【By Observer Net, Wang Yi】German Chancellor Merkel has called for the establishment of a unified European stock exchange to help European companies raise capital and grow locally, thus avoiding the need to list on the New York Stock Exchange in the United States and preventing Europe from becoming a vassal of the two major economic centers of the US and Asia.
The Financial Times of the UK noted on October 16 that Germany was previously one of the key member states hindering the integration of the EU capital market. Now, Merkel's remarks are seen as a signal of support from Germany on the issue of EU capital market integration.
"We need a unified stock exchange so that successful companies like BioNTech can avoid listing on the New York Stock Exchange," Merkel said during a speech at the German Bundestag on October 16. "Our companies need a capital market that is large enough and deep enough to better and faster access financing."
According to AFP, Merkel also warned that the development of Europe in the coming years will determine its fate in the global economic landscape. "The next few weeks, months, and even years will decide whether Europe can continue to exist as an independent economic power or become a vassal of the two major economic centers of the US and Asia."
On October 16 local time, German Chancellor Merkel delivered a speech at the plenary session of the Bundestag. IC Photo
The Financial Times stated that this statement comes at a time when Germany and France have reached a consensus to cooperate in accelerating the EU Capital Markets Union (CMU), including transferring some regulatory powers to a unified European regulatory authority. This means that Germany has abandoned its long-standing opposition to transferring regulatory powers from the German Federal Financial Supervisory Authority (BaFin) to EU institutions.
The report pointed out that the EU's capital market integration plan has been blocked for many years, largely due to the opposition of countries such as Germany, Luxembourg, and Cyprus to concentrating regulatory powers at the European Securities and Markets Authority (ESMA) headquartered in Paris.
Meanwhile, former European Central Bank President Draghi explicitly stated in his report that the EU should establish a capital markets union and a unified regulatory mechanism similar to the U.S. Securities and Exchange Commission (SEC), to reduce regulatory fragmentation and improve investment efficiency, thereby helping the EU compete with countries such as China and the United States.
Three sources previously told the newspaper that German Vice Chancellor and Finance Minister Christian Lindner has agreed to explore areas where centralized regulation can be implemented in the joint preparatory work with France.
Merkel previously served as a consultant for the U.S. BlackRock Group and was a director at Deutsche Börse Group, and is considered an experienced figure in the capital market. His push for establishing a unified European stock exchange is also interpreted as part of his effort to revitalize the German economy and overcome the country's three-year growth stagnation.
In the market, major European exchange operators have responded positively to Merkel's call. Stéphane Boujnah, CEO of Euronext, stated in a statement that Euronext has always believed that "working together in Europe is better than failing separately" and that the company is "ready to promote the next stage of integration of the European market, establishing deeper liquidity pools to provide financing for the growth of European companies."
Boujnah said that granting regulatory powers to ESMA helps solve the problem of "divergences in regulatory and supervisory standards" and emphasized that "Europe needs to take decisive steps towards unified regulation."
Reuters reported that Deutsche Börse also supported Merkel's position in a statement, stating that "the EU has more than 500 trading platforms, forming the most fragmented and least transparent market in the world, with only about 30% of stock transactions occurring on transparent public markets."
The institution believes that market fragmentation severely hampers IPO activities in Europe, weakening the ability of companies to raise capital locally.
The Financial Times mentioned that the EU Commission is currently drafting a proposal to grant ESMA more regulatory powers within the year, including supervision of systemic financial institutions such as central counterparties, central securities depositories, trading platforms, and cryptocurrency exchanges. However, Germany still opposes ESMA's involvement in the regulation of crypto assets.
On the eve of the upcoming EU summit, Merkel also proposed a broader vision for European reform, advocating for deeper integration, cutting excessive regulation, and implementing the recommendations of Draghi and former Italian Prime Minister Letta, further breaking down barriers to the flow of goods, capital, labor, and services within the EU.
Merkel pointed out that Draghi's report shows that the growth gap between the EU and the US is largely due to weak productivity growth in Europe. "Productivity is the most fundamental prerequisite for competitiveness... Europe can only regain growth momentum through profound changes."
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