Abstract
This chapter deals with the deepening of financialization in the EU which is intended with the Capital Markets Union (CMU) and its consequences for pension regimes. It departs from a brief overview of financialization and its meaning. It focuses next on deciphering the CMU as an institutional reconfiguration aimed at removing impediments to the circulation of capital and reviving the role of financial markets in the EU. The revival of finance-friendly views and policies in the EU institutions, after the traumatizing experience of the Global Financial Crisis, is interpreted as the outcome of a political stalemate on ‘fiscal unification’ which opened the path for the advance of the idea of private risk-sharing through finance as a substitute for public risk-sharing in a Fiscal Union. The pan-European personal pension product (PEPP), which is part of the CMU, is then addressed as a plan to speed up the shift of pensions schemes in the EU from Pay As You Go (PAYG) to funded pensions. Finally, the consequences of the possible development of an EU ‘third pillar’ of funded pensions with respect to the future of member states pension systems are highlighted.
The research for this chapter has been partially funded by FCT—the Portuguese Foundation for Science and Technology—in the framework of the project “Social security rights and the crisis: Social retrenchment as the normality for the financial state of exception”, Ref: PTDC/DIR-OUT/32096/2017.
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- 1.
European Commission Fact-sheet: “A pan-European personal pension product”, 13/02/2019.
- 2.
“Capital Markets Union: Commission welcomes political agreement on new rules to help consumers save for retirement”, European Commission—Press release, Brussels, 13 February 2019.
- 3.
“[A] derivative is a contract that establishes a claim on an underlying asset—or on the cash value of that asset—which must be executed at some definite point in the future. The underlying asset could be a commodity, such as wheat; or another financial asset, such as a bond; or a financial price, for example the value of a currency; or even an entirely non-economic entity like the weather.” (Lapavitsas 2013: 11)
- 4.
Securitization is a transformation of non-tradable loans (or other non-debt assets which generate returns) into assets which are sold on financial markets to investors who are repaid from the principal and remunerated with interest collected from the underlying debt.
- 5.
“There is a functional reason for this. The riskiness of mortgage contracts is much easier to assess than that of SME-loans, while the risk assessments of the latter are much more difficult, time-consuming and hence costly. Since the difficulty of assessing SME-loans is not addressed in the proposal (there is no regulatory attempt to standardize SME-loans for instance), mortgage lending will again be the main beneficiary of the sanitized market for securitized assets the Commission aims to set up. This implies that most of the extra funding generated by securitization will again finance already existing assets (real estate)” (Engelen and Glasmacher 2018: 170).
- 6.
EFR is an organization bringing together CEOs from the biggest banks and insurers in Europe.
- 7.
Surprisingly, the author was unable to find any reference to such an application.
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Caldas, J.C. (2019). Deepening Financialization Within the EU: Consequences for Pension Regimes. In: da Costa Cabral, N., Cunha Rodrigues, N. (eds) The Future of Pension Plans in the EU Internal Market. Financial and Monetary Policy Studies, vol 48. Springer, Cham. https://doi.org/10.1007/978-3-030-29497-7_13
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