profile and somebody who is 35 years old and a different ability to bear risk and that has to be understood as it feeds through the system. Likewise, you're looking at the borrower. If it's a large corporate, presumably, has foreign exchange risk to worry about, it's got liquidity to worry about and maturity and other kinds of elements to fit his particular or her particular needs. So, then third set is intermediaries, right now. Banks are in the middle of this and banks have their own requirement. They have to meet CRD-4, they have to meet liquidity requirements or a TLAC and all kinds of regulations that have to be met in order to facilitate this transaction but ultimately, somebody's got to transform the risk from what the lender is prepared to bear to what the borrower is prepared to bear. So, that is the way you think about that and so when you think of a proposal, as you're asked yourself, do these proposals address any of these things and help with that because if it doesn't, then it won't either foster a sound banking system or will it foster a liquid efficient capital markets? Now, let me start with one very important thing you have to remind yourself of and that is capital markets are not without intermediaries. A capital market needs an intermediary.  It's only the bank that can distribute. The bank has a huge sales force that has access to a thousand lenders who are prepared to buy the paper. So, you've got to think about within capital markets, it's not just that all of a sudden you've got these liquid markets out there and nobody in between. There is somebody in between. That's a very, very important institution. You usually call it a bank. And in capital markets, it tends to be investment banks because they're the ones who originate and distribute risk manage, repackage and get it done. So those institutions have to function well. If they don't function well, capital markets don't work well. There's no way that if we're not prepared to take down a big parcel of equity, the corporate isn't going to be able to do the IPO. He can't do it himself.  Those two go hand in hand. Now, what does the intermediary have to be able to do to make capital markets work? Well, one thing he has to be able to do is, and so I'm talking about my own book here, he's got to have good research in the sense that if you need to have company research that tells you what this company is about, what risk is associated with that debt that accompanies issue, then you can go out to the ultimate purchases and if you do good research, listen to you and you sell it to them. So again, it comes back to the credit evaluation function is hugely important in a good functioning capital markets. Somebody buying 100,000 euros worth of Siemens has no idea Siemens earning Siemens risk profiles, Siemens international exposures, Siemens possible liability to legal charges and whatnot. It doesn't know, we do. So that information has to be found its way into the price and has to be transmitted. The second thing, and this is actually that goes back to the original function that banks had is there are workout situations and that particularly in the SME sector, you need to understand how long do you want to let an institution run before you close it down, before you push it into insolvency. It's a hard thing to do. Again, banks have relationships that can make that work. So it doesn't push away the capital markets but it aids the capital markets in making that assessment. And there is, it goes hand in hand. The other thing is be quick and flexible and here you need to know the company, have relationships, not to be able to do that. You can't very quickly, unless you do it in money markets, you can't very quickly issue a very large piece of debt and a very large piece of equity. On the other hand, the size strongly benefits capital markets transactions. So if you want to do a billion dollar, Google wants to raise a billion dollar debt, even though it doesn't need it, just wants to test the markets. There's no way a single bank can take that. For that you need liquid fluid capital markets that can price that, that can hold it, can distribute it and can make that work. That can manage the effects, risk associated with that and all kinds of other elements. So these are the kind of things you have to think about when you ask yourself, what is the optimal system? In the background of that is the institutional setting in the sense that if you are a country where you're dominated by large corporates, relatively speaking by large corporates, you're much more likely want to have large and deep capital markets. If you're dominated by small SMEs, you'll probably tend to have more drifting towards banking relationships that can evaluate you, that have long-term relationships, even family relationships that know each other and prepare to keep you afloat when times are bad. So it's the structure of the economies of the corporate sector, the industrial sector that has a strong element on what the banking, what the, sorry, what the intermediation system looks like, we sometimes tend to think that, gee, we just put the banks in place and it's a bad thing or gee, the US was so clever, put its capital markets in place. No, it didn't. These things evolve hand in hand and it's very, very important to understand that things that sort of evolve together, you can't just kind of impose policy movements from above to put them asunder and to say, I want it this way because the US does it well, that's why we want capital markets. It won't work or you will destroy more than you put in place, that's just on the side. The, let me just briefly address the question of if I were working in this building, which I'm not, what would I recommend to my management for what should go first? I would say mortgages and securitized products. Why? Because you can standardize them and we find a way to securitize mortgages either through an agency approach to really, the US does it, then you have eligible mortgages, standardized products, you serve several things including what John just mentioned, then you take them off of Bank's Bell and Sheets, which is a good thing and you have a standardized product to put out there.  The US corporate debt market, in fact, is very, very illiquid and you need to have a big dealership and broker dealers and sort of market makers to make that work, very, very hard to do. Mortgage-backed securities markets is easy to, it's not easy to create, but it's relatively easy product to understand. It's well diversified and it kind of gives a model for how to weigh a port. Next thing I would do is consumer receivables. So, car loans and any kind of, anything you can put a lot of people to have, a little bit off, you put it together, make one big thing, slice it up and you sell it. Now, I know all of you sitting here, many of you were sitting here saying, well, that's what got us into trouble in 2008. It did, it doesn't mean we should throw out the baby with the bathwater. We should look at securitization again and I'm very, very pleased to hear that that has enjoyed fair amount of attention within the commission elsewhere. I think that is very, very commendable and should be very supportive of that. And it's only, excuse me, after all of that, that's when I would go and start worrying about corporate debt because their requirements are enormous and you know, there's much better than I do because you got insolvency law, you got different corporate law, you got different taxation across jurisdictions.  