The European's Commission's proposal to increase the use of
non-traditional banking systems across Europe - known as the Capital Market
Union (CMU) initiative – poses major risks to people and the environment, a coalition of European civil society groups has stated today.
initiative proposes to increase the use of
market-based financing, which involves institutions (such as hedge funds and
investment banks) that carry out traditional banking functions, but do so
outside the regulations of the traditional banking system. According to the
Commission, the CMU will boost economic growth and reduce reliance on funding
But the coalition, which includes Friends of the Earth
Europe, says that in reality the proposal is a "false promise" that
will only serve the interests of big investment banks and private equity funds.
Anne van Schaik, accountable finance campaigner at
Friends of the Earth Europe, said:
"Tens of millions of people across Europe are
still reeling from the consequences of the financial crisis in their daily life
– unemployment, low wages, erosion of labour and social rights, and rising
inequality. Why would we want our decision makers to simply pave the way for
the next one?
"We call now on the European Parliament and the 28
member states to ensure that the initiative is not further undermining the real
economy, sustainable development and human rights, both in Europe and in the
world. We urgently need legislative proposals against financial instability, as
well as to halt harmful investments, not another false solution to the economic
and financial crisis."
In a joint statement, the coalition says that the CMU
revives pre-financial crisis trends without adequately integrating the lessons
from that period. It also marks a shift in the political momentum towards
short-term growth and competitiveness at all costs, when what is needed is
long-term sustainable development of the economy.
The organisations signing this statement, which include
trade unions, consumer groups, development and environmental groups and think
tanks, have a variety of concerns about CMU. These include risks to financial
stability, retail investors, pensioners and consumers, workers, and
environmental, social and governance issues.
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