The Capital Markets Union (CMU) – a key issue from the perspective of Luxembourg’s financial sector – is once again on the agenda at the meeting of the 27 EU heads of state and government in Brussels. On Wednesday, the European Commission rebranded the Capital Markets Union project as the Savings and Investment Union. However, the objective remains the same: to channel savings – capital – towards productive investments.
For nearly 10 years, the EU has been trying to create a more harmonised financial market, but one central sticking point remains the question of oversight. France has been pushing for years, and continues to push, for supervisory powers to be centralised. The European financial market supervisory authority is also based in Paris. This has caused particular unease in Luxembourg’s fund industry.
Prime Minister Luc Frieden said on Thursday morning that Luxembourg stands “fully and entirely” behind the CMU. However, the focus should be on finding a common rulebook without adding unnecessary bureaucracy. In his view, a “network of centres of excellence for supervision” would be preferable – places like Ireland or Luxembourg, which could share their expertise with others.
Simplification is also one of the key buzzwords in Brussels. It is considered necessary to strengthen Europe’s competitiveness – and that competitiveness is, in turn, seen as essential to financing Europe’s defence.
On Thursday, EU heads of state and government will continue discussions on the plan to rearm the EU, a decision made at the special summit two weeks ago. Although EU countries have, in principle, agreed to allow more debt if it is intended for defence purposes, questions remain about how this debt will be issued and whether European subsidies might come into play.
Upon his arrival in the Belgian capital, Prime Minister Luc Frieden reiterated that funding is one thing, but the key now is to determine how that money will be used. Discussions will therefore continue on addressing military weaknesses and inconsistencies between member states.
A white paper from the European Commission is serving as the basis for these talks. For Luc Frieden, deregulation is also a crucial point, citing public procurement procedures as an example.
Regarding Ukraine, leaders are expected to first listen to what Ukrainian President Zelenskyy has to say. He will join the summit via video link to provide information on his recent conversation with U.S. President Trump.