I think that's exactly the right approach. But I doubt whether two years from now you're going to have a European-wide corporate debt market where big corporates can issue debt and have a reasonable amount of equity. I don't think that's going to work even though I wish it would, but it isn't, whereas securitization, you might achieve that. The other thing I would look at, and again, it's a hard thing to do, is institutional investors are important for capital markets. They're not totally necessary to make it work because you can distribute more widely, but they are important as a long-term holder and here at pension funds insurance companies. So solvency too and COD-4 tend to be somewhat restrictive as far as those things are concerned. One might want to know that we have a bit more experience, kind of look at it from that point of view. How can we induce institutional investors, the growth of institutional investors and of course, defined contributions from going to pension funds, from defined contributions to defined benefits is a big step forward. But again, that is a huge national kind of effort that highly politicized and very difficult to do. So theoretically it's easy to say but I fully recognize the difficulties of getting that to do. The benefits from a world function in capital markets are enormous. They give you competition, they don't allow banks anymore to be the price status which is a great thing. They give also liquidity for the banking sector itself plus for the corporate in terms of the way treasuries manage their capital structure. It's just a fabulous thing. It gives you a good risk pricing, much better than what we have now. In the banking relationship, it's always a question as to who has the power? The bank has the power that's gonna show up in the risk spreads. The corporate has the power that's gonna be smaller risk spreads. So you don't quite get the market determined risk premium that you get if you have much broader capital market. Even though it may not be something that my industry is wholeheartedly excited about but I'd rather as an economist, I'd rather look forward to deep and broad capital markets as being a strong competitor to the banking system. Never forget though that to make that work you've got to have sound banks sitting in the middle of that to make that work originated and distributed. I would at this point not talk about the macro side of it but there are obviously monetary policy transmission advantages that come out of that and but that's probably left to a different time. Thank you very much Benoit. Thank you David. That was extremely thoughtful and I get your last remark on competition is a perfectly appropriate remark as a transition to the next speaker because competition will be for the benefit of the end user and the investor. So Guillaume, perhaps the floor is yours. Thank you. Good afternoon and thanks to the ECB and the commission to have invited representative of financial users and in particular savers and individual investors. CMU for us is very critical. At last I would say because we are almost 60 years after the Treaty of Rome which was set up and I just quote first articles of Treaty of Rome to set up a common market in good services and capital and financial services is an area where I don't have it maybe blunt compared to for example the ECB. Benoit said it is not yet completed. I said I would say there is no such thing as a common market for financial services especially for retail investments. What is worse is that if you look at the European Commission's annual balance scorecard, consumer scorecard sorry, of all consumer markets in the EU, pensions and investments are the worst performing every year. To make it even worse it's not only a perception when you look at independent research from better finance we publish every year a research report on the real return of long term and pension savings in Europe but also there is other independent research from the commission, from other consumer organizations. Real return after fees and after inflation are too often negative over time and when looking in fact at pension savings they are also most often underperforming capital markets and by a wide margin often. So we welcome very much the capital market union. In fact savers and individual investors are at the heart of the capital market union. I'm not saying this, it's commissioner here who's saying that and he's right because 60% of financial assets are owned indirectly or directly by households. I'd like also very quickly to dispel two things we say about savers and individual investors that there are risk averse and there are short termists. There are less short termists than institutional investors because more than 60% of their financial assets are in long term vehicles and this goes up to 90% if you were including property as well so there are long term investors actually. There are less risk averse than institutional investors and there's plenty of evidence for this. If you look for example at the assets of Western Europe insurers in 2010, 8% in own risk equity. Of course I take away unit linked insurance which is on the shoulders of the clients. That's way before Solvency too by the way. And when you look at the portfolio of households there is still a few percent directly in shares but through investment funds, through pension funds and sometimes unit linked insurance there are much more than that. When you look more specifically for example the small cap capital market and I have an expert beside me the size of presence of individual investors in the small cap market, primary or secondary is twice what it is for the big caps. So if it's twice there it means someone else is less intervening there, guess who. So it's very good to say that we are at the heart of the CMU but in the CMU action plan there are only two pages on individual investors and we think there is one key building block missing and that was one of the general questions I was asked by the ECB and the commission is how and in fact it's a question of the panel how to encourage savers to turn to capital markets to complement their pensions from first pillar. It's a very good question. It's very hard to find an answer in the action plan at least for me. I don't know if you know about Professor John Kay who is writing in the Financial Times who has been commissioned by the UK government two years ago for a review of the UK equity markets. He published a great book recently called Other People's Money. The title itself is worth something and what he says is that we need a simpler word where in which short chains of intermediaries provide a more direct link between savers and the assets in which their funds are deployed and that's really a key thing I'd like to stress and I would very shortly illustrate why when you look at the current landscape of retail investment products. First and it's part of what John Kay is addressing we need and it's a priority we need more transparency on performance returns and fees and actually it is not one of the 30 free measures mentioned by John but it is in the action plan. It is in the narrative. Unfortunately it's not in the final list but I hope that does not mean it's gonna be forgotten. So what is very worrying is that at the same time there is a huge step in the wrong direction as the new authorities are currently eliminating the disclosure, so standardized and supervised disclosure of performance of retail investment products in the PRIPS regulation. We will not even know if the product has made money or not with the future PRIPS documents so we want some more consistency in the approach to make really this a top priority. Another transversal priority which is also in the action plan is to end the double taxation of investment income if you really want to have integration within your Europe but also more generally discrimination against EU savers that are sourcing their investment products in another member state and we answered in detail on the green paper on retail financial services on this topic. I was asked to tell you a little more precisely about the products, investment funds, personal pension products and shares and bonds. Investment funds, they are essential and even more so, I mean, you all know that with the longevity increasing with the pillar one government pensions going south as the Americans would say, it will be even more essential. It will be also even more essential because we badly need positive net real returns over the long term, especially in today's era of severe financial repression. As you know now short term savers in banks are almost all losing money and as I said, there are also problems in the longer term and pension area. Just bear in mind and I really hope the ECB as well realize this that even if you contribute for 40 years roughly to give you a very ballpark idea, your savings, your contributions will give you more or less five years of retirement income. All the rest has to come from returns. So returns matter. So investment funds in view of the CMU, the key problem is that when you look at financial savings of households and that relates to what John K. Anders pointed out, there are only 7% of the financial assets of households. Why so? It's because they don't invest directly in investments. They are sold products which are more packaged, which are wrapping these investment funds. Unit linked insurance products, personal pension products that add typically a layer of fees and of course again, a strange more the saver from the real assets where his funds are deployed. I give you a striking one example, the French corporate savings plan. Only invested in AIFs, usage funds are forbidden. It is the only pan-European retail investment product, but it's not sold to retail people in many countries, in France, in Germany, in some other countries. So it's only AIF funds and the default option is, guess what, money market funds, which is not really a long-term product and which has been losing money for years. So there's a lot to do in that area. Also one key thing where we have a problem with the current approach and the speeches is choice. We