Makhlouf calls for genuine single market in goods, services and capital to boost European competitiveness

Governor of Central Bank of Ireland Gabriel Makhlouf today (Tuesday 19^th May) spoke at the AFME Annual European Financial Integration conference, where he called for a more ambitious approach to Europe’s Single Market, arguing that greater integration in goods, services and capital is essential to enhance European competitiveness and resilience. The Governor outlined two primary conditions for building a genuine single capital market: completing the regulatory architecture and establishing a single safe asset. 

“The Single Market is one of Europe's greatest political and economic achievements and has already raised EU GDP by 3-4%. Completing it could double these gains, bringing greater growth, greater resilience and greater opportunities for the citizens of Europe.” Governor Makhlouf said. “The single market for capital cannot be separated from the single market for services. The cost of this unfinished project falls on every business, every household, and every citizen in Europe.”

He also acknowledged the demand-side challenges to capital market development, including uneven tax treatment, financial literacy and cultural norms.

“Europe cannot build a single capital market if its citizens are not active participants in it. Progress on the demand side will not be swift – changing cultural attitudes to investment is not something that moves quickly – but it needs to start.”

Governor Makhlouf stressed the critical role of national governments in delivering the Single Market agenda, pointing to Ireland’s recent launch of a comprehensive national framework for Single Market implementation, pension auto-enrolment, legislating for a Personal Investment Account framework by 2027and a retail investment tax roadmap.

Commenting on the role of central banks in maintaining and deepening capital markets, the Governor said “There is broad agreement that Europe needs more convergent supervision. Convergence in outcomes is what matters. Regulating well also matters.  Simplification for us at the Central Bank of Ireland means implementation before legislation: simplify the application of existing rules before layering on new ones. Simplification is not the enemy of robust regulation. Done properly, it is what makes robust regulation credible and durable.”

Concluding, Governor Makhlouf said “We have seen that Europe can, when it chooses to, build common instruments that work.  The starting point for doing that well is to avoid thinking in boxes or silos but consider the bigger picture that can deliver a genuine single market in goods, services and capital.”

ENDS