Il sogno europeo secondo Enrico Letta: dalla frammentazione alla crescita

[Music] Hello everyone, welcome and welcome to this new episode of Finance Explained, the UBS Set Management Podcast, which tells the finance and economy in an accessible way to everyone. I am Clara Morelli, The Will. And this is the second special episode that we have decided to dedicate to Europe and to all the challenges it is facing. We have already done a first episode that I advise you to listen to. With me today there is still Enrico Letta, President of the Institute of Jack DeLore and Dean of the IE University of Madrid. Welcome. Thank you, good morning. And Massimiliano Castelli, Head of Strategy Global Sovereign Markets of UBS Set Management. Welcome. Thank you. So, in the first episode we talked a lot about Europe, a unique market, challenges that the union is facing. Today, in this episode, we go even more into the life of what we have called "Saving an Investment Union" in the previous episode. But, staying for a moment on the unique market, there are two aspects on which we return, which are the fifth freedom and the 28th regime, which are two terms that we hope you will always hear more in public debate. Enrico, do you want to explain to us, in short, what we are talking about? But they are the two great transversal themes that can make the unique market once completed, really a steering wheel of growth. What does it mean? The unique market is not completed today on three vertical sectors, which are connectivity, energy and above all financial markets, from which our whole conversation is born. And then there are two transversal themes. One is about legislation and is the one for which a 28th regime is proposed. I will go back to that. The other is about the lack of innovation. Why do we talk about a fifth freedom? I start with this last one. Because the unique market is also known as the market of the four freedoms. When it was created between '85 and '92 by Delore, the unique market was the market known as the freedom of circulation of goods, services, capital and people. Around these four great themes the success of the unique market was built or the success that touches our normal lives. When you ask me, what is the unique market? I sometimes refer to my personal life. I have lived several phases of my life outside my country. When I was a child, my parents taught me how to work outside before the birth of the unique market. And then when I started working outside, which I do now, after the unique market. The difference is very simple. Before the unique market we were a family of Italian immigrants who worked and lived in Alsatia during that period. But it was a family of immigrants. It was not as it is today, after the unique market, that I work in Paris or in Madrid as if I worked in Milan. As if I worked in Rome or in Pisa, my city of birth. That is, today the unique market, in the case of, for example, the professional services of the work, is an extraordinary reality. Attention, the fifth freedom is missing. That is, the four freedoms that I described earlier give the possibility to live the unique market with, however, a deep limit. Well, the services of capital and people tell us the economic of 1900. An economy based on tangible, what was touching. The intangible is clearly missing. The research, the investments on innovation, skills, knowledge. All this was not included then because the unique market was created in the last century. And today we see this limit. From here this flag of the fifth freedom, which can be indeed something with which we mobilize new energy on the innovation that we have. And the 28th regime, why? Because not only are we not integrated in the vertical sectors such as financial markets, connectivity, energy. But we have 27 corporate laws. We have 27 different commercial laws. 27 law enforcement laws. And not enough. Some countries have different regional laws. Germany, Spain. So an impressive implementation. And this makes for many companies impossible to exploit the unique market. Because you have to spend so much money in legal services, for example. That in the end you stop and you stay alone at home. And this is also a way to prevent international investors from coming to Europe. For an international investor to come to Europe. It is a kind of break-up, a puzzle. Because it is totally fragmented from the legal point of view. The 28th regime, what does it mean? It simply means that we do not have a battle that would be absolutely lost, absurd, would take away only energy to impose a European legislation by canceling the national legislation in the field of corporate law, the right of society. It would be absurd, would take away years of battles and would put it on the ideological side. Something wrong here must be a very pragmatic thing. So the idea is to add an option for society. To tell you, a society of three major sectors. Start-up, small and medium-sized, international investors. Think, Clara, how would it be if we had an order of a virtual state, Europe, that you, at the start-up, at the small and medium-sized, to the international investors, give them this, which is valid everywhere. They do not need to change from country to country. It is a revolution, even intellectual, because it is a very pragmatic way of saying it. It is not an ideological battle that Europe against the member states or vice versa. It is simply that in today's world, the United States will solve it ten years ago with the Delaware. The Delaware is a kind of similar thing, even if it has this aspect of tax that would be different from us for the norms that we have. But in the end, an international investor goes to the United States and creates a society based on the right of the Delaware. This is the rule that usually happens, because it is all, in the end, more simplified and it is valid everywhere in the United States. I will lose the American example, we do not have to do it in Europe, we do not have to be Americans. In Europe it means a 28th