The capital markets union can make Europe a more attractive destination for our investments
European Commission President Juncker presented his plans for revitalising the European economy at the end of 2014. Part of those plans is the formation of a European Fund for Strategic Investment, but the completion of the European capital markets union forms another key objective. Responsible commissioner Hill called on market parties to present their ideas on what this union should look like during consultations conducted this spring. As a large institutional pension investor that is involved in society it is only natural that we shape our ideas in this connection and participate in the debate.
The capital markets union can make Europe a more attractive destination for our investments. PGGM likes to make long-term investments, because they fit well with the obligations of pension funds. Moreover, this makes it possible for pension capital to contribute to economic growth and financial stability. It is important to indicate in this connection that we already invest half of the pension capital in Europe.
We would advise the European Commission to choose a pragmatic and targeted approach that focuses on removing specific policy obstacles. Reduce, for example, the differences in the field of investor protection or VAT between the various countries.
The unprecedented loose monetary policy means that there is currently an ample supply of capital. But this capital does not always find the most desirable destination. Projects and undertakings with a high social but uncertain financial value sometimes find it hard to raise capital. The Commission should focus on this market failure, first by arranging for consistent and reliable policy for example in the field of climate, energy and innovation. And also by identifying where prudential supervision focusing on the short term stimulates liquidity rather than long-term investment behaviour. Closer cooperation between public and private parties makes it possible to create an investment boost, for example by having the public sector finance (part of) an operating shortfall.
And finally, a pragmatic and targeted approach can also mean that EU provides a platform for national and local initiatives for standardisation and upscaling of investment, such as the Dutch Investment Institutions. Other examples include contract standardisation and improved project documentation.