Other parts of this series:
In the wake of the 2008 global financial crisis, the role of Europe’s financial services regulators has become incredibly important to the development of both the continent’s financial services industry and social economy.
The ability to navigate the current landscape of European economic public policies and strategies is essential for financial services institutions (FSIs). As I discussed in my previous post, FSIs—banks and insurers—need to embark on an innovation-led transformation imperative to drive growth in their own organizations and the social economy.
As FSIs transform themselves, what will be regulators’ overarching objective?
Will it be to oppose the neoclassic economic goal of restoring market failures only if the free market could not address them? Or is it Keynesian—moderating boom and bust cycles of economic activity and encouraging fiscal and monetary policies to alleviate the adverse effects of economic crises?
In assessing European regulators’ responses to the 2008 financial crisis and the initiatives they have launched in recent months, one reasonably might be tempted to conclude that the current regulatory objective falls half way between those two alternatives. However, I strongly believe that regulators’ role today extends beyond their ability to govern financial markets and ensure FSI compliance.
Indeed, regulators’ objectives include building windows of opportunities for FSIs to unlock their innovation potential to become more competitive. That clearly is evident in:
- The establishment of an integrated Capital Markets Union.
- The forthcoming creation of integrated European retail financial services.
- The rollout of the Digital Single Market.
- The promotion of green finance and fintech.
- The encouragement of institutional investors to consider sustainability in their investment decisions.
European regulators have unleashed a transformation imperative for FSIs, and innovation lies at the heart of it. In their new role, European regulators will be able to support FSIs as they attempt to meet their mandate for stimulating the social economy by offering the new portfolio of products, services and investment strategies that will meet customers’ expectations.
I am convinced that FSIs have reached a critical time. Regulators are providing them a tremendous opportunity to lead the innovation revolution and stimulate competition and growth in the European social economy.