Securitisation for more efficiency and capital market integration for more volume in long-term financing - Europe needs both, according to Fabrizio Campelli, Member of the Executive Board and Head of Deutsche Bank's Corporate and Investment Bank, speaking at the opening forum.

Admittedly, last year's financial crises in the UK and the US underlined the importance of interest rate risks in the context of financial market stability. But as such, says Fritzi Köhler-Geib, Chief Economist at KfW Banking Group, the financial markets in continental Europe have proven to be very stable.

However, their fragmentation is an obstacle to growth of the real economy because it runs counter to the scaling of financing, says Michael Hüther, Director of the German Economic Institute in Cologne. In view of the fundamental importance of bank-based corporate finance in Europe, securitisation also has a key role to play in financing the transformation. According to Fabrizio Campelli, this means that banking skills can be used many times over for underwriting, origination and servicing.

If what needs to be done is so obvious, the tenor of the audience's questions suggested, why aren't policymakers taking action. Katharina Beck, spokeswoman and deputy chairwoman of the Finance Committee at German Bundestag, stressed the importance of advocacy in Berlin and Brussels, and that the momentum is now right for this in view of the EU parliamentary elections in June 2024.

The Investor Kick-off takes the same line. All reform proposals are available, in particular, on removing barriers for investors in the securitisation market and on the Capital Markets Union. In terms of financial market stability, the reduction of the ECB's balance sheet next year will be a challenge.

Alexander Batchvarov, Head of International Structured Finance at Bank of America, sees the risk less in financial interconnectedness than in market sentiment.

Concrete proposals for activating medium-sized banks in financing growth of the real economy in transformation are discussed by the panel on the German Securitisation Platform. The final report, which was published September the 20th, provided an important impulse on how small and medium-sized institutions can use this instrument for capital management through higher standardisation.

Nils Bösel of the Deutsche Bundesbank suggests that the approval process for SRT (Significant Risk Transfers) by supervisory authorities could be enhanced. Furthermore, the SRT panel emphasised the product's high significance. In 2022, a volume of EUR 145 billion was synthetically securitised in Europe, a growth of 100% compared to the previous year. In addition to the improved framework conditions due to the introduction of STS for synthetic balance sheet securitisations, the increasing capital requirements of the institutions play a significant role, triggered also by the finalisation of Basel III.

Good news from the European Banking Authority (EBA): Roberta de Filippis has announced that the regulatory cycle is coming to an end and only a few implementing rules still need to be finalised.

Regulatory stability is welcomed by market participants.

The "Roadmap for CMU - Time to take off?" panel provides a forward-looking perspective.

Stefan Müller, Chief Parliamentary Secretary of the CSU at German Bundestag, emphasizes the significance of Capital Markets Union and the successes in enhancing consumer protection and transparency. At the same time, Mr Müller stresses that the new EU Commission will be responsible for driving forward the completion of CMU and recognising the complexity of the project.

Tobias Berg, Professor of Finance at Goethe University Frankfurt, emphasizes the essentiality of enforcing uniform implementation of rules across EU regions for successful implementation.

At the same time, the costs of very extensive and complex regulation are worrying and would affect the competitiveness of the European economy, including the financial sector.

A survey of the audience at the panel discussion on central bank policy shows that safeguarding financial market stability in the course of the monetary policy turnaround is not a foregone conclusion: a slim majority expects positive effects of central bank policy on asset-based finance markets and financial market stability; no one believes that the monetary policy turnaround will leave asset-based finance unscathed. On the inflation front, Björn van Roye, Head of Global Economic Modelling at Bloomberg Economics, argues that we should prepare for a "higher for longer".

Growth in the real economy is at the centre of discussion on the challenges for SME financing in Germany. Andreas Sowa, Member of the Executive Committee of the Verband Deutscher Treasurer (Association of German Treasurers), and Michael Munsch, Member of the Board of Creditreform Rating AG, call for sustainability regulations for SMEs to be simplified and better communicated. The discussion with the audience shows that SMEs, which cannot tap capital market funding, face particular challenges. This is because the additional administrative costs have a negative impact on production in the value chain and, thus, on the creditworthiness of SMEs undermining their ability to obtain financing for transformation. There was also broad agreement on this challenge in the panel on “Optimal Financial Market Architecture in the Face of Global Megatrends for Germany and Europe”.

Klaus Wiener, Member of the Bundestag, expressed a similar view at the Business Breakfast, seeing international competitiveness threatened not only by bureaucracy but also by energy costs.

The fact that renewable energies do not have to be in conflict with the competitiveness of the German economy, but require an appropriate infrastructure, was also discussed in the panel on infrastructure and project financing. Oliver Luksic, Parliamentary State Secretary at the Federal Ministry of Transport and Digital Infrastructure, outlined the needs for the coming years and pointed to persistent bottlenecks in the planning sector. Sandra Rother, head of MEAG's Infrastructure Debt Asset Management team, pointed out that these challenges are actually "upside opportunities" that need to be addressed systematically. Frank Dornseifer, Managing Director of Bundesverband Alternative Investments, emphasised that there are not only administrative but also regulatory obstacles, particularly with regard to fund regulation. Christian Bevc, Global Head of Syndications & Treasury KfW IPEX-Bank, made it clear that project finance is a "super instrument" for mobilising private capital. It allows complexity to be reflected in a structure that is attractive to many financial market participants. To broaden the investor base in infrastructure and project finance, the panellists suggested the creation of granular portfolios using synthetic securitisations. This would allow a data-driven rather than transaction-specific analysis of investments.

Once again, energy and the future of German industry were the focus of discussion at the closing forum. In his keynote speech, Florian Toncar, Parliamentary State Secretary at the Federal Ministry of Finance, argued for a clearly supply-oriented economic policy. In principle, he said, the capital markets are of central importance in securing future energy supplies, and the securitisation market is essential, especially in phases when a lot of investment is needed. Sebastian Bolay, Head of Energy, Environment and Industry at the German Chamber of Commerce and Industry, and Astrid Hamker, Member of the Board and President of the Economic Council, appealed to politicians to include all four million companies, including the craft sector, in their communication.

There is a lot to be done. Securitisation can contribute in many ways to financial stability and growth in the real economy. What is needed now is to move policy from talk to action.