order. Simple, which helps the company, because the thing that is most requested today is an elimination of this complexity, of this fragmentation that unfortunately has become the negative image of Europe. When around the world you associate a word with Europe, it is complexity, without simplification, fragmentation. And we have to overcome this. Europe must be smart, it must be fast, fast, attractive. This is a fundamental point today. It would certainly be a huge revolution. But Similiano, you, who we still do not remember, you interface with these great institutional investors, on this 28th order, what is the feeling, what do you think? It is a complex question, from a technical point of view and I come back to it. Surely it makes me think, for example, of an experience that I have lived in a region of the world, which at the moment is, for example, a region of strong growth, which is that of the Gulf Cooperation Council. There we have a similar situation, we have six different countries, each with its own regulatory system, and they have created an experience that I would define as successful, which is the Dubai International Financial Center, which in the management of the bank we would call it offshore. But in fact, the 28th regime is something similar. Obviously with the fact that the countries that are part of the other 27 recognize the 28th regime. That is exactly what many countries do to accelerate. What has Dubai and the United Arab Emirates done in this case? They have taken the English legislation, which is the most Anglo-Saxon, which is the most effective to regulate financial markets. In English, they have created a financial center within the European Union, with their legislation separated from the national one. And they had a flow of capital from abroad, and investors, hedge funds, and now they are aiming a lot at digitization, which finds a norm that allows them to move in a flexible way, etc. I am also the co-sherman of the asset manager Investing in Council, which also deals with regulatory issues, not only in Europe, but also globally. And the 28th regime is something that is often mentioned. In the world of finance, there is a concept that I do not know exactly how to translate it in Italian, but it is called the level playing field. In general, banks and financial investors generally prefer to have a regulation on which they build. Exactly, but above all it must be uniform, because it is also true that there is always the temptation and also the accusation of financial sector, that if there are different regulations, I can do what we call arbitration. I mean, I go there. But in reality, arbitration is very expensive. If I want to sell a fund, I want to sell it in a country with its regulations, and then another, another means that I have to have three different vehicles. So surely for me the 28th regime is an option, I think, also the Tempest, in the sense of implementation, because sincerely the harmonization of 27 regimes seems to be an insurmountable challenge from a certain point of view. The technical aspects are certainly important. But we may have to think a little about the market in June for the shareholders. The market in June has been launched, if I remember correctly, in 2015 by the Junker Commission, we talked about 10 years ago. After that there was, if I'm not mistaken, a relaunch, a revamp in 2020. Then it happened that we had the COVID crisis and then we had the Ukraine crisis. I have the feeling that these crises, these events, sincerely carried out by many points of view, have in some way also moved the attention on other aspects. Maybe here's the next generation of you, how to give more resources to members of the country. Maybe there was a loss of focus. And what is happening these days seems to me to put back on the track after these events so important, the market in June. Which was rebranded, we will say in marketing, as a saving investment in June. But it also seems to me with a, it's not a rebrand. There is a focus on simplification, there is a focus on the Tempest, there is a roadmap that allows you to measure progress in a real way. So it's not just a rebranding, but surely in some way it seems to me that the European military wanted to move. But this time the question that we all have to ask, and we have talked a little briefly in the first podcast was, there is the political will to overcome the national resistance. And here I have to say that, as a European citizen, I am optimistic, because I see Europe with a huge express potential and I see this question of financial integration as one of the missing elements. But on the other hand there is a certain pessimism when it comes to national policies. For example, UBS Assemanage has dedicated a red threat publication to Europe, because we feel this attention that comes from investors towards Europe. The drag relationship and the letter relationship are in fact the two things that are mentioned by investors, as they say for us, and this is the blueprint of what we expect to fall apart in the next few years. Then we have Draghi who goes to the parliament and says, "Look, I don't see the progress, you have to move more slowly." What I'm afraid of is that I don't see at the national level some debate or a very limited debate between the national leaders. And I don't ask a question in Italy, I have to say in a rather transversal way between the various countries. I don't feel that there is, how to say, the political capital, I would say in an old terminology, behind to push this thing forward. And on this one you will also hear Enrico, more of an ex-politician in this case. What do you think of the political will of the member countries to really put us behind the political capital? Because in fact it is a decision of sovereignty, which obviously has a political resistance. Maybe Enrico, if you can give us an answer, let us understand exactly what the difference is between Capital Market Union, which is something you've been talking about for 10 years, and a saving and investment