This article is based on the introductory speech given by Pierre Wunsch, Governor of the National Bank of Belgium, at the EIB – National Bank of Belgium Webinar “Investment for a sustainable recovery in Belgium” on 30 April 2021.
Since 2016, the European Investment Bank Group (EIB) has conducted an annual survey on Investment and Investment Finance (EIBIS). This includes interviews with some 13,500 firms from the EU27 Member States, the UK and the US, of which around 480 are Belgian in 2020. The survey covers both SMEs and larger corporates in main economic sectors, offering qualitative and quantitative information about their investment activities, financing needs and the difficulties they face.
The EIBIS 2020 was conducted during the spring/early summer of 2020, right after the first wave of the COVID-19 pandemic. The impact of the pandemic on EU firms and elsewhere has been substantial, leading to large revenue losses and changes in investment strategies. Therefore, assessing business needs and setting priorities is crucial for a rapid and solid recovery of the EU.
In this context, the current note analyses and discusses the answers given by Belgian firms on their investment activities, such as objectives, obstacles, drivers, and financing conditions. These answers are compared with the responses of the other surveyed companies in the EU to identify areas for potential improvement and target setting for Belgium.
This article is based on the intervention of Wim Vermeir, Chief Investment Officer of AG Insurance – Ageas during the panel discussion at the EIB – National Bank of Belgium Webinar “Investment for a sustainable recovery in Belgium” on 30 April 2021.
This article is based on the intervention of Hugues Bultot, founder & CEO of Univercells, during the panel discussion at the EIB – National Bank of Belgium Webinar “Investment for a sustainable recovery in Belgium” on 30 April 2021.
This is the report of the speech given by Klaus Regling, Managing Director of the European Stability Mechanism, during the Belgian Financial Forum Webinar of May 5, 2021.
Today’s banks are healthier and more solid than they were a decade ago. Sustainability and transparency are top priorities and the focus lies on the traditional core task of converting savings into loans. As a result, the banking sector was able to play its full role in society during the corona crisis. Companies, consumers, and individuals experiencing financial difficulties could count on postponing the repayment of their loans. A state guarantee scheme for enterprise loans totalling €10 billion was developed as well. In addition, regular credit production for companies was maintained. However, this does not mean that the other challenges – such as the increasing digital transformation of society and therefore also of the financial sector – have disappeared. On the contrary, they too remain at the top of the priority list.
The European Payments Initiative EPI is intended to counter the dominance of global card networks and Big Tech companies with an independent European retail payment solution. With the support of the European institutions, European banks and payment service providers are developing the infrastructure for payment transactions. EPI is part of a set of initiatives including the digital euro and the GAIA-X European cloud. Together, they stand for Europe's move towards digital independence and sovereignty.
Book review: “VALUES. Building a Better World for All”/ Mark Carney
Signal, 2021, ISBN 9780771051555, 608 p.
Belgium used to be known as a country with a high tendency to save. The banking sector managed to inject this savings mass into the real economy. There is hence no systematic savings surplus. However, since the beginning of the COVID crisis savings increased strongly and part of these savings must be placed overnight with the ECB. The COVID pandemic thus shows that supply and demand in our financial markets are not well aligned and that there are some missing links in our financial landscape.
The coronavirus crisis has created two bottlenecks in the financial circuit. On the lending side, there is a surplus of idle household savings for many - but not all - households, while there is a potentially large unmet need for capital increases at affordable conditions for those companies that have suffered from the crisis. To redirect savings into an alternative financial instrument, the latter must be (i) safe, (ii) liquid, (iii) non-loss-making, and (iv) socially meaningful. To persuade companies to open their capital to external investors, they should be able to issue securities that are (i) equity-like, (ii) non-diluting, (iii) non-voting, and (iv) self-destructing. It is not easy to link these two incompatible needs, but we believe that, thanks to the current economic conditions with low interest rates but a positive expected economic growth rate, some adequate financial engineering could bridge the gap. For households, we advocate the issuance of liquid bullet bonds with a variable coupon and guaranteed capital. On the corporate side, the proceeds of these bonds would be invested in callable, cumulative, convertible preferred shares. A proper asset & liability management governance can ensure a smooth management of the maturity, credit and liquidity risks of the structure. Based on the feedback of many knowledgeable actors of the Belgian economy, we list several potential hindrances that need to be overcome to succeed with this project, but we believe that none represents a crippling obstacle.