have too much choice, not too little. There are 35,000 investment funds alone and as I just told you, it's only 7% of the product range offered to individual households. What we need is a reverse. We need much simpler offering, but a cost effective and a performing one. And we hope that in the future measures of the CMU Action Plan, we can have that. Very briefly, so on personal pensions and securities, personal pensions, one key measure of the action plan and we are implicitly in the action plan is we really badly need a pan-European personal pension, the PEP or PPP as you like. What we are concerned about, because we need a correction, a simple and cost effective one, but we are concerned because when the commission asked for advice on such a PEP, that was in July 2012. And we are almost four years later and we still have currently now a NEOPA consultation on not on PEP, on PPPs. We didn't be better or look at complimenting by trying to harmonize the regulations of the myriads and fragmented PPPs. I think that's a recipe for not doing anything like in the past 60 years because the probability of achieving this in the short term is close to zero. So we really need this PEP and we hope, we heard from Commissioner Hill that there will be another consultation from the commission but I heard John Berrigan talking about short term deliverables. This is certainly one. One last word on securities. As I said, we ask how to encourage our souls to go to capital markets. Not only they are not encouraged but they are discouraged and sometimes it's even banned. I just give the example of the otherwise very, very well thought of proposal of PEP from NEOPA. It will be banned to invest directly in securities in the PEP. I've been working in the US. I have one IRA, individual retirement account, simple, popular, low cost. I can do it. I thought the motto of why doing it simple when you can make it complex was only a French motto but it seems to be a pan-European motto this time. No, we need to, I was hearing John talking about promoting equity culture. This is frankly missing in the action plan. We need to give back access of our souls, at least the ones who want to, the ones who are literate enough of course to capital markets because the policy has been to tailor make capital markets for professional players only. And it's only now in regulated markets that we find some transparency in terms of trade information, et cetera. We need not to ban access to these securities in the key products for savers. And one last thing, if you want really an internal market of capital markets, you have to facilitate cross-border voting. It is currently an antiquated, long and complex chain. It doesn't work and it's very difficult for the beneficial owner of shares to vote. You have also these things called nominee accounts, et cetera, et cetera. I think I've spoke too much so I will stop there. Thank you, Guillaume. That's a lot on Sean's plate so I might give him the opportunity to answer to some of the points but how can the floor is yours? No, thanks a lot. It's an honor to be here and thanks a lot for giving me the opportunity to share my thoughts with you. The European political agenda has shifted from regulation and the aftermath of the financial crisis to fostering growth and thus hopefully closing now the chapter of slow growth and high unemployment in many parts of Europe. The proposed action plan comes at the right time and the measures contained are pragmatic and from our perspective, well-chosen. Of course, as we heard already, there are some parts that need to be adjusted or things to be added, but from our perspective, the measures are in actions are well-chosen. Deutsche Börser Group fully supports the Capital Market Union Initiative and the proposed action plan and we are also convinced that a merger between Deutsche Börser Group and the London Stock Exchange would support and accelerate the development of the Capital Markets Union, building a very strong European market infrastructure provided that supports a Capital Markets Union. I will focus in my short speech on two areas of the action plan. Number one, supporting SMEs seeking financing and the second part, fostering retail investments. I would like to then focus on one area and that's the role of technology, a point that was not touched in any of the speeches today or before, but I believe technology is the catalyst for the change and the improvements we want to achieve. So let me start with the SME financing, a part of the action plan, SME with pre-IPO markets and innovative forms of financing. Bank funds have been decreasing in the response of higher capital and liquidity requirements to close the gap in needed funding. Alternative non-bank funding channels need to be further developed. We don't see this as a competition, but we look at this as terms of increasing complementary offerings. The European SME landscape is very diverse. SMEs have different company size, different business models, they have different financing needs. And in order to address these, no single solution will do. Instead, a whole array of solutions must be applied and I think this was already addressed in previous speeches. We need to look at all the different ways of equity and debt financing, whether it is venture capital, securitization bonds, crowdfunding, or any other way of raising capital. The whole spectrum of alternative financing instruments must be taken into consideration and must be improved in order to provide products and services to respond to the SME financing needs. Easier access to equity financing, for instance, through venture capital or IPOs, could be one way to help innovative businesses to grow. Financial markets, infrastructure providers like Deutsche Börse Group or London Stock Exchange Group or the hopefully potentially merged group could play a key role in increasing efficiency and transparency at the pre-IPO stage by bringing issuers and investors together. Particularly in Europe, the process is complicated by wide variants in market practices and regulatory structures that govern the financial markets in the different member states. We as Deutsche Börse Group have staked a first claim in the pre-IPO equity section by launching Deutsche Börse Venture Network in 2015. We are aiming at creating an entire ecosystem for growth by giving growth companies access to a strong network of attractive partners. But we won't stop there. We are looking into further instruments for the SME market. Another important area of the action plan is fostering the retail investments. This was touched before. We do not have, and that's clearly outlined in the action plan, we do not have strong capital market culture in Europe and equity financing does not have the same significance in each European country. There's in fact a substantial difference. 40% of Swedes use equities for long-term capital formation. Only 14% of the German people do the same. So there's a wide difference between the use of equity for savings and financing. To change a financing and savings culture towards equity depends on several factors. There are many factors that will influence this. I would like to mention three that I believe are important. Number one, we need to improve the education and information to regain trust in financial players and develop a culture change towards equity savings and equity financing. Then, well-balanced and balanced is the important word. Investor protections rule are also important. Assessing the suitability of an investment should not be too complex and resource intensive. And third, a harmonization across Europe would be beneficial for all and facilitate the means of financing via the capital markets. So now let me address the third point and that's the role of technology. Technology is a game changer for the entire financial industry anywhere in the world and technological progress is beneficial because it generates new business opportunities and increases efficiency, stability, and innovation. The securities and the derivatives market have experienced the innovative force of technology already more than 20 years ago when the complete industry changed. However, now more and more other segments of the global finance get first-hand experience of how technology is able to completely change the existing business models. Emerging companies will set in motion a far-reaching transformation of the financial industry and important IT is not a back office activity. Quite to the contrary, IT stands at the forefront of the financial industry and the innovation in this industry. In fact, technological progress and IT are increasingly playing a key role for the performance of the entire economy. Buzzwords like digitization, industry 4.0 or blockchain have made the disruptive change popular to a wider public but buzzwords are