union. But look, the point is exactly what Massimiliano said earlier. That is, why today the need for the Capital Market Union has changed, with this new, not only brand, but also with this new philosophy. There are many reasons, if I have to synthesize to make the thing really understandable. The essential point, I see it here, the Capital Market Union in the end, for the co-existence of the financial crisis and the exit from the financial crisis, the period we have lived in, has been interpreted by European leadership as finance for finance. That world, which is that world there, closed in itself, which is not a dialogue with the rest of the economy, let's see how we can regulate it. So far, we have not gone anywhere. Excuse me if I simplify too much, but the saving and investment union starts from another reasoning. The reasoning is that we are in the back of growth and innovation, also because we are unable to connect finance, the financial push, to the growth of which Europe needs, to the innovation of which Europe needs. What does the United States do? Because if we look at the multiplication, for four in 12 years of private investments in R&D and innovation that the United States have done, for four when they themselves have maintained public investments in this field, the same figure today of 12 years ago. The bottom line is that we are able to convince the European political leadership, as Massimiliano said, because he took the point that today putting the face on the subject of a political operation on finance is feasible without losing consensus. Because normally, for 15 years, from this part of the crisis, all political leadership think that if you put the face next to the financier, you basically lose something because people have it with the world of finance. And, on the other hand, we must realize that exactly the opposite is to transform finance into an engine of real economy that makes it possible, not only a long-term growth, but also a sense. So, Clara, I come to your question. Why did savings and investments do and the capital market did not succeed? First of all, there is a historical reason. Massimiliano has mentioned the birth date of the capital market. The birth date is linked to a very clear political objective. It was born when European political leaders tried to invent something to keep Great Britain on board the European Union. That is, it was born when the English left the idea of starting with the operation of the referendum Brexit. The Europeans said, "Let's see something that is, to give to London, a status of "pilastro" of Europe." That is, it was born in 2014, giving London and Great Britain the following message. France is the capital of the European Bank, Strasbourg is the political capital with the European Parliament, Luxembourg is the capital with the Court of Justice and the European Communities, the European Bank of Investments, so this double aspect. Brussels, the headquarters of the European Commission, where the Council joins the more political headquarters of the European Union, London becomes the financial capital of the European Union. This was the message before the Brexit. A very intelligent message for me, also very strong. Frankly, I say it here and it is totally useless to say it. But if they hadn't done the Brexit and had completed the capital market union, we would have a much stronger Europe today. And it would be better for the English, it would be better for us, we would have London, the European financial capital, it would be another story in the relationship with the rest of the world. I say this because sometimes you also have to look at the facts of the story, the damage of the story. Brexit, among the various damages, has also killed the capital market union because after London went to the beginning of that story, 2016, and after what happened, everyone continued to think about the capital market union with the scheme with which it was created. That is, with the idea of what the financial capital is, only that London was no longer there. So it was years in which the main discussion on this topic was is Paris, Francoforte, but not even Milan, but not even Madrid or Barcelona, no Dublin, no Amsterdam, no Luxembourg. Everyone interpreted it like this, without realizing that, especially in today's times, also the subject of the physical capital is much less relevant than the integration of the financial markets. But the occupational aspects are much less important. Exactly. So, what is the background topic today? Saving is an investment union with three objectives together. And the three objectives are the union of savings, that is, to give other European taxpayers better returns. The exact opposite of what someone says, that you want to put your hands on savings. No, simply the European savings go to the United States because returns are not sufficiently good enough. You have to create the conditions, also the fees, because returns are better for the savings. Second, all this with a bridge on investments, so that all this is transformed into a boost on the growth of the real economy. The investment today is what is missing in Europe. Thirdly, this push of private investments is the key to arrive at an agreement between member states, those unpaid, with those unpaid, to also make a bit of public investment that will never be possible if there is no such push of private investment, because unpaid countries will not be able to make an agreement with unpaid countries, as we have seen in all these years of history. They did it only when there was the COVID drama, next generation new. In this sense, the savings and investment can be the engine of a Europe that finally comes out of the bags of this difficulty in which we are today, in this absurd situation in which we export 300 billion euros of savings that are going on in the United States because our markets are fragmented and do not transform all this in growth for the real economy. It is certainly very useful to understand that behind these names, Capital