Past Event

Potential impediments to long-term investment

How can we encourage long-term investment in Europe? Many factors hinder long-term investment but are there risks involved in reviewing existing regulation?

Date: October 4, 2016, 12:30 pm Topic: European Macroeconomics & Governance

 

Event summary

See below for video recording and presentations

The event aimed at identify the possible economic structural impediments to long-term investments and the consequent corrective actions.

Investments have been particular low since the beginning of the recent crisis in 2007, this mainly due to a low demand.

Sandra Rigot from Paris 13 University presented some interesting results from a survey developed to study the impact of accounting and prudential standards on long-term capital investments of financial intermediaries (banks and insurances).

The current accounting standards (IAS39 and IFRS4) and prudential requirements (solvency, liquidity and leverage ratios) have introduced a short-term thinking into long-term management strategies, representing therefore an obstacle to long-term investments.
The plausible improvement will be to introduce a greater balance for future standards in order to measure the long-term assets in a more consistent manner and avoid to excessively penalize them.

Sophie Barbier from Caisse des Dépôts et Consignations stressed the importance of not imposing a banking or insurance regulation to long-term investors and she presented the internal model the company has adopted to promote the funding of long-term investments.
This model is based on very stringent and high standards requirements to preserve the public confidence, a measure of risk consistent with a long-term horizon, a buy and hold investment strategy and a careful design to encompass all the possible kinds of risks existing in the balance sheet.

Furthermore, she highlighted the importance of a close collaboration between the European institutions and the long-term investment institutions, to find the right strategies to return to a stable growth path.

Edoardo Reviglio from Cassa Depositi e Prestiti also underlined the importance of the role of long-term institutions to cover the gap between the demand for long-term investments (e.g. due to an important growth of the population) and the supply of these resources, stressing the importance of the role of an appropriate non-financial regulatory framework (e.g. fiscal incentives) and financial regulations (e.g. Solvency II, liquid instruments as project bonds, securitization of loans for SMEs).

The last panelist was Miguel Gil Tertre from the European Commission, which underlined as the uncertainty can be identified as one of the main obstacle to long term investments, together with regulatory barriers (e.g. Gotthard Base tunnel has been a very long project also due to the much different regulatory environments between Italy and Switzerland).

To overcome these obstacles, he highlighted the importance of country specific recommendations given at EU level, together with broader EU interventions (e.g. reduction of capital requirements for insurance companies that want to invest in long-term projects; simplified rules to use the EU funds for investments), more incentives for sustainable finance and a general more comprehensive approach at European, sectoral, national and regional level.

Event notes by Fabio Matera, Research Intern

VIDEO RECORDING

Event materials

Sophie Barbier – presentation

Miguel Gil-Tertre – presentation

Sandra Rigot – presentation

Schedule

Oct 04, 2016

12.30-13.00

Check-in and lunch

13.00-13.45

Panel discussion

Chair: Grégory Claeys, Research Fellow

Sophie Barbier, Caisse des Dépôts et Consignations

Miguel Gil Tertre, Member, Cabinet of Vice-President Katainen, European Commission

Edoardo Reviglio, Chief Economist, Cassa Depositi e Prestiti SpA

Sandra Rigot, Professor, Paris 13 University

13.45-14.30

Audience Q&A

14.30

End

Speakers

Sophie Barbier

Caisse des Dépôts et Consignations

Grégory Claeys

Research Fellow

Miguel Gil Tertre

Member, Cabinet of Vice-President Katainen, European Commission

Edoardo Reviglio

Chief Economist, Cassa Depositi e Prestiti SpA

Sandra Rigot

Professor, Paris 13 University

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

matilda.sevon@bruegel.org

Read article More on this topic More by this author

Blog Post

Moroccan job market issues, and labour trends in the Middle East and North Africa

Morocco is an interesting case of structural labour market disequilibrium despite respectable growth, and illustrates the issues facing the region’s oil-importer countries

By: Uri Dadush Topic: Global Economics & Governance Date: December 7, 2017
Read article More by this author

Blog Post

Why US investors earn more on their foreign assets than Germans

The United States benefits from large yields on its foreign assets relative to foreign liabilities, while in most continental European countries foreign assets and liabilities yield almost the same. Risk factors can explain only a small part of this difference; tax, intellectual property and financial sophistication issues might contribute to the high yields on US foreign assets.

By: Zsolt Darvas Topic: Finance & Financial Regulation, Global Economics & Governance Date: December 1, 2017
Read article Download PDF

Working Paper

Returns on foreign assets and liabilities: exorbitant privileges and stabilising adjustments

Large stock of foreign assets and liabilities could foster international risk diversification. US, British and Japanese investors earn high yields on FDI assets, which might also relate to tax, intellectual property and financial sophistication issues. Valuation changes on net foreign assets had a stabilising impact.

By: Zsolt Darvas and Pia Hüttl Topic: Finance & Financial Regulation, Global Economics & Governance Date: November 29, 2017
Read about event

Past Event

Past Event

Sustainable growth in transition countries

This event will feature a presentation of the EBRD Transition Report 2017-18.

