The Franco-German treaty of friendship known as the Élysée Treaty, signed on January 22, 1963, is an outstanding political achievement. After a long period of “hereditary enmity” and numerous wars with heavy losses, the agreement marked the beginning of close Franco-German cooperation.
This friendship has long given the European project a further boost. Yet a new resolution passed this Monday by the French National Assembly and the German Bundestag also underlines the challenges – and the fact that the Franco-German engine is needed now more than ever to overcome them.
The Franco-German economic area provides important momentum for the further deepening of the European single market. Banks have a key role to play, particularly as sources of finance for businesses, players in the digital single market and providers of cross-border financial services and green finance. French and German banks are determined to play an important role in financing Europe’s economic development in a post-Brexit environment. Financing small and medium-sized enterprises remains our main priority.
This is why we are calling for the further development of Europe’s Economic and Monetary Union.
Additional steps to reduce risks are important before further risk-sharing mechanisms can be put in place.
The bloc’s long-term stability requires fundamental reforms in euro zone countries and at the community level, as well as better integration. We should introduce incentives that can boost economic harmony and international competitiveness in euro countries, and end the lack of compliance and institutional weaknesses. Fully recognizing the euro zone’s uniformity is also crucial in the continent’s relevant supervisory rules and regulations. The upcoming withdrawal of the United Kingdom from the European Union should be handled in a way that minimizes damage, maintains a level playing field and secures the financing of Europe’s growth for the future.
Efficient and profitable European banks are essential for that success. In that vein we are calling for further development of the continent’s banking union and capital markets union. This could secure the medium- and long-term financing of the European economy against the current backdrop of new banking regulations, which are restricting banks’ activities.
In developing the banking union, additional steps to reduce risks are important before further risk-sharing mechanisms can be put in place. Greater integration of European capital markets also requires greater standardization and harmonization, particularly in securitization, insolvency law and prospectus law. We also need to rebalance priorities at the European level to promote the liquidity of European financial markets. A council of “wise men” could develop proposals and pave the way for the next European Commission to make progress in this area.
We are calling for the appropriate implementation of the Basel accords in Europe to better reflect European banking practices and the EU’s low-risk investment profiles. In view of its importance for the European economy, we should provide more tailor-made treatment of real-estate finance, specialized finance and the financing of non-rated companies at the EU level.
Finally, we advocate the comprehensive digitalization of our economy, adapting regulatory frameworks to support the digitalization of the banking sector, and a secure European digital economy based on resilient cyber-security. In the banking sector, this includes developing exclusively digital and paperless communication, as well as fully digital financial transactions. This is why digital identification should be made available throughout the EU. Supervisory rules should also be adapted and banks should be less disadvantaged when investing in software.
The German and French banking associations are committed to these objectives, and we will be actively and constructively involved in these debates. We want to contribute to further integration in Europe.
To reach the authors: email@example.com