EUROPE – Michel Barnier has reiterated his plans to "calibrate" all the new regulatory frameworks the European Commission is working on – such as CRD IV, Solvency II and IORP II – with the results of the Green Paper on long-term investing, which will be released "within a few weeks".
In an early draft of the Green Paper released earlier this month and seen by IPE, the Commission stated that it might seek preferential treatment for certain types of long-term asset classes in Solvency II and the proposed new solvency rules for occupational pension funds.
Speaking at a conference held by the CFA Institute and the Federation of European Securities Exchanges in Brussels, Barnier, the commissioner for internal markets, also highlighted the need to attract investment in European venture capital funds, which "play a very important role".
He pointed out that, in 2011, venture capital investment covered the financing needs of only 2% of small and medium-sized enterprises in Europe, compared with 14% in the US.
"Venture capital funds play a very important and specific role," he said. "They provide the innovating start-ups, which are not publically listed and need a 5-7 year engagement from their investors, the necessary capital for their launch."
He also pointed to "mutations" in the banking sector that could lead to "additional funding difficulties".
"That's why we are planning to calibrate all our regulatory frameworks to ensure the new rules are not damaging the financing of the real economy," he said. "I am particularly referring to our proposals for the CRD IV directive, which focuses on capital requirements for banks."
Barnier stressed that such concerns did not apply only to the banking sector and that banking financing activities should be "completed" by other financial institutions such as insurance companies and pension funds.
"Alongside banks, [the Commission] should search for a better equilibrium between prudential requirements and incentives for long-term investment for insurance companies, reinsurers and pension funds," he said.
Barnier criticised the behaviour of "some asset managers" for contributing to short-termism and mispricing.
He finally pointed to the role he believed national regulators should play in implementing rules to promote long-term investing, citing national public investment banks and sovereign wealth funds as possible examples.
