He is the face of Luxembourg's financial centre in Brussels. Antoine Kremer heads the joint office--of four people--of the Luxembourg Bankers’ Association (ABBL), Association of the Luxembourg Fund Industry (Alfi) and Luxembourg Insurance and Reinsurance Association (Aca). He shed light on the issues at stake in the European elections on 9 June during an interview.
Guillaume Meyer: How important are the European elections for the insurance industry?
: These elections are of vital importance, often underestimated by the general public. Our standard of living, which is closely linked to the economy, depends to a large extent on the rules established at European level. Members of the European Parliament are co-legislators with the member states on a whole range of pieces of legislation, which largely determine the rules of the game for the entire EU financial sector, including that of Luxembourg.
How much of the rules that affect you is decided in Brussels?
The overwhelming majority of the rules come from the EU. They range from capital adequacy standards for banks and insurers to specific regulations for investment funds, as well as anti-money laundering and payment rules. Not to mention provisions from other areas, such as good governance. There has even been talk of imposing the rules on deforestation on the financial sector. So it’s vital for us that these regulations are designed with our specific characteristics in mind.
What do you expect from Luxembourg’s representation in the European Parliament?
Every Luxembourg MEP counts, given the small size of the delegation [six MEPs out of 705 members]. We depend on their active commitment, particularly in the key parliamentary committees for the financial sector, starting with the Committee on Economic and Monetary Affairs (Econ). This committee is at the heart of legislation that has a direct impact on us. Continued representation of Luxembourg MEPs on this committee would be an asset for the country.
At present, three Luxembourg MEPs are alternates on this committee. Is that not enough?
It’s good, but having full members, with voting rights, would be even better. Substitutes can take part in debates, table amendments... They can even vote in the place of an absent member, and if we’re determined, there’s usually a way of replacing someone because not everyone is always there. But we can’t rule out the possibility that the composition of this committee will change during the next term. There could be mergers with other committees or a reduction in the number of members. It is therefore vital for the country to ensure a strong and influential Luxembourg presence.
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Or else?
There will be a lack of representativeness. Luxembourg is one of Europe's leading financial centres. If we are not careful, other member states will push their agenda--often to the detriment of Luxembourg.
Why is there a discrepancy between the economic importance of the sector and the interest that Luxembourg MEPs may have in it?
There is not necessarily a natural appetite for financial issues among politicians. It was very sexy after 2008 and the financial crisis, but then the wind changed. What remains, structurally, is that the Econ committee is the most important for our country.
As interest representatives, we are politically agnostic.
How do you work with Luxembourg’s political parties to raise awareness of these issues?
We are in active dialogue with all the major parties. These discussions are enriching and often open up new perspectives. It is crucial to work together for the good of Luxembourg, aiming for economic stability and growth. It is in this spirit that we seek to establish a win-win situation for all.
What message would you like to get across ahead of the elections?
We want to encourage people to vote in an informed way, reminding them that the EU is first and foremost an economic union. Voting decisions should therefore take account of the economic issues on the table. As interest representatives, we are politically agnostic. We work with the MEPs that voters send to the European Parliament. There are bound to be parties that are easier to work with.
And with the extremes?
It’s a bit more difficult for us as representatives of the financial industry. Especially as we advocate an open attitude, knowing that the employees and managers we represent come not only from Luxembourg but also from the whole of Europe, and indeed the whole world.
Our integration with places like London... cannot be ignored.
What are the main challenges facing the Luxembourg financial centre at European level?
There are two major challenges. The first is the quest for strategic autonomy, exacerbated by recent events such as the covid-19 pandemic and the war in Ukraine, which have shown us how vulnerable we are in terms of drug production and food safety. This realisation has led to a widespread desire for autonomy in a number of areas, including financial services. However, interaction with other international financial centres remains necessary. Our integration with places like London, despite Brexit, cannot be ignored.
Why is this so important?
The departure of the British marked the loss of half of Europe’s financial markets. Without the influx of capital from financial centres like London, we face a deficit in terms of funding for major European projects such as sustainable transition, digitalisation, European defence and reindustrialisation. We are facing a crying need for capital which, unfortunately, is not available on the continent on the scale required.
Are there protectionist impulses behind this quest for autonomy?
We are observing a worrying trend within the single market, where certain member states are exploiting European legislation to close off their markets, particularly in the insurance and fund sectors. This protectionism takes the form of double reporting requirements or increased supervision costs for players using the freedom to provide services. This closure of the internal market, which runs counter to its original objective, is becoming increasingly apparent.
Including in the European legislative process?
Yes, we are seeing attempts within the Econ committee to restrict cross-border business models such as that of Luxembourg. We are concerned about the future of the EU’s internal market. We are calling for measures to preserve its integrity and fluidity. The European Council and Commission have recognised this dysfunctionality and mandated former Italian prime minister Enrico Letta to draw up a report on the future of the single market, which is a positive development.
Creating a genuine capital markets union is a painstaking task.
What is the second major challenge you have identified?
Some people support the creation of a centralised European supervisor for the financial markets, inspired by the banking model. But this ignores the fact that financial markets and banks operate differently. Capital markets involve spreading risk across a wide range of investors, unlike banking structures.
Doesn’t a capital markets union require a single supervisor?
The idea that capital markets can be magically unified in this way is an illusion. As we have just seen with the new anti-money laundering authority, creating a direct European supervisor is child’s play. On the other hand, to create a genuine union of capital markets, we need to tackle the many specific obstacles that stand in the way of their integration. It’s a painstaking task. I would add that the rapid reaction of national authorities--such as [Luxembourg’s financial regulator] the CSSF--during the covid-19 pandemic illustrates the importance of maintaining supervision that is adapted to and close to the realities of each financial centre, rather than centralising everything.
Nicolas Mackel’s qualities will make him a formidable ambassador
You mentioned Brexit. What impact has the departure of the British people had on your work?
Brexit has changed the European financial landscape considerably. Before, there were three main international financial centres in the EU: Luxembourg, Ireland and the UK. With the UK’s departure, Luxembourg and Ireland have lost their big brother, forcing us to redouble our efforts to represent the interests of international financial centres within the EU. The challenges are accentuated by geopolitical trends such as the retreat of globalisation, making our position even more delicate. The distinction between the financial centres of allied countries and those of the rest of the world is becoming crucial, especially when we are talking about open strategic autonomy.
Today, who do you consider to be your most regular allies?
Our allies vary depending on the issue. We often find common ground with Ireland, because of the structural similarities between our financial centres. However, our allies may also include Germany, France or a group of small or medium-sized member states, depending on the specific issues at stake in each case.
What are the main dividing lines?
Debates often pit the advocates of an open financial centre against those in favour of more restrictions. On other issues, such as the construction and supervision of the internal market, a centralist tendency is pitted against a tradition of dispersion. And sometimes, it is simply a question of defending jobs in specific regions.
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Can the appointment of , currently CEO of Luxembourg for Finance, as Luxembourg’s permanent representative to the EU noticeably improve the influence of the Luxembourg financial centre?
It will obviously be extremely useful to have a permanent representative who knows the financial centre so well. But it’s above all Nicolas’ personal qualities--his immense intelligence, his talent as a diplomat, his social skills--that will make him a formidable ambassador.
Originally published in French by and translated for Delano