one. Making innovation come true is the other side. It is as simple as this. Only by remaining innovative we will be able to achieve growth in the future. Therefore, and this is my request and my hope to make use of this technological opportunity, there should be special focus on supporting technology innovation in Europe, supporting the growing FinTech sector and supporting a close collaboration between these FinTech companies and the regulators. The overall aim should be to establish a more attractive environment for these companies and thus create jobs and growth across Europe. So yes, there is further integration of European capital markets and the supporting innovative initiatives of the action plan are the right way forward. But we should not forget at the end of the day it's all about new products and new services and they need to be implemented using technology. One last comment. Not about technology, just closing with one request. Europe is competing on a global scale. It is important to strengthen Europe and make it a very attractive and strong financial place and to do this, we need a strong European financial infrastructure provider. So therefore, my request and my point again, we believe that a potential merger between London Stock Exchange Group and Deutsche Börse would support the activities we are undertaking and would support the development of the capital markets union. Thank you. Thank you very much, Hauker. I mean, Sean and I will make no comment about your last statement. But I would like to thank you very much for linking, for tying our discussion with the FinTech discussion. It's true that this has not been raised so far today and it sometimes seems that these are two parallel discussions led by different people in a somewhat disconnected way. But we are talking of a horizon which is an horizon where a lot of what we're seeing today in the digital industry and in the FinTech ecosystem will have consequences for the mainstream financial industry. It probably does not have these consequences today, but at the horizon we're discussing, it will have consequences. And so we have to project ourselves at that kind of horizon where FinTech will matter a lot. So it's very important that we can link the two discussions. Haric, the floor is yours. Thanks very much. I'd like to touch upon three topics today. One is corporate insolvency reform and I know there's been a number of discussions talking about the issue, but our members have been speaking to an investor community for years about this issue, about how fragmentation of corporate insolvency laws in Europe is discouraging investment. A couple of months ago we distributed to all member state governments, both justice ministries as well as treasury departments, publication that's available on our website in case you're interested, that tries to pull together all the legal issues, all the economic issues, so the member state governments, commission and others can all look at the details. There are three basic reasons why, sorry, four reasons why insolvency form really matters. First of all, it says at bankruptcy process, it doesn't have to be exactly like the one in the states, enables the viability of entities to be decided about whether they're a viable ongoing concern or not. If you have a process where you automatically dive into a liquidation scenario, if somebody comes insolvent, it takes that question off the table and potentially takes a lot of jobs off the market. It enables the restructuring to proceed pretty quickly in an orderly way, provides legal certainty to all different parties and enables the settlements of claims to be done in a much more efficient manner. There has been some work done already, and which is certainly welcome on the regulation on insolvency proceedings which goes into effect next year. It imposes rules governing the jurisdiction in which insolvency proceedings can be opened. It also sets rules of recognition, another mutual recognition for other member states. In short, it's certainly a step in the right direction, but we don't feel that it really addresses the key issues. We have five key issues that are described in this publication which we do feel make a big difference. And I think are worthy of quite a bit more debate and hopefully the commission will take a look at this as it looks at insolvency reform in the future years. One is the development of a concept of a stay. In other words, if somebody becomes bankrupt, an automatic stay, so there's clear flexible rules and process to stay creditors while affirms restructuring some process. Another one is debtor and possession financing. Effectively it's a super priority creditor status for new financing basically enables the existing entity to keep going while the existing creditors restructure. Cram down is a big issue. There's lots of insolvency proceedings can basically get held up by very minority creditors who don't have a strong economic interest in the reorganization. There needs to be a process to basically weigh those benefits in a fair, but economically viable way. On creditors rights issues that needs to be processed for ensuring creditors have the right to propose a restructuring plan. The last thing is in reporting to introduce performance reporting by national insolvency regulators on the cost, time scales, and the recovery schemes. What we then next did in terms of that, that's on the legal side of things. Those are important issues in many European countries that would be a significant change to the existing regimes, but we do think it's at least worth talking about the pros and cons about what those mechanisms could potentially do to reduce the fragmentation across Europe and encourage investment. What we then tried to do is quantify, particularly for the justice departments, whether all this work, and this is going to be quite a bit of work, is worth it. And in conclusion, some economics we commissioned analysis from Frontier Economics concluded that it is worth fighting for. And we thought we'd put this together as a means for discussion. But basically what we asked them to do is to try to quantify if you had an increase in recovery rates through improved bankruptcy proceedings across Europe of, let's say, 10%. How much would that cause a drop in bond yields? And according to this study, approximately an 18 to 37 basis point reduction in bond spreads could be expected if you improved recovery rates to a European-wide average of 87% a par. If you add up all the numbers and a little charge here that you probably can't see, but it's included in the publication, it describes on a GDP-weighted basis where the savings would be if insolvency reformed was put together along the lines roughly of what we talked about before. But most importantly, just simply to increase the recovery rate up to, say, an average of 85%. And there's significant savings that we estimate between roughly 40 to 80 billion per year, which is roughly a quarter to a half a percent of European GDP. I mean, everybody can argue the assumptions. We encourage, actually, that there should be a debate on this, but it's something worth taking a look at because the economic savings could be very significant, particularly in southern Europe and eastern Europe. Briefly, on securization, this has been an important topic mentioned today on many different panels. The industry certainly has taken on board the need for significant change during the financial crisis. Initially, in Europe, the problems in securization were caused by American securizations being sold to European investors. And one of the huge differences is the regulatory framework for the origination of assets in the States is very different than it has been here. If you look at the performance of European securizations, it's been very, very solid and continues to be solid but before the crisis and after the crisis. And we welcome the initiatives to create the STS framework as well as the changes, concurrent changes in the capital requirements regulation to give securization which achieve the STS label favorable capital charges within the CRR framework. So if you look at the numbers, they're very compelling in terms of how much funding could be raised. In the last couple of years, there's been about 80 billion or so euros of securizations placed and that's all high quality securitizations and we would probably think the majority would meet the definition of STS securitization. I think as Commissioner Hill mentioned, if we put this regulation in place, there's easily scope for another 100 billion of funding. Before the crisis, there was in Europe, the high quality portion was actually even larger than that but even if we can get back an additional 100 billion of funding, that's a meaningful number. It would be worth fighting for. We also wanna note that there's