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Cassa Depositi e Prestiti’s (CDP) chairman, Franco Bassanini, this morning made the introductory remarks at the "Improving the Financing of the Long Term Projects to Favor Growth" panel discussion during the Eurofi Financial Forum 2012 held in Brussels. Eurofi President Jaques de Laroiére chaired the discussion.
Bassanini’s speech stressed the need for long-term investments in infrastructure and companies’ growth plans in order to boost Europe’s economy and competitiveness.
"The financial crisis and consequential prudent accounting regulations have exacerbated the difficulty of the banking system to offer long-term financing," the CDP chairman said. "There needs to be regulations, instruments and incentives to increase the attractiveness of long-term investments for institutional investors that allow the banking system to return to the role of financers of the economy that saw them as leaders, at least in Europe."
Among the many ideas suggested by Bassanini, of particular interest was that of a long-term refinancing operation (LTRO) by the European Central Bank (ECB) of a smaller size (€100-€200 billion), but of longer duration (7 years) with binding conditions not only relating to the presence of adequate collateral, but also to medium-to-long term financing. "The two LTROs put into effect months ago have efficiently eased the liquidity crisis for the short to short-to-medium term, but they could do nothing for the liquidity crisis that today penalizes investments and growth for the medium-to-long term," Bassanini said.
Bassanini also discussed the role of politics, saying it "must guarantee a regulatory framework more favorable for long-term investments, adjusting the CRD IV (Basel III), Solvency II and the IORP rules.’’
Regarding equity, the Marguerite and InfraMed Long Term Infrastructure Funds, in addition to the Energy Efficiency Fund, should be referred to as models as cooperation among long-term investors, Bassanini said. The same is true on the debt side "where the large national development banks may create common funds to finance long-term investments."
To conclude, the CDP chairman believes there is a need to guarantee tax incentives in order to support long-term investments and savings, promote the adoption of the Project Bond, assure a stable regulatory framework, a trustworthy and rapid judiciary system, an efficient public administration, and a steep reduction of the bureaucratic and regulatory costs for businesses.
Rome, 28 September 2012