‘The future of the Capital Markets Union’ dinner debate hosted by Insurance Europe, the European insurance federation, on Monday, 28 November 2016



Michaela Koller, Director General, Insurance Europe


Burkhard Balz, Member of the European Parliament, Group of the European People’s Party (DE)

Niall Bohan, Head of Unit, Capital Markets Union, Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA), European Commission

Miguel Gil-Tertre, Member of Cabinet of European Commission Vice-President Jyrki Katainen, Commissioner for Jobs, Growth, Investment and Competitiveness


Future steps in the Capital Markets Union (CMU) initiative were debated by representatives of the European Parliament, Commission and the insurance industry at a private dinner in Brussels. It followed publication of the results of the EC’s Call for Evidence on the EU regulatory framework for financial services on 23 November. CMU aims to create a European single market for capital by 2019.


  • Miguel Gil-Tertre: One of the Commission’s biggest achievements is to put investment at the centre of policy discussions.

  • Niall Bohan: The overarching aim is to stimulate investment in productive capital — still below pre-crisis levels — fostering the supply of infrastructure projects and addressing regulatory barriers.

  • Burkhard Balz: The EC’s plans are helpful but not as promising as hoped. Given current low interest rates and political and economic uncertainty, this piecemeal approach will not deliver growth.

  • Insurance industry: Insurers are still being regulated as though they are traders not long-term investors. The treatment of all long-term assets should be reviewed.


The Commission stressed that the concept of sustainable finance is at the core of the EU Investment Plan. Good investment projects are those that generate maximum public value and are completed on budget and on time, not ‘bridges to nowhere’. The Commission recognised the insurance industry as the biggest institutional investor, with assets of almost €10 trillion, and noted that it is important to understand what has driven the significant reduction in investment in equities. The Commission is preparing for a CMU review in 2017.


MEP Balz urged the Commission to be more ambitious in its efforts to ensure that insurers can maintain long-term investments. He argued that while the CMU cannot be a stand-alone guarantee of success, the opportunity is still there — and should be taken — to address the shortfall in economic growth. He was particularly forthright in his rejection of any attempt to now change the ultimate forward rate (UFR) calculation in the Solvency II regulatory regime, which would affect insurers’ investment strategies.


The insurance industry welcomed the Commission’s work on infrastructure project finance, which has aligned Solvency II more closely with the industry’s real risks. However, insurers stressed that infrastructure investment is only a tiny portion of their portfolios and that — to support growth — more action is needed on other asset classes.


The supply of suitable infrastructure projects has improved but there are still not enough. There are the risks that governments change their views during the course of projects and that private funding is crowded out by public banks. The industry also expressed disappointment that the EC has not addressed the negative consequences for consumers of the overload and duplication of contractual information created by various pieces of legislation.

Where to next for the Capital Markets Union?