a strong consensus among the different players in the market on the STS proposal itself between the issuers, the investors, banks, rating agencies and different participants and recently our association together with AFAMA, ICMA, Insurance Europe put together a joint letter to really demonstrate unity within the industry about all the different proposals and how the whole thing puts together. And broadly, we do agree that the 55 criteria that you need to meet for the designation of the STS broadly are workable and doable. However, in the words of one of our auto manufacturer members, says you have to basically look at the securitization market as a machine. And so for example, if you buy a car and if you ask if you pay 80% of the parts in the car, will you get 80% of the speed of the car on the 90% of what you put in? And of course not, the car needs all the parts in it to make the machine work at all. It's not a matter of if you go partway on securitization reform, you'll get part of the market back. It's important to look at the whole market as a whole between what the issuers are looking for, what the investors are looking for and what the different participants, the middle need to basically provide in terms of information to give the information to the parties that they need. The other thing in terms of principles we would suggest on securitization is it's important not to take all the risk out of the market. This product is intended to basically help in the facilitation of risk transfer so that banks as a predominant originator in Europe, we can also certainly work for non-banks. It's a product as institution agnots that can in terms of originators. There needs to be an acknowledgement that some of the tranches will be ultra-saved. Some of the tranches will have risk which enables risk transfer to occur which then will free up more capital in the banks to enable more lending to SMEs and other participants. That's an important thing to keep in mind. Cover bonds and securitization are different. They have many similarities but they should be recognized in terms of different complementary and we need both types of markets. On the last section I wanna just build on a couple points that Hauke made on the SME side of things. Our association has been actively working with a number of market participants to try to actually get more information to SMEs across Europe to help job creation and to basically make them aware of where they can get money. It doesn't matter whether the money is from a bank in the form of a bank loan, from a non-bank, from a participant for example in the crowdfunding market or business angels or from a venture capital provider or somebody else. And last year and early this year we distributed this document called raising finance for Europeans SMEs in six languages across Europe to about a million of our members SME clients across Europe to raise awareness of how the institutions that provide money think, how they provide loan criteria, whether they're banks or non-banks, where they get their money from, why they do accept certain types of loan implications and sometimes rather reject them. But one of the key conclusions we found which is actually demonstrated in this chart which some statistics backed up by Boston Consulting Group is we did find that for lots of both banks and non-banks it's that many institutions across Europe are actually looking for more loan applications. There's two big exceptions however. Startups have a difficult time raising funds and also high growth companies with negative projected cash flows also have a hard time raising money. In many cases those types of SMEs need equity. They don't really, or are alone from a bank or even a non-bank probably isn't the right product. So I just want to highlight a couple figures from this chart and we'll come back to detail on it. One of them actually supports the discussion earlier on pensions reform. We've noticed, and this all gets into the discussion on where the money's gonna come from in terms of risk capital for European growth. In the States there's 15 trillion euros of private pension money. Here in Europe there's 4.3 million euros of private pension money of which 85% is sitting in the Netherlands and the UK and a couple other countries. It's very concentrated. So there needs to be a much greater emphasis on gathering risk capital which very much fits into the commission's comments throughout the day. Sean's earlier comments on the need for retail financial services, raising of awareness, Guillaume raised the point of retail distribution as well. That's a hugely important issue that our members are very focused on and with that I'll stop. Can you just turn up your mic? Thank you very much, Rick. I would like to thank all speakers who've been remarkably disciplined in terms of our time allocation which gives you plenty of time to discuss which is good. Let me, I would just like, don't want to take too much time but I would just like to make two remarks on that first phase of the discussion. The first remark is about the tone of the discussion. The tone was very much practical, more micro-focused than macro-focused, very much focused on all the practical things we have to fix to make savers and investors meet and sometimes sobering in terms of what we can achieve or what we can achieve in the short term which I think fits with the initial presentation by Sean of what's the ambition of this project. This is not about having a grand vision. There is a vision but there is also a sequence of short-term to medium-term achievements and that probably reflects also the spirit of the times that we are not at a time where there can be a quantum leap in the way European capital markets work. Banking Union was a quantum leap it was discussed this morning. We're not at a time where the collectivity, generalistic holders in Europe wants to make new quantum leaps and so we have to take it as it is and make the best out of it and that's what you've discussed. Also the substance of the discussion I think was extremely useful also for us from an ECB standpoint. We tend to have a very macro-based vision. We tend to focus very much on the risk-sharing properties of Capital Market Union which matters for us of course as monetary authority, as central bank. You focus very much on the micro-dimension which is about just meeting, saving and investment's meat and why do we want savings and investment to meet because we want to finance good projects and why do we want to finance good projects because we want to create growth. That's also about how to revive long-term growth in Europe and so that the discussion captures very well I think the two key dimensions of the discussion on CMU which is the macro-dimension which is very much focused on stabilization as economists would say while the micro-dimension is very much focused on allocation to use economic terms that is how to create jobs and growth and long-term growth and we need both. So it's very important that we, at any point in that discussion we can reconcile and combine the two dimensions of it. That's about making the Monetary Union safer and more resilient that's also about creating more long-term growth and that's only by creating long-term growth and bringing money to the project that have a higher productivity that also will make returns improve in that Monetary Union so it also, of course, resonate with some of the concerns we have here related to rates being low for a very long time. The only way to recreate a higher return in the economy is to improve the functioning of the economy and to make money go where it ought to go. So I stopped my philosophical remarks here. Let me give a chance to all speakers to react to what each other have said before opening it to the floor and maybe Sean, you want to react to some of the remarks or polite criticisms which were directed at you? All very constructive, I'm sure. On the macro-micro, somebody who, in my new job, gets the pleasure of doing both macro and micro. I think what you say is perfectly correct but I mean, I find that, as I said, on the micro level, it's difficult to develop a clear narrative. You have 33 measures, you probably have more which are not even put in as measures. The narrative is not easy but the macro does allow you to rationalize why we're doing all these things and it allows you to tell a story which is not so easy to tell when you look across 33 measures in a kind of sequence action plan. So I think this macro-micro is also important as a sort of communication tool to the outside world.  