EUexecutiveseespersonalsavingsusedtopluglong_termfinancinggap

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usive: EU executive sees personal savings used to plug long-term financing gap | Reuters

2/13/2014 6:34:://www.reuters.com/article/2014/02/12/us-eu-banks-savings-idUSBREA1B1ZI20140212

BYHUW JONES

LONDON Wed Feb 12,20146:00pm EST

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(Reuters )- The savings of the European Union 's 500 million

citizenscould be used to fund long -term investments to boost the

economy and help plug the gap leftby banks since the financial

crisis,an EU document says .

The EU islooking for ways to wean the 28 -country bloc from itsheavy reliance on bank

financing and find other means of funding small companies ,infrastructure projects and other

investment .

"The economic and financial crisishas impaired the abilityof the financial sector to channel

funds to the realeconomy ,in particular long -term investment ," said the document ,seen by

Reuters .

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The Commission willask the bloc's insurance watchdog in the second halfof thisyear for

advice on a possible draft law "to mobilize more personal pension savings for long -term

financing ",the document said.

Banks have complained they are hindered from lending to the economy by post-crisisrules

forcing them to hold much larger safety cushions of capitaland liquidity.

The document said the "appropriateness " of the EU capitaland liquidityrules for long -term

financing willbe reviewed over the next two years ,a process likelyto be scrutinized in the

United States and elsewhere to head offany riskof EU banks gaining an unfair advantage .

The EU executive willalso complete a study by the end of thisyear on the feasibilityof

introducing an EU savings account ,open to individuals whose funds could be pooled and

invested in small companies .

The Commission also plans to study thisyear whether changes are needed to help fund small

businesses by creating a liquid and transparent secondary market for trading corporate

bonds in the EU .

Itisalso seeking to revive the securitization market ,which pools loans likemortgages into

bonds that banks can sellto raise funding for themselves or companies .The market was

tarnished by the financial crisiswhen bonds linked to U .S.home loans began defaulting in

2007 ,sparking the broader global markets meltdown over the ensuing two years .

The document says the Commission will"take into account possible future increases in the

liquidityof a number of securitizationproducts " when itcomes to finalizinga new rule on

what assets banks can place in their new liquiditybuffers.This signals a possible loosening of

the definition of eligibleassets from the bloc's banking watchdog .

The Commission willalso "review " how EU rules treatcovered bonds by the end of thisyear,

the document says,a step that willbe welcomed by Denmark with itslarge market in bonds

used by banks to finance home loans .

Other steps to boost financing in the EU include possible steps to aid crowdfunding ,where

many people contribute relativelysmall amounts of money to create a sizeable funding pool .

The document said investors and asset managers also have a role and itwillpropose a

revision of EU rules on shareholder rights to "ensure better disclosure of institutional

investors'engagement and voting policies".

More controversially,the Commission willconsider whether the use of fairvalue or pricing

assets at the going rate in a new globally agreed accounting rule "isappropriate ,in particular

regarding long -term investing business models ".

(Editing by Ruth Pitchford )

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Comments (2)

sabrefencer wrote:

sure,stripthebanks ,or thepeople,oftheirhard earned and maybe safedollarsthrow them intorisk

thats a greatformula

Feb 12,2014 5:33pm EST --Reportas abuse

sabrefencer wrote:

sure,stripthebanks ,or thepeople,oftheirhard earned and maybe safedollarsthrow them intorisk

thats a greatformula

Feb 12,2014 5:33pm EST --Reportas abuse

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EUexecutiveseespersonalsavingsusedtopluglong_termfinancinggap