The world is rapidly changing, and Europe is striving to find its place. In the debates over European sovereignty, the issues frequently revolve around diplomacy, defence and occasionally industrial policy, but only rarely finance. The most noteworthy advance in European construction was undoubtedly the single currency, but the European Union (EU) could make much better use of its strengths in the financial area. It took the global financial crisis for common regulatory rules governing finance to be adopted and for their control to be entrusted to European supervisory authorities. Even today, the domestic financial services market remains fragmented and the euro’s geopolitical role unfulfilled. Yet the strategic nature of the financial stakes is evidenced by several factors.
First, financing innovation is essential to remain internationally competitive. The climate transition alone requires massive investments, without which it will be impossible to achieve the target of reducing CO2 emissions to zero by 2050. Bridging the technology gap also requires substantial capital, in this case with a special twist: not only is finance indispensable for innovation, but innovation transforms finance. Tech companies, on the strength of their customer data, are also entering the payments market (e.g. Facebook with its Diem/Libra project).
Alongside these structural changes, cyclical factors also come into play. The COVID-19 pandemic forced governments to provide unprecedented and massive financial support…
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