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Martin Schulz - PES Candidate for the European Commission Presidency, answers to FEBEA Appeal "CHANGE FINANCE TO CHANGE EUROPE"

Friday, 23 May, 2014

Read the answer of Martin Schulz- PES to the FEBEA Appeal "CHANGE FINANCE TO CHANGE EUROPE":

"Dear Mr Salviato,

Thank you for your letter, and for bringing your petition and initiatives to my attention.

The regulation of the financial sector has been a key focus for the socialist family in the past years, and will continue to be in the future. As a political family, we have been at the forefront of this fight. And I have been, and remain fully committed to this priority.

Much has been achieved thanks to the work of the PES family, both in the Council and in the European Parliament, despite resistance by the conservatives and  the liberals. We have taken steps to improve financial regulation and supervision, increasing financial transparency and taking steps towards ensuring financial stability. But much more work will still be needed in the next five years, work which I am committed to undertake.

Regarding your specific questions:

1. What is your stance on the introduction, based in the proposal of the Commission dated 28th September 2011, of a “Tax on Financial Transactions” that could effectively contrast speculation in all EU countries?

I have always been I firm supporter of the implementation of the Financial Transaction Tax. In fact it is thanks to the constant political pressure of the PES family that the FTT is becoming a reality. The Party of European Socialists has been one of the key leaders of the FTT campaign over the last years. In the European Parliament the S&D Group, thanks to the hard work of the Greek MEP Anni Podimata, managed to put the issue on the table and then to put enormous pressure on the Commission to issue a legislative proposal. And I have welcomed the decision of the 11 Member States to implement the FTT under enhanced cooperation as an important step. The FTT is key for encouraging more responsible financial trading and putting an end to financial speculation. With the implementation of the FTT the financial sector will finally contribute its fair share to society.

2.   What will you do to ensure the separation between banks that conduct risky financial activities and banks based mainly on the collection of savings, advocated by the Liikanen Report and recently addressed by the proposal of structural reform of the banking system promoted by the Commission on 29th January 2014? In this regard, do you think a complete legal separation between commercial and investment banks would be appropriate?

It is imperative to protect citizens’ deposits from financial speculation and excessive risk taking. Therefore I am a firm supporter of the proposal to reform the structure of the banking system in order to deliver adequate firewalls between commercial and investment banking. The S&D group in the European Parliament, thanks to the commitment of the British MEP Arlene McCarthy, issued a solid report on the issue which paved the way to the Commission's proposal on banking structure. Our political family has always been a strong supporter of the need to ensure that depositors' money does not end up being used by banks for risky trading thus exposing depositors to risk. I look forward to making steps towards this direction during the upcoming legislative period. My aim is to ensure that the financial sector starts serving the real economy.

3.   In focusing their investment strategy on financing projects with specifically social, cultural or environmental goals, European ethical banks have for many years favored a sustainable and transparent approach to banking, always focusing on the support of real economy. What do you think about a specific acknowledgement of the role of these banks, also in the context of the Basel III regulation?

As European Socialists, we have been urging Europe to pursue a progressive investment strategy as an imperative for generating economic growth and creating new jobs. The financial sector has obviously to play a pivotal role, and I therefore welcome every effort in that direction. We have also urged and fought to make sure that the financial sector contributes to the real economy. The values that you describe in your question should of course be supported and promoted, and I would be happy to examine your proposal.

As we say in our PES Manifesto for the European elections: “We will make sure that never again will banks gamble with citizens lives. Instead we must actively put in place the framework that will make the financial sector work for the real economy and contribute its fair share to society. Regulation will force banks to serve your communities instead of stripping them.”

In the context of the Basel III / CRD IV legislative framework, it is obvious that different banks must have different capital requirements.

4.      What do you plan to do to oppose the “Tax havens”, a relevant source of the distortions that have caused the financial crisis?

There is a lot we can do. But as a first concrete step, I have committed to take steps to introduce one simple, transparent rule. And that simple rule is that the country of profit should be the country of taxation.

Every year Europe loses 1 trillion euros to tax fraud and tax evasion, it is vital that we collect this money and use it for investing into the real economy and creating new and decent jobs. Putting an end to tax fraud and tax evasion and closing down tax havens is one of my key priorities. For tax havens in particular, I believe that strict rules, sanctions and levies should be pursued to ensure that aggressive tax planning is discouraged. My aim is to promote tax rules that ensure transparency and prevent tax dodging.

The issue of tax fraud, tax evasion and tax havens is as much a European as it is a global issue. Tax havens are often off-shore and the international dimension has historically been a stumbling block. However the EU must also deal with any loopholes that can allow tax-haven to exist in Europe. As President of the European Commission I can guarantee that I will continue the fight on tax fraud, tax evasion and tax havens wherever they are.

5.  Based on the work undertaken by the Commission with its Communication to the Council and the European Parliament dated 04th September 2013, what will you do to fight the “shadow banking system”, namely the kind of non-bank financial intermediaries that provides services similar to those of the ordinary commercial banks, but with approaches and modalities that tend to avoid the ordinary controls of the monitoring authorities?

All sectors of the financial markets should be regulated. Shadow banking entities and activities played a major role in the credit explosion that caused the financial crisis. I am committed to implement a strict regulatory framework for shadow banking entities and shed transparency in those operations. A legislative report was being finalised in the European Parliament by the Belgian MEP Said El Kadrahoui, unfortunately due to the conservatives and the liberals opposition this report was not voted and it will be dealt with by the new Parliament.

6.  What will you do, by way of integrating the European Market Infrastructure Regulation (EMIR), to regulate the derivatives, in particular the non–regulated ones, that were among the financial products that caused the current crisis, and today still play a relevant role?

Following the financial crisis the EU has taken steps forward to implement stricter laws to reduce the amount of trading that is done in the dark and ensure that financial market players trade through organised clearing venues. But this is not enough. We need to ensure that all financial products undergo the same obligations. This is vital for preventing future financial crisis and for ensuring the stability of the European economy. The work done with EMIR but also with the review of MiFID are a very good step in the right direction. But as the devil is in the detail,  it will be key to ensure that implementing and regulatory technical standards do not water down the level 1 proposals.

I am happy to send attached the common PES manifesto which constitutes the political framework of the PES campaign. I believe that you will find that our plan, and especially sections one and two, of great interest to your concerns.

I hope that we can count on your support to the progressive, socialist European forces that will fight for better finance and a better Europe.

Sincerely yours,

Martin Schulz, Common Candidate of the Party of European Socialists