V. Vasiliauskas: The Capital Markets Union — more competition in the financial sector
Vitas Vasiliauskas, Chairman of the Board of the Bank of Lithuania, on April 24–25, will participate in Riga in an informal meeting of the Economic and Financial Affairs (ECOFIN) Council, where heads of the EU central banks and financial ministers will confer on the creation of the EU Capital Markets Union. During the meeting it will also be discussed how to encourage the structural reforms necessary for economic growth and how to remove any obstacles they may face.
“The European Union is encountering decreasing economic growth potential and a lack of investment. In seeking stable long-term growth, we cannot depend only the monetary encouragement policy conducted by the ECB — for this, consistent reforms and reliable sources of funding are necessary,” says V. Vasiliauskas. According to him, this is exactly why the considered initiative to create the Capital Markets Union is not only one of the most relevant topics in the upcoming ECOFIN Council meeting in Riga, but also one of the most important activities for this year. The expansion of the common EU capital market, the decisive elimination of obstacles to cross-border investments, the reduction of capital attraction costs could significantly ease the conditions for access to financing for small and medium-sized enterprises as well as infrastructure projects.
According to the Chairman of the Board of the Bank of Lithuania, this initiative is particularly relevant for Lithuania: “We need to admit that our capital market, where banking financing dominates without competition, is not sufficiently developed. Its expansion and a greater variety of financing models for small and promising enterprises would provide alternative fund-raising and business financing sources, while for institutional and retail investors new opportunities for investment would arise.”
The Bank of Lithuania has presented proposals on how to improve the tax environment for companies investing in equity capital and collective investment undertakings intended for informed investors. In the assessment of the Bank of Lithuania, seeking balanced financial market expansion requires unification of tax conditions for banking and capital market financing, as currently it is bank loans that have obvious tax advantages.
The Bank of Lithuania has also prepared proposals on the regulation of alternative financing and non-public offers of securities in Lithuania as well as permission for private limited companies to publicly distribute bonds.
“We also see opportunities in Lithuania for forming long-term investment funds, which could contribute to the country’s infrastructure projects and the financing of promising enterprises, thus strengthening our economy,” says V. Vasiliauskas.