“A unified capital market to finance challenges. No less important than the railway to the Pacific in the USA” – Corriere.it

“A unified capital market to finance challenges.  No less important than the railway to the Pacific in the USA” – Corriere.it

European Central Bank President Christine Lagarde is taking on the role of Abraham Lincoln to relaunch the Single Capital Market (CMU), which is crucial to overcoming Europe’s massive shared challenges, such as building the Pacific Railway in the United States. From the 19th century according to the 16th US President, he claims.

“Railroads not only connected the far corners of the United States, they also connected the capital markets. “The need to finance this project of unprecedented size has radically changed the American financial system and changed its fate forever,” Lagarde said in her speech at the European Banking Conference in Frankfurt.

Today, Europe finds itself in a similar situation. It faces “a new series of challenges that will require financing generational efforts,” says the banking lawyer, as the “three Cs” of deglobalization, demographics and decarbonization emerge.

To finance the necessary transformations, The European Commission estimates additional investments worth $620 billion annually, on average, until 2030 for the green transition alone. He notes that another $125 billion annually is for digital transformation. But financial integration today is lower than before the financial crisis; Bond markets are three times smaller than those in the United States; It is claimed that EU venture capital is only one-fifth of US venture capital.

instead of A true European capital market would make it possible to build a sufficiently large convertible market for securities», which will allow banks to transfer part of the risk to investors, freeing up capital and opening more loans. But also providing funding to startups that are driving innovation. According to Lagarde, with “the rapid development of the communications management unit, Another 4,800 companies across Europe could “raise an additional $535 billion annually”.

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Another challenge is the digital euroPiero Cipollone, the new member of the Board of Directors of the European Central Bank, replaced Fabio Panetta, who became governor of the Bank of Italy at the beginning of November, explained yesterday, during a virtual roundtable organized by the European Union Parliament. Cipollone stressed that the digital euro will enhance Europe’s flexibility, innovation and competition.

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