European regulation is restricting competitiveness - Eurex panel

European regulation is restricting competitiveness - Eurex panel

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European authorities should look at regulation as part of broader efforts to make Europe more competitive on the world stage, a panel of experts has suggested.

Speaking at the Eurex Derivatives Forum in Frankfurt on Wednesday a panel of German experts discussed the problem of Europe’s dwindling competitiveness versus other countries and regions.

Florian Toncar, Parliamentary State Secretary, Federal Ministry of Finance, Germany, told the delegation: “We have structural issues in Europe which the Americans don’t have to the same degree. We are world class in regulation but the density, intensity and the speed of change in regulation makes it really difficult for companies, and this is the major difference to the US which relies more on entrepreneurial responsibility and freedoms.”

Toncar, a member of the Free Democratic party serving in the German coalition government, said European authorities have tended to over-regulate European industries.

“The mistake that Europe has made over the last years has been regulatory micro-management, not only in the financial sector but elsewhere. The result is that we have lost competitiveness and our productivity is poorer than the US and elsewhere.”

Thomas Book, executive board member at Deutsche Boerse, agreed Europe has a competitiveness problem, adding: "Europe has been underperforming in terms of growth for more than ten years now compared to the US. In the projections of the OECD, the US was upgraded while Europe was downgraded with Germany as the weakest country in terms of growth in the G20 right now which obviously is a problem.

Book added: “We need to think about how competitive is Europe as a location. I couldn’t agree with Fritzi more that companies are adaptive... but we have a long-term problem with underperforming growth.

“Action is required in various ways and that includes being competitive in terms of the regulatory environment," Book added.

Fritzi Koehler-Geib, chief economist at KfW, told the panel: “I agree with the point that the perspective has shifted to how, in this very competitive and shifting geo-strategic environment, Europe can compete.”

She added: “Innovation has been an element that has set Europe apart from other regions in the past and we need to maintain that and strengthen it further going forward.”

Speaking earlier in the day, the European Commission’s head of financial services Mairead McGuinness said the European agreement on the controversial EMIR 3.0 rules to force the clearing of certain Euro-denominated derivatives into Europe “is only the beginning”.

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