Whether one embraces opportunity or fears risks may be a question of approach. It’s also a matter of considering the alternatives. This is especially true for the planned merger of Deutsche Börse in Frankfurt with the London Stock Exchange.
The new German-British heavyweight offers a host of strong opportunities. First, it will be a strong European signal at the right time, almost independent of the result of the British referendum about whether to stay in the European Union.
And in a Europe of varying speeds and currencies, the deal offers a sustainable connection between the euro zone and other E.U. countries – far removed from the function of a liquidity bridge.
Keeping the status quo would amount to a step backwards.
As the financial center of the euro zone, Frankfurt will be joined with the most important site for capital turnover in the world. And this means that investors will have better commercial terms and companies of all sizes will have better access to capital.
Finally, with the new stock exchange, efficiency reserves can be better managed, while chances for earnings and growth can be improved, achieving a better and more sustainable position internationally.
Still, there are worries that need to be taken seriously, particularly when it comes to Frankfurt as a financial center. The fact that London is supposed to be the headquarters of the controlling company is cause for skepticism. But there would have been scarcely fewer reservations if Frankfurt had been chosen, and the top managerial position in the new company had been assigned to a Briton.
This is indeed an association of equals: The fact that the chief executive comes from Germany should be celebrated! And we should trust those who have offered guarantees about London as the new stock exchange’s headquarters. Frankfurt will remain a commercial powerhouse. Whoever doubts this can count on the proximity to the European Central Bank, which will certainly not be transferred to London.
On the other hand, the danger of job cuts remains, because not everything can stay the way it is, even if the problem is approached as carefully as promised.
Ultimately, only those who are willing to change can survive. On its own, Deutsche Börse has recently declined in the worldwide ranking, despite a strong performance. Industrial logic speaks clearly in favor of the merger and a European solution. Keeping the status quo would amount to a step backwards.
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