ECB‘s Nagel: Need Capital Markets Union for Green Economy Transition

7 May 2024

By Aurėja Bobelytė – VILNIUS (Econostream) – The Capital Markets Union is urgently needed to ensure the transition to a green economy, European Central Bank Governing Council member Joachim Nagel said Tuesday.

In a panel discussion in Frankfurt, Nagel, who heads the German Bundesbank, said that ‘the green transformation of the economy requires substantial investment. Which is, by the way, one reason why we need the Capital Markets Union so urgently’.

One of the reasons why the Capital Markets Union has still not been achieved is that a whole package of measures is needed, which might affect national law, Nagel observed. In order to harmonise the rules, a greater willingness to compromise would be required, he said.

‘As the leaders of Europe increasingly recognise the relevance of this topic, I am confident that we will make progress’, Nagel said.

Governments could best support the Single Market by ensuring good framework conditions, he said. '[B]efore they resort to direct market interventions, policymakers should double-check whether there really is a robust, compelling case of market failure or high security risks', he said.

According to Nagel, digitalisation could help overcome the obstacle of physical distance when trading services. ‘It has the potential to give the Single Market a fresh boost’, he said.

Referring to the Next Generation EU programme, Nagel said that ‘given the current level of integration, it should remain a one-off exception to the rule that the EU must not borrow money’.