Market Union, Saving and Investment Union, there is a story that then explains that if the premises are different, then everything changes after the development. And therefore it is certainly important to reflect on what has been. Then coming to the tools and practices of which the Saving and Investment Union would be used, Eric, in your relationship with the lines of concrete tools such as EU long-term saving products based on an automatic registration that you call Auto Enrollment and then also the strengthening of funds with a whole system of tax incentives. What we would like to try to do maybe in this episode is to understand in what way, then, in the daily life of an investor, these products would then work. Look, I'll give you a very simple example. Those who listen to us maybe are familiar with Italian financial products that have had success, that have not had success, stories, etc. There is an interesting case, which is the PIRR. The PIRR have had an interesting story, which is a story that has allowed for the saving of transforming into nations, reinforced the stock market, has transformed into the growth of the companies. What is the background idea from which I start? The idea is that it is necessary that the members of the countries and the members stop competing with each other and go in a united direction. Obviously, everyone is free to use the tax, depending on why they are treated like this. But the fundamental thing is to give an indication through an important tax incentive. This can be done in many ways. I cannot not refer to the Previdential issue, which is fundamental. Because one of the reasons for which things work badly for us is that we lack the foundation pillar, that is, of an institutional investor, which in other parts of the world is fundamental in the growth of the long term, also in the financing of infrastructures. In Europe, there are some countries that are not the ones that have the best financial markets. Take Sweden, look at the Netherlands, Switzerland. They are all countries that have the funds that work. And the funds are more than everything, a pillar that helps the investment of the long term and the savings, the self-saving of the long term. If you do not think about when your son is born, that you must start making a long term speech, and then you find yourself in front of surprises or think that you must always intervene in the state, to save yourself or save the situation. And when the state is indebted, as is indebted to the Italian state, to the French state, because this debate is a little known to me and I have lived in France, it is the same in France, the providence state, the providential state. And the providential state no longer exists. That is, you need to create an equilibrium that works. For a very simple reason, it no longer exists, because no longer exist the demographic conditions that have made possible the providential state of our youth. I'm talking about the generation of those who were born in the 1960s like me. Because today the demographic pyramid is totally reversed, and it is a dramatic demographic pyramid today, in which you only solve it if you give a very strong push to innovation, obviously to the integration of people who come from outside, but above all from this ability to live in financial markets in a different way. We are still unfortunately traumatized by 2008, which was a drama, but it was a drama in Europe, because we did not have the political instruments to manage it. Today I think that Europe has the political instruments to manage it. It opens a parenthesis, it closed it immediately, if Italy ratified the MES, this would surely make us stronger, I close the parenthesis. But today the instruments are stronger, today the Central Bank of Europe is a shield, because when the crisis took place in 2008 it was not, it became in 2012 with the "Whatever it takes" of Draghi, but before it was not, today it is. So, in essence, today we are in a condition to be able to take greater awareness of this point, we have to play it with instruments that can only be European instruments. Obviously, however, all this goes on and on with the fact that these instruments must be within markets that are not 27 islands, but markets that are a dialogue between them, all the other terms linked to the organization of these markets in a more integrated way between them is absolutely essential. Exactly, but then this was the idea we were referring to at the beginning, which distinguishes the saving and investment union from the union of capital markets, because it is then linked to investments that have a European breath, then linked to the energy transition, to the digital transition, and then the instrument that I took back from your report, which I mentioned earlier, this Ju Long Term Savings Product, just to give an element also to those who listen to us, it is really an idea to say, and it almost must come, I don't say automatic, but it must create a mechanism for which a part of Welfare, which has been for so long public, thanks to the fact that demographically we could allow it, is now supported by a private part, and we have also said it in the first episode, it is not mobilized. This I am referring to all of the proposals and solutions that concern investors, which are called retail in the GERGO, but similar to what you have to do, we have said with great institutional capital, which I have to say are fundamental, however, to face these great transitions. So I wonder if instruments of this kind, even if they are unfortunately incentivized, are really scalable to the point of competing with the depth and liquidity of the private equity markets, of the venture capital of the United States, of which we also talked in the first episode, which are actually there and also have a power of fire that cannot be ignored. I would like to add some considerations that Enrico has made, because first of all Europe has a story of success in creating instruments that have not only happened in Europe, but