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The role of capital markets in Germany - Five questions on the state of play, current opportunities, and themes for the future
20 Mar 2024
Download the German version of the reporthere. The Association for Financial Markets in Europe (AFME) has today published a new report on the role of capital markets in Germany.This study, published in partnership with zeb Consulting, shows the potential that stronger financing via capital markets offers for Germany. Among the key findings, the report shows that for decarbonisation efforts alone, the bar is set very high in Germany. The German government has committed to reducing greenhouse gas emissions in Germany by at least 65% by 2030, compared to 1990 levels, under the Climate Protection Act. Key findings: Germany is lagging behind other countrieswith respect to capital markets financing. German companies rely almost exclusively on bank loanswhile households still avoid capital markets for investing and retirement provision. There is anannual funding gap of EUR 175 billionneeded to achieve the German government’s ambitious climate targets by 2030. There are increasing signsviews are changingwith respect to the role of the capital markets in the German financial system. In Germany, the proportion ofcapital marketinstrumentsis significantly lowerthan in other countries, however, anequity culture is growing among young investorsin Germany. TheGerman statutory pay-as-you-go pension system is beginning to falterin the face of an ageing society. To address this challenge, a pension scheme, partly based on capital markets funding, will be essential in the future. Capital markets could help to finance future investments in Germany, including via new sources of financing, such as securitisations.
Sustainable Finance in the EU: Priorities to unlock financing and investment
16 Nov 2023
The Association for Financial Markets in Europe (AFME) has today published a new report 'Sustainable Finance in the EU: Priorities to unlock financing and investment'. The paper outlines AFME members’ views and recommendations on the functioning of the current EU sustainable finance framework and the implementation challenges that banks face in applying it to financing companies. The paper then highlights AFME’s constructive recommendations for policymakers, including how policymakers and regulators can further enable financial institutions in providing financing in support of climate, environmental and social goals. The report sets out five priority recommendations to address identified challenges: Maintain focus on establishing roadmaps, reducing regulatory barriers for the deployment of sustainable investment projects and providing incentives for the real economy transition; Ensure that the regulatory framework is achieving its goals, is coherent and usable in practice to promote and support sustainable finance (including transition finance); Provide a stable regulatory framework with time for implementation and review how it is working in practice, with targeted guidance/changes introduced where needed in consultation with market participants; Ensure that regulation is promoting investment and does not adversely impact the competitiveness of financial institutions or companies operating in the EU and internationally; and Enhance international coordination and improve international interoperability with other key jurisdictions. Alongside recommendations on improving the functioning of the EU regulatory framework, the report also sets out AFME’s recommendations in three further important areas which we see as priorities for EU policymakers: Facilitating transition finance; Developing carbon markets; and Scaling finance for nature.
Capital Markets Union Key Performance Indicators – Sixth Edition 2023
9 Nov 2023
Press releaseavailable inEnglish, French, German, Italian, Spanish Individual country analysis available for France, Germany, Italy, Spain The Association for Financial Markets in Europe (AFME), in collaboration with eleven other European and international organisations, has today published the sixth edition of the'Capital Markets Union – Key Performance Indicators'report, tracking the progress of Europe’s capital markets against nine key performance indicators. This year’s report shows a mixed picture, revealing no discernible medium-term advancement on the CMU key performance indicators. This edition also coincides with the 30th anniversary of the Single Market. Here too, the data points show minimal change in the development of the EU's capital markets on a global scale. Adam Farkas, Chief Executive of AFME, said:“All the planned measures from the CMU Action Plan of 2020 have now been delivered by the Commission and EU leaders earlier this year committed to finalising negotiations on any open CMU issues before the next EU elections. However, certain goals, such as rebalancing the EU's funding sources toward more market-based financing, channelling individual savings into productive investments, and integrating national capital markets to create a unified EU market have not yet materialised to any meaningful degree. “It is clear that the financing structure of the EU economy will need to adapt, and at pace, if it is to support the EU’s significant and transformative investment needs, including the fast-approaching climate goals of 2030, as well as its demographic and competitiveness challenges. “Ahead of the next legislative cycle commencing, a strategic discussion on the best way forward will take place within the Eurogroup to set out recommendations for the next Commission. These recommendations are highly anticipated by the capital markets industry. The growth of an integrated capital market for Europe must continue to be a key priority if the European Union is to achieve its dual goals of sustainable and digital economic transformation.”