Opening remarks by Commissioner McGuinness at the ECON Committee Structured Dialogue

(Source: European Commission)

Thank you Chair. Thank you Irene and good morning everyone.

It’s good to be in the room – I think for my last two engagements on the Structured Dialogue, I was online. But today, happily I’m in the room.

And I’m very grateful for the engagement of this committee.

Chair, you already mentioned that the workload is quite heavy.

And I was looking before I came here at the number of files that are open – so we have close to 20 active files under negotiation – ranging from measures to develop capital markets union, anti-money laundering, and sustainable finance.

In addition to those active files, there’s a number of reviews of legislation underway and we have several proposals under preparation.

Because we want to deliver on our work programme.

The truth of course, is that today everything is overshadowed by the Russian invasion of Ukraine.

When we held our dialogue in December last, I mean so many things have changed. Our focus, in December, was on the recovery from Covid and the role of the financial system and capital markets in that recovery.

Throughout Covid, Europe and Member States took very big decisions to address the Covid crisis – we have Next Generation EU, targeted government supports for business and citizens.

And this committee worked hard and fast to pass measures aimed at easing potential problems in the financial system.

Again, our banks and the financial system continued to provide liquidity and services despite lockdowns.

So in December, I think there were reasons for optimism as we looked to the future.

Sadly, that optimism is tinged with huge uncertainty because of the invasion on February 24th.

We know that inflation is now a reality;

Interest rates are also expected to increase.

The global financial system is undergoing change – not least as a result of digitalisation, but also due to this war.

Our continuing work to build a stronger, more resilient Europe is vital.

And tackling our vulnerabilities is also essential.

On sanctions and impacts, we have worked with international partners – including the US, Japan, the UK and Canada.

We have sanctioned 1,100 individuals and 100 entities.

We have imposed import bans on Russian coal and oil.

We have imposed a ban on transactions involving the Russian central bank’s international reserves…

…and taken measures to cut off Russian institutions from some of our financial market infrastructures.

By cutting off 10 major Russian and 4 Belarussian banks from SWIFT, this was a bold step impairing the ability of those banks to interact internationally.

That said, we are also mindful of the need for keeping the right balance, so in particular:

ensuring that legitimate transactions can continue,

and mitigating the impact on some third countries and their ability to connect to the global financial system.

I think it’s fair to say that the global financial landscape will change.

We might see fragmentation of the financial landscape at the global level;

As well as the fragmentation of the international political and economic community.

This fragmentation is not good news for those who believe in globally open, integrated and competitive markets.

Financial activities, global savings, risk-taking and cross-border financial services are likely to be impacted.

And as you know, global instability has increased.

The war is directly affecting commodity markets – energy and food.

This is something that we’re monitoring very closely.

We are witnessing a sharp rise in global food prices. This is compounded by increases in agriculture production costs, not least fertilisers.

Now, the recent price spike in global commodities, food commodities, is a direct consequence of the war.

Because Putin is weaponising food. He is bombarding grain storage facilities in Ukraine, blockading Ukrainian ports and stealing grain from Ukraine.

I want to stress here that the European Union does not target grain or other food exports with our sanctions.

We are very mindful of the importance of Ukraine as the breadbasket of Europe. But of course, it’s more than just Europe – it’s really important for the Middle East and North Africa.

There is a campaign of disinformation being waged by Russia – pointing the finger to Europe as being the cause of global hunger.

I want to stress here that we are determined and are doing everything we can to get grain out of Ukraine to global markets and to support food insecure countries.

On the energy side, I think this goes without saying – we really do have to increase investments in renewable energy production.

That’s why I want to thank this committee for your work on the Climate Delegated Act which is now law, and which prioritises absolutely investments in renewables.

And you know that the Commission had a communication – we also need to look at issues like planning and licensing.

The other issues around energy that need to be done is to address energy efficiency.

This requires investment and also finding alternative supplies of gas and oil.

Despite all of those big challenges that I’ve just outlined, our financial sector has remained resilient.

Our direct EU exposures to Russia were small before the invasion, and they have considerably fallen since.

The market reactions we are seeing are due to heightened uncertainty, expectations of lower growth and volatile commodity markets.

Over the past decade we have built up a robust and well-functioning financial sector.

In a climate of uncertainty, we are particularly vigilant and following market developments closely, together with ESMA.

And all the while, we continue our work on the green and digital transition.

Financing that transition and ensuring that it is just, is our shared responsibility.

Again, our work on sustainable finance; on corporate reporting; on ESG; on questions of greenwashing are really, really important.

The key driver of our economy is to have a stable, efficient and resilient financial sector. This is our priority.

Our economy and our single market is our strength here in the European Union.

Our work on big projects – I mention here Capital Markets Union and Banking Union – is really essential.

Addressing the changing face of money – crypto; digital euro; cyber security requires us to be very future focused – yes, seizing the opportunities of innovation, while all the time managing the potential risks.

A brief word on crypto because it’s been in the headlines again this morning but over the last while.

Firstly, I really would like to see a political compromise on our MiCA – the Market in Crypto-assets proposal – under the French Presidency.

Two events but I might say three now, have shown that regulating all crypto-assets – whether they’re unbacked crypto-assets or so-called ‘stablecoins’ – and crypto-asset service providers is necessary.

In the context of Russia’s war against Ukraine, there were concerns that crypto could be used to circumvent our sanctions regime.

We made it very clear that our sanctions also applied to crypto.

Of course, sanctions implementation could be facilitated if our framework on crypto was in place,

And if all crypto-asset service providers were regulated entities and subject to effective supervision in the European Union.

The experience and turmoil recently following the crash of Terra – a crypto-asset which was supposed to rely on an algorithm to stabilise its value has certainly raised a lot of questions and concerns at many levels.

That crash also had wider repercussions on the crypto-asset market, including on one stablecoin.

This morning, Celsius Network is in the news for pausing all transfer and withdrawals, citing extreme market conditions.

This afternoon, I will have a discussion with some of you, colleagues, at the MiCA trilogues.

That will be really an important step.

What I want and what I can tell you that MiCA rules will be the right tool to address the concerns on consumer protection, market integrity and financial stability.

This is something that is so urgent given recent developments.

MiCA is just one of the proposals that you as a Committee are working on –  you are working on insurance, investment funds, anti money-laundering – all of this work is critical to reinforce our financial sector.

Finally, a very brief word about the Taxonomy complementary delegated act.

I know there is a vote later today.

I really want to thank colleagues who have engaged with me directly but also for your scrutiny of the work in the Commission.

Open debate is a hallmark of democracy so I will finish at that and I look forward to both comments and questions.

Privacy Preferences
When you visit our website, it may store information through your browser from specific services, usually in form of cookies. Here you can change your privacy preferences. Please note that blocking some types of cookies may impact your experience on our website and the services we offer.