also in the world. For those who do not know USET, they are an instrument that has grown in a remarkable way. I go to Asia and many Asian investors use USET, because a brand is a vehicle that gives certain characteristics of liquidity, governance, etc. So Europe has the ability to create new vehicles, obviously adapted to the needs of today, which are very different from those that maybe were 30 years ago in terms of investment goals, of sectors and of where they invest. There is no doubt that facing the challenges we have, it is not possible, the public debt cannot solve it. I think this is a macroeconomic factor that has not yet entered into the mentality of many European countries, and I think that even in the United States, in this discussion, because we do not forget that the United States has a public debt that has increased, that is continuing to increase, and it is not that 25 years ago this would have been unthinkable, there would have been a political movement that opposed this debt. The private capital plays a fundamental role. Second point, it is true that the institutional capital is very important, but the private savings is also the retail, that is, the family. I would not underestimate it for two fundamental reasons. First of all, because in Europe we have a private savings tax, double that of the United States. We are therefore talking about a savings amount that remains much higher than the United States, aside from the macroeconomic developments that derive from it, but creates a capital fund that is available to finance. Obviously, with the income, for those who own this capital, the most innovative sectors. Second, there is also a change of investment behavior among European families. As you know, one of the characteristics of this private savings in Europe is that, if I'm not mistaken, about 70% remain in bank account deposits. In reality, in recent years we are seeing that there is much more appetite among European families to invest in investment funds in the equity sector. Let's say Europe is becoming a little more similar, even further back, but in terms of risk capacity that can take individual investments. Obviously, you have to give the vehicles that allow you to bring this capital towards these investment goals. So from this point of view, to talk about the proposal of Eric and the long-term savings product, surely these will respond to this demand. I add a third factor that maybe someone has not noticed, obviously we have noticed it. In the United States, it is discussing opening retail products to the so-called alternative funds, including venture capital, private credits, as we call it, infrastructure. This will give an overall boost to the American economy. Obviously, there are risks that are absolutely evaluated, but surely the United States, also with a high public debt, to invest in the private sector, they are thinking of channeling private savings, not only on the stock markets, those liquid ones, those quoted ones, but also towards alternatives. At the moment, this is not possible in Europe. Only the institutional investors can invest in the capital, or the retail sector can do it, but only when they have a large amount of assets. From the point of view of the institutional investors, this is no longer a vehicle problem, because these investors usually act with large numbers and are able to do what we call direct investors. Let's go back to the question of fragmentation, let's go back to the question of having an integrated capital market that creates enough investment opportunities to be able to justify billions of investments, in this case, of sovereign funds, large investment funds, pensions funds that move and make investments in these sectors of a certain magnitude, that go well beyond the retail sector. So it is said that both the retail sector, private savings and the institutional sector, must become part of this vision of Europe and the capital market of the Union. Surely. Surely it is a speech that goes forward on parallel bonds of great complexity. Now I would like to go back to a question that we have partially touched on in the last episode, which is a sort of creation of a safe asset common European that we need, because at the moment there is no benchmark that in a fast and synthetic way has an indication on how the European market is going. And then I also come to the question that Massimiliano Enrico was asking you before, on how difficult it is to exceed sovereignty, especially when it comes to vigilance and the debt on behalf of the member states to be able to obtain the creation of this safe asset common. Look, the question is absolutely central for many reasons. The reasons are linked to the damage, first of all, that we have today, not having the safe asset. Not having the safe asset, today we are very weak on the issue of the ability to make bank unions. It is very difficult today to be in the present situation, which is a situation in which the bank union is made in half, in which we cannot guarantee deposits, in which we cannot manage the income of the bankers in the state. In the end, we cannot manage all this even because the logic of the safe asset is missing. And yes, it works on the German bond as a reference point. Now, what is the effect of the German bond as a reference point? First of all, the effect of the spread. The effect of the spread is still negative, which is useless from the point of view of the incentive to a class of leaders of a country. Because once you were thinking about the spread. There is the spread, so a class of leaders knows that it is forced to do certain things that otherwise would not do if there was not the pressure of the spread. In the end, we in Italy, this story we remember, and in part it was a story that gave us the benefits. But attention, with the new monetary policy of the BCE it is always less true, this thing. So in the end, the spread has only a confusing effect. Let's start like this. When there is an angle football, football is the physical orbit, the