Dr. Constantin Gurdgiev:

I will quote the third sentence in the preamble: "But to strengthen investment for the long term, we need to build [there is no argument about that] a true single market for capital – a Capital Markets Union for all 28 Member States." The Deputy is correct in the sense that the EU does not allow in this paper any derogation from the core concept of a singular market. The question then becomes one of what the singular market is.

I am concerned by the lack of substantive assessment, listing and pricing, let alone analysis, of individual risks and the potential for things to go wrong. I am also concerned by the general approach that the EU has taken recently to a great deal of regulation, for example, the idea that harmonisation repairs all of the problems, that we need a genuine monetary union and a banking union, and that we need a unified tax system across financial services. This approach to policy making hinges on the extreme technocratic assumption that, once a particular union is in place, the regulation and supervision mechanisms built around it will function perfectly in addressing the future known and unknown challenges. We know from the history of finance that this is not the case. For example, Professor Franklin Allen of the Wharton School has put on record that, historically, all of the large systemic financial crises had a similar pattern - overconfidence by regulators who, after the crisis, build institutions to address the causes of the previous crisis, with the financial services hiring the brightest young people to bypass those regulations, leading to more crises, which are usually of greater proportions and of a higher frequency. Nothing in the EU's approach would prevent this vicious cycle from repeating. That worries me.

From the point of view of today and the future, it is none the less important that we consider whether we should fund our companies, entrepreneurs and enterprises through equity, the banks' relationships or the direct markets of bonds issuance. Giving investors and enterprises access to a more diversified base allows for better risk management and targeting, that is, ensuring the suitability of particular investment vehicles to the objectives of the enterprise and the investor.

Mr. Brown raised crucial caveats. Education is important for investors, companies and regulators.

Another issue I raised is supervision, not just the regulation. The issue the Deputy raised is crucial as well, the nitty-gritty details of how we assess those policies, how we write them and how we structure them. That remains to be done in the future, and none of it is done here.