Speakers: Jonathan Charles, Zsolt Darvas, Sergei Guriev, Debora Revoltella and Lucio Vinhas de Souza Topic: European Macroeconomics & Governance, Finance & Financial Regulation Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 28, 2017
Read article Download PDF More on this topic

Policy Contribution

How should the European Central Bank ‘normalise’ its monetary policy?

During the crisis, the ECB resorted to a number of unconventional monetary tools. This paper discusses how to phase out these policies and what the ‘new normal’ in monetary policy should look like.

By: Grégory Claeys and Maria Demertzis Topic: European Macroeconomics & Governance Date: November 23, 2017
Read about event More on this topic

Past Event

Past Event

Growth, productivity and social progress in Europe

On 26 October, Bruegel is organizing an interactive brainstorming seminar on Growth, Productivity and Social Progress in Europe. This is a closed-door, high-level workshop for a selected number of experts in the field.

Speakers: André Sapir Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: October 26, 2017
Read article More on this topic More by this author

Blog Post

Long-term growth potential, or dead in the long run?

By linking growth with both employment and the imperative for India to hold its own with China for strategic autonomy, Prime Minister Modi has brought sustainable, high quality, inclusive economic growth to the centre of political discussion, which is where it rightfully belongs.

By: Suman Bery Topic: Global Economics & Governance Date: October 5, 2017
Read article Download PDF More by this author

External Publication

An innovation deficit behind Europe’s overall productivity slowdown?

Reinhilde Veugelers' chapter in "Investment and Growth in Advanced Economies", conference volume of the European Central Bank’s Forum on central banking in Sintra.

By: Reinhilde Veugelers Topic: European Macroeconomics & Governance, Innovation & Competition Policy Date: October 2, 2017
Read article More by this author

Podcast

Podcast

Surprising priorities for Europe and China

Bruegel’s Alicia García-Herrero and Robin Niblett of Chatham House discuss a new joint report on EU-China relations. How easy was it to find common ground with Chinese partners? And what should be the priorities for economic cooperation between Europe and China?

By: The Sound of Economics Topic: Global Economics & Governance Date: September 13, 2017
Read about event More on this topic

Past Event

Past Event

EU-China economic relations: looking to 2025

This event will see the launch of a report on EU-China relations and discuss issues such as trade and investment, industrial cooperation and innovation and global governance

Speakers: Victor Chu, Ian Davis, Alicia García-Herrero, Dame Clara Furse, Tony Graziano, Anatole Kaletsky, K.C. Kwok, Lawrence J. Lau, Ina Lepel, Hanna Müller, André Sapir, Robin Niblett, György Szapáry, Jean-Claude Trichet, Zhang Yansheng, H.E. Ambassador Yang Yanyi, Liu Xiangdong, Gunnar Wiegand, Guntram B. Wolff, Huang Ping and Elena Flores Topic: Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 13, 2017
Read about event

Past Event

Past Event

Bruegel Annual Meetings 2017

The Annual Meetings are Bruegel’s flagship event. They offer a mixture of large public debates and small private sessions about key issues in European and global economics. In a series of high-level discussions, Bruegel’s scholars, members and stakeholders will address the economic policy challenges facing Europe.

Speakers: Carlos Sallé Alonso, José Antonio Álvarez Álvarez, Agnès Bénassy-Quéré, Pervenche Béres, Matthias Buck, Grégory Claeys, Zsolt Darvas, Jean Luc Demarty, Maria Demertzis, Anna Ekström, Lowri Evans, Ferdinando Giugliano, Sandro Gozi, Peter Grünenfelder, Reiner Hoffmann, Levin Holle, Kate Kalutkiewicz, Steffen Kampeter, Peter Kažimír, Emmanuel Lagarrigue, Matti Maasikas, Steven Maijoor, Reza Moghadam, Nathalie Moll, James Murray, Johan Van Overtveldt, Julia Reinaud, André Sapir, Dirk Schoenmaker, Mateusz Szczurek, Marianne Thyssen, Jean-Claude Trichet, Reinhilde Veugelers, Nicolas Véron, Ida Wolden Bache, Liviu Voinea, Guntram B. Wolff and Georg Zachmann Topic: Energy & Climate, European Macroeconomics & Governance, Finance & Financial Regulation, Global Economics & Governance, Innovation & Competition Policy Location: Square - Brussels Meeting Centre Date: September 7, 2017
Read article More on this topic More by this author

Blog Post

Africa and Chinese rebalancing

What’s at stake: China and Africa have developed close economic ties over the past 20 years. The need to rebalance the China-Africa relationship was also a prominent topic in the context of the recent Kenyan elections. But if the drivers will shift relatively more towards domestic consumption, what will the impact be on Africa? We review recent contribution to this debate.

By: Silvia Merler Topic: Global Economics & Governance Date: August 28, 2017
Load more posts