Can asset management get Europe's competitiveness back on its feet?
Financial markets/economy
Posted by MoneyController on 29.11.2024
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The European Union is facing increasingly urgent geopolitical challenges in recent years. But how could the capital market and asset management help it to overcome these challenges?
Increasingly, there is talk of the need for the European Union to strengthen itself so that it can compete, both economically and in negotiations, with today's great geopolitical champions, such as the United States and China, but also India and Russia. For example, it is pointed out that the European capital market is very small compared to that of the US, partly because it fails to attract a large amount of savings. The channelling of savings into the European financial system would mean, through the mediation of competent asset management companies, a very useful financing channel for many European companies.
This is the context of the proposal by the President of the European Central Bank (ECB), Christine Lagarde, who - writes Isabella Bufflacchi in the ‘Sole 24 Ore’ - has proposed a de-bureaucratisation of the system, an effective supervisory authority for the entire Union, as well as the creation of accessible and transparent products for all Union citizens. Two important institutional representatives, Joachim Nagel and France François Villeroy de Galhau, respectively the presidents of the central banks of Germany and France, also spoke in this direction.
But what is the size of this savings, i.e. the money that is not invested? As the ECB president explained, it is a huge amount: 11,500 billion euro. This unused savings corresponds to one third of Europe's total wealth. In the United States, the same share falls to 10 per cent. If the same mobilisation of capital were to occur in Europe as in the US, asset management companies could find themselves managing around 8 trillion euro more in investments. Making the European capital market more effective and efficient would therefore be aimed at nurturing the productive and innovative sectors in Europe, thus making them more competitive in the face of today's global challenges.
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