The Commissioner-designate for financial services, Ireland’s Mairead McGuinness, promised on Friday (2 October) a “full investigation” into the Wirecard fraud that has thoroughly shaken up Germany, to see why supervision failed.
McGuinness (EPP), who was an MEP for 16 years and European Parliament’s first vice-president, was grilled by the Parliament’s Economic and Monetary Affairs Committee before taking over the financial portfolio from vice-president Valdis Dombrovskis, who will add Trade to his Economic portfolio.
She spoke about the Capital Markets Union, the Banking Union, the digital financial services and sustainable finance.
McGuinness shared her vision of financial services in Europe as more digital, more sustainable and more inclusive, demonstrating solid knowledge of different issues. If confirmed, she will replace Phil Hogan, who stepped down after attending a private dinner in defiance of COVID rules.
Her election would help Ursula von der Leyen’s Commission progress toward gender parity, as it will then have 13 female members and 14 male colleagues.
McGuinness’s nomination came as the EU is preparing to cushion the impact of the UK becoming a third country on 1 January, and the unfolding scandal of the payment service company Wirecard, the biggest corporate fraud in Germany in the last decades.
McGuinness said that “we need an absolute full investigation” into the scandal that left a €1.8 billion hole for clients. “Something was wrong”, she told MEPs, referring to the failures in supervision by German authorities and other streams.
“We will look carefully and act accordingly”, she added. Her predecessor Dombrovskis also promised to look into what had gone wrong.
As regards the impact of the UK’s departure on financial services, McGuinness warned of the risks for financial stability if the EU is “overdependent in key financial services” on the City of London.
For that reason, she said, the Union needs to build its own financial infrastructure, even more since “we don’t know their intentions” on financial regulation. “We cannot take risks”.
She promised a “cooperative relationship” with UK supervisors in the future, but she said that it is “difficult” to grant equivalence to UK-based financial operators, which would in practice allow them to operate in the EU, without knowing how UK rules and supervision will evolve.
“At the moment we don’t have that info,” she said.
McGuinness urged all financial services to prepare for the UK’s final departure and noted that “many operators have made changes”. But she was “a bit concerned” because the preparatory work was impacted by the COVID-19 crisis.
She shared MEPs’ concerns about the slow progress made on Capital Markets Union and the outstanding obstacles to complete the Banking Union, two of her toughest battles if she is confirmed by the Parliament.
Progress will continue to be “incremental” on the Capital Markets Union, guided by the 16-point action plan the Commission put forward in September. But McGuinness stressed the importance of moving forward as Europe needs liquid and deep capital markets “more than ever”.
She will start by focusing on issues related to SME financing but will also consider legislative measures to tackle other difficult issues, such as harmonising the insolvency framework in Europe. “Long judiciary procedures are in no one interest”, she said.
As for the banking union, she said she would focus first on issues where there is “broad consensus”, such as the completion of the European Stability Mechanism backstop, tasked with providing emergency loans in return for reforms.
But she also gave her “personal and political commitment” to inject fresh energy into more contentious issues, such as the European Deposit Insurance Scheme aimed at protecting savers across Europe with a common instrument.
She urged the EU to seize the “window of opportunity” and warned EDIS sceptics that “doing nothing is going backwards, and if we don’t act we will repeat the past”, in a reference to the 2007-2008 banking crisis.
MEPs also grilled her on the new rules for digital financial services, and she defended the principle of “same risk, same regulation” for Fintech companies while stressing the need for “strong supervision” for cryptoassets, in line with the Commission’s recent proposal.
On sustainable finance, she did not exclude common European rules to develop green bond standards, based on the new taxonomy.
Likewise, she didn’t rule out a “brown list” of economic activities that should not be financed by these green bonds, but recalled that “some areas need a transition toward green”, while admitting she needed more information before making up her mind.
Various MEPs asked her about whether her passport would influence her views on tax matters, a topic that is not under her direct competences.
“My duties are to the EU”, not to Ireland, she stressed.
During the three-hour hearing, Mc Guinness also promised a tougher approach against money launderers and did not exclude infringement proceedings against member states that are not properly implementing EU rules. She also defended a European supervisor to fight against money laundering, a proposal she will put forward next year.
She wrapped up her session by paying tribute to John Hume, a former MEP and key figure in the Irish peace process, and also an entrepreneur in financial services at a young age. “We owe so much to John Hume”.
Once the Economic Affairs Committee completes its evaluation, the Parliament will vote on her nomination on 7 October.
[Edited by Zoran Radosavljevic]