The Eurofi High Level Seminar 2017 organised in association with the Maltese EU Council Presidency MALTA I 5, 6 & 7 APRIL SUMMARY OF DISCUSSIONS LEAD SPONSORS SUPPORT SPONSORS REGIONAL PARTNER Visit the Eurofi website for a detailed summary of all the sessions of the Malta seminar www.eurofi.net The Eurofi High Level Seminar 2017 Seminar organised in association with the Maltese EU Council Presidency 5, 6 & 7 APRIL I MALTA SUMMARY OF DISCUSSIONS Strengthening EU prospects in a period of major change CONTENT EDITORIAL ................................................................................................................................................................................................................................... 5 EXECUTIVE SUMMARY 1. GROWTH AND STABILITY CHALLENGES IN THE EU AND EUROZONE ............................................................................................................... 15 2. KEY VULNERABILITIES IN THE EU FINANCIAL SYSTEM .......................................................................................................................................... 32 3. NEW TECHNOLOGY AND CLIMATE-RELATED TRENDS .......................................................................................................................................... 44 4. BANKING AND INSURANCE REGULATION ................................................................................................................................................................. 53 5. CMU IMPLEMENTATION .................................................................................................................................................................................................. 76 6. GLOBAL OUTLOOK ........................................................................................................................................................................................................... 87 SPEECHES JOSEPH MUSCAT, Prime Minister, Malta ................................................................................................................................................................... 94 EDWARD SCICLUNA, Minister of Finance, Malta .................................................................................................................................................... 96 MARIO VELLA, Governor, Central Bank of Malta ................................................................................................................................................... 98 MAHMOOD PRADHAN, Deputy Director, European Department, International Monetary Fund ........................................... 100 VALDIS DOMBROVSKIS, Vice-President for the Euro and Social Dialogue, European Commission ....................................... 104 VÍTOR CONSTÂNCIO, Vice-President, European Central Bank .................................................................................................................... 107 PETER PRAET, Member of the Executive Board, European Central Bank .............................................................................................. 113 SVEIN ANDRESEN, Secretary General, Financial Stability Board .................................................................................................................. 115 SHARON BOWEN, Commissioner, U.S. Commodity Futures Trading Commission ........................................................................ 118 EXCHANGES OF VIEWS IMPROVING ECONOMIC CONVERGENCE IN THE EU AND EUROZONE TO DEEPEN THE EMU ....................................................................... 124 THE ECB’S ASSET PURCHASE PROGRAM AND FUTURE PROSPECTS ...................................................................................................................... 132 GLOBAL MARKETS AND CROSS-BORDER INVESTMENT .............................................................................................................................................. 138 LEVERAGING SAVINGS TO DEVELOP CROSS-BORDER INVESTMENT IN THE EU ................................................................................................ 142 IMPLICATIONS OF BREXIT FOR THE EU ECONOMY ...................................................................................................................................................... 148 EMERGING RISKS IN GLOBAL & EU FINANCIAL MARKETS .......................................................................................................................................... 152 PRIORITIES FOR PROGRESSING TOWARDS A SINGLE BANKING MARKET ............................................................................................................ 158 PROSPECTS OF GLOBAL FINANCIAL REGULATION FOLLOWING THE US ELECTIONS ........................................................................................ 166 FOSTERING INVESTMENT IN THE MAGHREB REGION: CHALLENGES AND OPPORTUNITIES ........................................................................... 172 POLLS BREXIT IMPACTS ....................................................................................................................................................................................................................... 180 EU27 PROSPECTS .................................................................................................................................................................................................................... 181 BANKING UNION ...................................................................................................................................................................................................................... 182 CMU ACCELERATION .............................................................................................................................................................................................................. 183 VULNERABILITIES ..................................................................................................................................................................................................................... 185 PORTFOLIO .......................................................................................................................................................................................................................... 187 INDEX OF SPEAKERS ................................................................................................................................................................................................ 223 EDITORIAL The Eurofi High Level Seminar 2017 was organised in Malta in association with the Maltese EU Council Presidency. More than 600 participants from the EU and international public authorities and the financial sector attended this three-day international event. Over 170 speakers contributed to the 21 sessions of this Seminar, covering the main regulatory developments in the financial sector and the economic and monetary trends affecting the sector. The potential impacts of Brexit and new technology and climate-related trends were also major elements of the agenda, as well as the prospects of global regulatory coordination. In the following pages you will find an executive summary of the roundtables that took place during this international Seminar, transcripts of the main speeches, summaries of the exchanges of views, and also an outline of the main take-aways of the Malta Seminar. More detailed summaries of all the sessions of this Seminar can be found on our website www.eurofi.net. We hope you will enjoy reading this report. Jean-Marie ANDRÈS Didier CAHEN Marc TRUCHET Senior Fellow Secretary General Senior Fellow 6 Malta 2017 MAIN TAKEAWAYS FROM THE SEMINAR 7 MALTA2017 GROWTH AND BREXIT STABILITY CHALLENGES IMPLICATIONS IN THE EU AND EUROZONE It would benefit both the EU and the UK if an appropriate post-Brexit agreement could be found allowing, as much as Nine years after the crisis, there are positive possible, a preservation of existing financial signs of economic recovery in the EU, but market integration. the pace is moderate and cross-border capital flows remain limited compared to before An EU-UK free trade agreement based the crisis. The Juncker Plan and the ECB on mutual recognition and regulatory monetary policy have had positive effects, cooperation is advocated by many but challenges remain that include the stakeholders, but ensuring that regulations expected rise of interest rates and the lack of remain consistent over time and that single policy space to deal with possible future risks. market rules are not circumvented may be incompatible with the UK’s political Improving the mobility and allocation objective of ‘taking back control’, many of capital and private risk sharing within considered. Financial institutions should the EU are essential to restore growth and therefore prepare for a hard Brexit with improve the resilience of the EU economy. possibly no deal or any proper transition The Banking Union and the Capital Markets period. This requires initiating licensing Union (CMU) should contribute to these processes and examining any implications of objectives. A pre-requisite however is to Brexit regarding the location and supervision restore trust between Member States, which of key financial activities especially those of involves addressing legacy issues (e.g. NPLs) systemic significance for the EU. and improving economic