I think it's striking remark. I think that's why we have objective five in there. It doesn't look initially as it's in place. It's about banks inside a capital market plan but this is not about displacing banks using capital markets. This is about creating a diversified system and as you said, it should be symbiotic so the capital markets should have a kind of beneficial relationship with banks and vice versa. Guillaume made a number of very important points about retail investors. I have to agree this is not the most integrated sector of the market but that's not because it's been neglected by the commission. Unfortunately I'm old enough to have sat through five commissioners who have dealt in this field and every one of them has had in his mandate action on retail markets and everyone has found how difficult it is and it's difficult partly because we used to have what we're called natural barriers, language proximity and also because we have this tension between investor benefit from integration and the need for investor protection. And this is a tension which has always been there. Sometimes it's used legitimately. I have to be honest, sometimes it's not used so legitimately. I believe, and this is something Hawker has mentioned about technology and then the commissioner mentioned it this morning. We believe that technology may allow us to overcome some of these barriers which prevented progress in this field in the past. That's one of the reasons why I think he's more enthusiastic than he might be having seen five or four previous commissioners try this and not have this whole success that they wanted to have. On transparency of fees, of course this will be in the new PRIPS document. What we're trying to do with a PRIPS document is describe sort of features of a product so that you know when you buy it, what you're buying.  But we're not trying to tell people whether they should choose this product over this product based on returns. That's an investor decision. It's not for us to do. But of course investors deserve to know what is the basic features of the product itself. On too much choice, I must say I find it idealistically difficult for me to say I would regulate against providing choice. I think it's for the industry to decide how much choice it wants to offer. If you don't like it, you don't take it. Pan-European pensions, as mentioned by Yu-Gi-Ohm, also by David and Rick, we are of course very keen on this. We are also aware from our past work in this area where the barriers lie. They lie primarily in taxation. There are also legal barriers. We are working ourselves through a consultation to try to identify those barriers, but also to try to identify why these products, why pension products work well in some jurisdictions and don't work well in others and see whether or not we can transport some of the factors which help to generate pension systems at national level to the European level. So basically work with the member states and learn from best practice. Across-border voting rights, here we go back to Joe Venini. I worked quite a bit on this 10 years, 12 years ago, a nightmare. It's all based on corporate law and goes down even deeper into the whole concept of securities ownership. Can you transfer your rights to vote or not? Or do you have to fly in and vote yourself? And if you have to fly in and vote yourself, you're not gonna buy. So I think there's a lot of work to be done there, but it's let me, nobody on the illusion that it's easy. On insolvency reform, another tricky area, and I said I would come back to it. We know this is a big problem. We know because it creates a lot of legal uncertainty for cross-border investment. And the work that Rick and AFME have done, we have read, of course, and we have taken it fully into account. We agree that there needs to be a clear and effective approaches to debt restructuring. This is good for the debtor. It's also good for the creditor because he can speed your recovery values. So I think the economics are promising, but I have to say the history of more intrusive approaches around insolvency is a lot less promising. So I think here again, we're gonna have to be pragmatic. We're gonna have to, I think, use principle-based approaches so identify what's working in member states, see if we can identify a set of principles which make insolvency frameworks efficient, and then leave it to the member states, perhaps to reverse engineer that into their own legal systems rather than the commission trying to create a single legal framework, as we have done in the past. Let's see. We have a consultation open on this since mid-March. I'm told we'll close on the 14th of June, so I'll do a bit of advertising myself. Please reply to that before the middle of June. And there we are, said we're proposing a pragmatic approach with the member states, and if we are to plan, we will put forward this principle-legislative proposal by the end of the year. Thank you. Thank you, Sean, on insolvency framework, let me just also add that this was discussed by Eurogroup ministers at their meeting in Amsterdam last Friday. And the reason why it is discussed in the Eurogroup, which is EU-19, is that it matters for capital allocation or reallocation across Eurozone countries. And it matters enormously for NPL, non-performing loan resolution, which is one of the most important macro issues that we have to face today in the Eurozone. So it again makes a point that you can easily move from the macro to the macro, and then back to the macro. It also matters very much for the functioning of the multi-union. David, you want to add something? Thank you very much. Having just publicly disagreed with the ECB's monetary policy, I find it very heartening that I agree with everything I've heard here so far, including from John and from Benoit. I think that... You can keep it, you can stop it here. No, no, I actually mean, I usually mean what I say, and I at this time as well. I think this is one area where the conceptual part of it is right, I think banking union had to come first, then capital markets union, I think that was just the right sequence. I think the emphasis, and I can just completely echo what John has been saying, that this is just hard work. This is just every day you go to work and you change one more rule, one more law, and that's the only way forward here. This is not anymore about strategizing and about grand visions and about this and that. We all know what it is. The emphasis on insolvency is very heartening. I think it's exactly right. You cannot have proper corporate markets if you have 18 different insolvency laws. It doesn't work as simple as that. I also like the analogy to a car. This is something that has to work all together. You can't just leave out one part and then just hope it runs. It doesn't work that way. I think further on the positive side, I think we probably all underestimate the benefit that comes from a really well-functioning European-wide capital markets. And I don't worry so much about how big it is compared to the banking markets. I just worry about what we have functions really well. It'll grow by itself. There's a natural proclivity for corporates to shift to capital markets away from banking markets and banks support that because, as I said earlier, they distribute and originate. And so I think we're very much on the right track. I think this is one of these, in many ways, I would think of this as one of the success stories at least at the conceptual level of European policy. And it's very heartening and I'm very pleased to be here and to be able to say that after what I said yesterday. You. I will not make further comments to what John said about choice because sometimes the authorities, EU or member states are reducing choice and are banning products as I mentioned several examples. I would like just to put maybe, to make a politically incorrect question to my fellow panelists from the banks because I did not mention securitization and I have nothing against securitization per se, especially when it's standardized and as proposed by the European Union. But I quoted Professor Kay the other time and according to him only 3% of UK bank assets is lending to the real economy. So if you are going to securitize part of this 3%, which in layman's term meaning, means dumping the book of loans to a third party investor, what are you going to do with the proceeds? Because I would like sometimes that we come back to the boring banks that is collecting deposits and lending to the real economy. I recognize it's a bit incorrectly stated, but it's just to stir up the debate. Thank you. I'm happy to answer that. I came in from the point of view if the commissioner of ECB had asked me as to what would be the most likely product to succeed. I would have said to myself, well, I need lots of constituents parts in that much as five firms and I need to have large volume and then I cut that up and distribute it because lots of people, so I don't have to do it individually. And for that what comes to mind is mortgages. Mortgage securitization is kind