CMTI 2019: Regulation and investment needed to support European innovation
Positive regulatory frameworks and increased investment capacity will be needed across the European Union if the bloc is to make the most of a wave of innovation sweeping financial services, says Odile Renaud-Basso, general manager for the ministry of economy and finance at the French Treasury, speaking at the Association for Financial Markets in Europe (AFME) Capital Markets Innovation event in Paris this week.
“There is a debate happening around balancing innovation and regulation in all countries,” she says. “All regulators are trying to test new avenues while asserting some very important principles. It’s our responsibility that innovation doesn’t create a block hole where illicit activities can grow.”
In the aftermath of the financial crisis, adds Renaud-Basso, there have been “huge” regulatory changes at both the international and European level.
The result of this has been the creation of a set of institutions which Renaud-Basso says are much stronger and much more resilient than they were in 2008.
“When we saw the crisis coming, we looked at America and thought ‘Europe is safe, we have no sub prime here’ but didn’t realise how deep some connections go within the market. We need to be – and are – more vigilant.”
There remains a lot of uncertainty in the global economy, she adds. “Will the US and China reach an agreement? Will there be new measures and trade tariffs applied to Europe? What is going to happen with Brexit? All of this creates a slowdown as people wait to take investment decisions.”
Despite a tight labour market in the US, European countries’ wages are not going up, says Renaud-Basso. This brings a lot of debate about new paradigms and what the monetary policy reaction should be: “All of this has impacts on the market.”
France has a lot of young professionals wiling to engage in entrepreneurial projects, but the country has a major challenge in scaling companies, she adds, as these new firms fail to find sufficient investment to remain based in Europe and are bought by big companies from the US. “This is a big loss for us, even if it is good globally.”