of the cornerstone of securitized markets and once you get one market going then the next one will follow. It's sort of demonstrating success in one area then you follow in the corporate market and other markets and things like that. That's why from my point of view as a practical person I would say focus on the securitization of mortgages and that's why we've also elsewhere said that here public assistance through some kind of agency approach of taking that risk on and to distribute it, I think would be certainly very supportable from a public policy point of view. Okay. I just want to highlight one point and not repeat the other comments. It's again about harmonization across the different member states we have in the different countries, different regulatory structures, different market practices and I think the discussion showed it today. We are in the Capital Markets Union discussion now about the details and executing the details and important is to make sure that we harmonize across Europe. I think what will help us or what is important about this is Europe is competing on a global scale and only a very strong Europe can really play the part in the world in the future in a global competition and therefore I think we all need to rally behind the point of harmonizing across Europe and building strong structures in Europe. Thank you, Hoke. Rick? Great. I'd like to just touch upon the securitization issue because I think Guillaume raises a really important point of how different policy makers look at, for example, US securitization in the US is compared to European securitization in US and then each other. In the absence of a Fannie and Freddie and Ginny which basically absorbs between six to seven trillion dollars of mortgage assets off the balance sheets of the bank, in the absence of any kind of European institution like that and we're not in any way suggesting there should be, if you assume there isn't going to be a Fannie, Freddie and Ginny, all those assets which basically are off the balance sheets of the US banks which freeze up effectively the balance sheets of the American banks to focus on more high yielding, credit intensive, higher margin assets, it changes the business model, it does. So in the absence of an institution whether it's the national, pan-European level in Europe to divert that sector, very high quality assets generally, it's a more difficult thing which is actually one of the reasons why this STS proposal is so important. It's actually, we have a tougher job here in Europe because we don't have a Fannie, Freddie. Thank you very much. So now it's now time to open to the floor. I'll take two, three questions and bundle them. I will not slide them and trans them and come back to the panel. So yes, please. Yeah, thank you very much for an interesting panel. It's a pity that Mr. Constancio just left because well, the agency-based idea of residential mortgages might actually be a way even to implement macro-prudential policies if you are of the opinion that there's too much or you could just tell your pick or you could just put a lid on the market maybe. So why did Europe not choose to go the way of Fannie Mae or Freddie Mac if Europeans are so in love with the American capital markets? To me it appears as if we're learning the wrong lessons that we need more state and not less state and we need, yeah, would like to have that discussed. Thank you. Thank you and I forgot to ask you to introduce yourself. Yeah. Yes, please, here. Yes, I'm from the European Commission. So since Philip established the rule in the morning that the causes of the reports can also take the floor, I follow up on this. On the insolvency, I would like to make two comments that also relate to our report, to our publication. As Rick had the slide on the EU legislative proposal and on new measures, these were indeed exactly the areas that we looked into, also in the impact assessment that led to the recommendation on a new approach to business failure already a couple of years ago. Exactly those areas, they show how complex it is. Just two comments. The frontier economics point on the recovery value is of course very good for communication purposes because it's a very clear point estimate. You do that, you get that. But what we found in thinking about these things is what we heard also from investors is that it may be even more welcomed by investors to actually reduce the standard deviation. Not so much the midpoint, how much you get recovery value but really reduce the standard deviation. It's more important to know what you get than how much it is. You can work with that figure. And the second point, I think we quoted already for the second time now in our report, a paper that is quite interesting because it shows how capital markets can help to address one of the main arguments against insolvency reforms that we hear over and over again and that is the moral hazard, right? If you make insolvency too easy then you will have strategic default, et cetera. And there's this paper that we quoted the second time in a row about Stoughton, Rindland and Sechner, I think, where they show with a very peculiar data set from the tourism industry that actually with the right data, capital markets can be a very nice disciplining device because once they have solved the standard deviation problem they can really give a very good feedback on who is defaulting strategically and who is not. And maybe this is something one can develop further how capital markets can really help to address one of these major issues that comes back and back again when exactly the ministers of justice tell us, well, you know, insolvency reform, difficult. Thank you. Let me take one last question here. One last for this round. Thank you. I'm João Tomás from the Portuguese Banking Association. Just a very quick comment. First, we welcome the fact that capital markets union contrary to the banking union has a development agenda. Although we consider it important that the focus should be more on increasing overall financing and not so much in the question of the substitution of financing because if you look at the numbers in Europe who have an investment gap of over 300 billion estimated investment gap, there's clearly an equity gap that needs to be filled. And regarding the previous interventions, it was clear that regarding, for instance, items such as securitization or money market funds, we have many issues that arose from what happened in the United States, namely the questions of the market, money market funds breaking the buck, the problems of the losses in the securitizations and what we see in Europe, we have big files such as money market funds. That was an initial proposal by the Commission in 2013 that they still have not developed and it had an initial proposal of a buffer of capital. Afterwards, the parliament came with the idea of the constant enough public debt money market funds. But it will be difficult to conciliate some of those perspectives in terms of the risk return. That is to say, when you have a negative yields, when you want investors to invest in funds that account for over 38% of the short-term debt by banks, it's a difficult issue to solve in terms of regulation. And also regarding securitizations we welcome the proposal of the STS and also the capital calibration. But if you look at the estimates of the non-neutrality ratios after those measures, we can still see that those ratios are too high. That is to say, and my question just to sum up is from the members of the panel, what is your view in terms of the competitive advantage or disadvantage in terms of regulation in capital markets when we compare to the US? Thank you very much. Thank you, let me turn back to the panel. Who would like to react? Rick? I can probably address maybe the securitization question that your last one first in terms of the US framework versus the European framework at least on securitization. If you look at the investor base for the products, whether they're pension funds, insurance companies, banks, or other participants, the environment's fairly different in the states that is here. One of the big differences is insurance companies, they sound obvious, US insurance companies don't have a solvency too. And the capital charges for particularly the mezzanine tranches of securitizations in Europe are really high, which are basically a non-starter for the insurance industry. In the states it's a much different measurement, so the insurance companies are still actually active buyers in the states. The capital charges also for liquidity portfolios make a big difference. So one of the reasons why we've been trying to recommend looking at securitization as a whole is unless you look at the buyers and the sellers incentive and motivations together, they'll be maybe fixing one problem, but you maybe create another problem over here. So that's why we're completely supportive of the direction that the STS is going, because it does look at it as a whole. Thank you. Sean. Thanks, Benoit. Maybe I come back on this agency-based approach to securitization. Of course, there are big differences between the US and the EU approaches, and I think the US have this agency-based approach. They've had it for a very long time. I think before the crisis, this public underwriting was rather vague. We were told they were GSEs, but they weren't really underwritten by the state. But of course, the market assumed they were. I think this created quite a bit of moral hazard in the market. This market did balloon up to six, seven trillion, and it all ended up in a conservatorship on the balance sheet of the US state. So I think from that alone, we're not so keen on following the sort of agency-based, certainly not public agency-based approach. I think in keeping with the philosophy that we have now, post-crisis, where government is encouraged to stay out of financial markets as far as possible, we think what the approach we have adopted with STS is one which will deliver probably a smaller market, but a market which stands on its own feet and is then probably more sustainable in the longer term. So I think it is true. We could, of course, we could pump prime this market. We could put government guarantees across lots of it, but we don't think that's necessarily philosophically or even economically the right way to go. One of the points on the substitution of, I mean, I think it's clear from comments up here. Nobody's talking here about substituting capital market financing for bank financing at some kind of competition game here. This is about evolving the system. But it does raise another issue about transition versus steady state. So there's macro, micro, but there's also transition versus steady state, which is a banking union issue as well. We're going to have to start creating capital market union in a very particular environment of low interest rates, which I presume to be a transitional phase, but we'll have to target the end at the steady state. So I think the idea is not to create, is to create a kind of bigger financial system where the share of banking may be smaller, but the absolute size of the banking system could very easily be bigger. I would even go one step further, Sean, and saying that capital market union, if properly done and if done quickly enough, will be instrumental in bringing money to high yield projects, high yield meaning innovative growth, ambitious projects in the real economy, which themselves will help increase real returns in the economy and will help monetary policy come back to normal. So I think there is a positive interaction here over time. Let me take a, let me go for a second, unless there is any other reaction. Let me go for another round of questions. Yes, please. Thank you. John account, Blackrock. We're generally incredibly supportive of the capital markets union, particularly the focus on long-term sustainable assets, infrastructure, venture capital, investing in SMEs, cross-border investments, because it's very good for the financial future of our clients as well as growth and employment. A couple of people have highlighted tax as a barrier. Sean mentioned tax in the context of private pensions, and this morning we heard about withholding tax. I wanted to flag another potential, very significant barrier, and I've got a question about it as well. The potential unintended consequence is caused by BEPS, basis erosion profit shifting, and its implementation in Europe, the anti-tax avoidance directive. Totally not really supportive of the primary aim of BEPS, which is to stop multinationals shifting revenues around and achieving double non-taxation, but it has a big unintended consequence on investment funds because they are multinational entities and have cross-border clients and cross-border investments, and the OECD has come to some sort of solution for what they call, for mainstream funds, USETs, AIFs investing in equities and bonds, but there is no solution at the moment. They're still trying, but there's no solution at the moment for investment funds, cross-border investment funds, investing in infrastructure, venture capital, private equity, loan origination funds, real estate, so all of those funds that we're hoping to spur and increase investment in infrastructure and SME investing. My question is, if the OECD doesn't come up with a solution, what can we in Europe do to allow legitimate cross-border capital allocation in these asset classes to continue? That was a secondary goal of BEPS because Europe is, the other regions don't suffer to the extent as Europe. We are the region that has the greatest amount of cross-border investing in the most exact state. Thank you. One last question, if any. Yes, please. Hello, thank you. My name is Sandra Huck from AOPA, so I have a question on the PEPs. You know, we have issued our final device of the Commission on 1st of February on the Pan-European Pension Product that was mentioned favorably here a lot of times. This is about the standardization, raising economies of scale, making it a cost-efficient personal pension product here, which still has a high level of consumer protection, which is very important for us. Looking at the numbers of who is investing actually and what we have in mind when we talk about the Capital Markets Union being S&E loans and so forth, I'm wondering whether we target the wrong provider of these PEPs, because, I mean, so far we have the sectors very much attracted by this, this ensures asset managers less so banks. What are your thoughts on that? Thank you. Okay, thank you very much. So, who wants to comment on either tax or pensions? Yes, Guillaume? On taxation, I'm not an expert, but I think your point makes sense, that there should not be a discrimination or a multiple taxation of funds, even if they invest in non-transferable securities, such as venture capital funds, et cetera, that's contrary to the objective of the CMU. On the question on the PEP, I think I said, except for some point, I think it's a very well-designed proposal from EOPA, and one of the good things, I think, is that it is open to multiple types of providers, as you said, asset managers, insurers, banks, and I think it's a key part of the success of this product. It should not be limited to one category of providers. Thank you, Guillaume. Rick? Yeah, I would agree. One of the things we're finding as part of our SME research is that, particularly at the early stage, the pre-IPO stage, for example, which Deutsche Borussia and other major exchanges are actively looking through for their venture program, which we're very supportive of, a good program. There's about six stages of funding that most SMEs go through before they get big enough to go to Deutsche Borussia or other exchange. A pension fund, if it's sufficiently flexible, could have the capacity to invest in small bits of equity. It doesn't necessarily need to be that vehicle, but it could be other vehicles. For example, lots of, for example, business angel equity, from what we understand, is actually made through companies, rather than the new pensions. So I think at the smallest level, there needs to be a broad approach, again, not looking at this as a silo, to say what are the different motivations and incentives for people to invest, either companies or individuals, in small bits of equity, and have them hang on to it sufficiently long to let the company grow. Thank you. Let me give the last word to Sean on BEPS and investment funds or any other issue. Well, on BEPS, I'm reluctant to commit to this because I start swimming out of my water here. This is an issue which is handled primarily by another department, but we are aware of the problem. It has, you have made us aware of the problem. So, so we are working with our taxation department to see what we can do. The thing is, as you said, this is an OECD sponsored approach. We like it because it's global. So it's being adopted at global level. So we will try as far as possible, I think, to find a solution within the OECD, rather than having to break out into a European one. If it doesn't come, we have to think again, but our preference is to just work with the OECD to find a way around this consequence. Thanks. Thank you, Sean. Let me thank very warmly all the participants in the panel. Thank you for coming. There is no formal closing of this conference.  So let me just thank all the participants, all also the audience for your questions. We'll have the next conference next year, presumably around the same time in Brussels at the commission. And I'm quite certain we'll discuss the achievements in implementing a capital market union. Thank you very much.