effect, no, the confusion effect. That is, a situation of confusion, it understands well what is happening. The spread today is this, creates a confusion effect that blocks, avoids dynamism. The safe asset, instead, would be fundamental, especially in that reasoning that we did in the first episode, which Massimiliano did in his first interview, linked to what is happening in the United States. The United States, which have always been an asset of attraction from all over the world, dollar, good and refuge and everything else. Today, what is happening, the war between the president and the head of the Fed, the complexity compared to the law and many aspects related to the relationship with the judicial power, an objective instability that there is, would, in Europe, many options, many possibilities to attract. But how do you attract from the situation, at the point of the safe asset, there is no less to say that there is a reference point around which to build the rest of the reasoning. So, in the meetings that I did, to prepare the report, I was struck by the fact that, I have to say the truth, always in confidence, never in public speeches, I did not hear any of the speakers. Also, the representatives of the most famous institutions to be the "falki", among other things, in this report, tell me that you do not realize that today the safe asset is still a natural evolution. The bottom line is always the usual, and we return to the discussion of political will, that is, these same institutional representatives are able to, not so much to say and explain, but they are able to do without the need of having to use the creation of a safe asset to say, "Brussell, put your hands on ours, we have to defend our sovereignty." All the stupidities, because today's sovereignty is losing it because of fragmentation. The bottom line is that fragmentation, the remaining fragmented in such small dimensions while others are enormous, is simply worth giving away our sovereignty. We recover our sovereignty if we avoid fragmentation. And this, the Safe Asset, is absolutely a topic. Massimiliano, do we need a European equivalent of the American treasures that are so liquid? Certainly, yes, some important points. First of all, the question of the Safe Asset, just for those who listen to us, what does the Safe Asset mean? The Safe Asset has already had a fundamental role in respect to two points of view. The first point of view is more of geopolitical nature, in the sense that investors want to have an asset, we call it the Safe Asset, which can be used by refugees when there are 20 people who are willing to go to markets. It can be a conflict, for example, when it happens in Ukraine. This role, after the war, has been played by the American dollar. I don't want to go into the details of the technical details, but fundamentally, when something bad happens in the world, investors tend to refuge themselves in the American dollar to refuge themselves in the American dollar, usually it means to buy the American treasures, which are the titles of the treasure, named in dollars. This Safe Event Status, this state of refuge, and this domain of the American dollar, has immediately been damaged by Trump. I'll tell you what it means for the future, but at the moment there has been a damage, and this damage is visible in the fact that the dollar has begun to lose ground towards the main global values, including the euro. You can see it in the fact that there is a greater demand for diversification, so there is a search for Safe Event Asset Alternatives. When you talk about this issue, very often you have probably heard it, maybe even reading the banks' reports, you say "OK, but if I no longer have the dollar, where do I put it? What is the alternative?" Basically, there is a vision in the financial markets that the dominance of the dollar is in some way inevitable because there are no alternatives. Because what are the alternatives? And come back to the concepts of stability, of liquidity that I mentioned earlier. Any Safe Event Asset must give me stability, liquidity and growth. The Safe Event Asset must give me, above all, stability and liquidity. I want to use it and get out of it when I can. The two candidates that are always mentioned, such as potential competitors to the dollar, are the euro, the Chinese king. For issues of nature, too, of greatness. In the sense that the Chinese economy, the European economy, when the dollar is integrated, represents the two most important blocks within the global economy. The Chinese, obviously, are talking about a lot of de-dolarisation. What have they done? They have sold a lot of dollars, their U.S. Treasury, which I keep in my pocket, for example, at the Central Bank, came out a lot in the last few years. Did they buy the euro? No, they did buy the euro. We see this as an asset class that, in recent years, has had a huge growth dynamic, which clearly reflects this desire for diversification of the dollar, which cannot, however, be absorbed by alternative values. And then we come to the euro, because the euro does not absorb this demand for diversification of the dollar. Let's go back to the issue of lack of liquidity. Let's go back to the issue of fragmentation. And let's go back to the issue of lack of fiscal integration. And here, I've done my PhD studies on these subjects, and Rico will remember very well. When the euro was launched, the main criticism that was brought to the euro is that you cannot have a monetary union without having a fiscal union. What does a fiscal union mean? In fact, it means that there is a mechanism of fiscal transfer between the member countries of the monetary union that allows to absorb the shocks that can come from an external event, such as the COVID or an internal event. What, for example, exists in Switzerland, where there is a mechanism of fiscal transfer between the richer and poorer countries that allows to maintain a stability. The nice thing about the euro story is that when it was launched, the spreads disappeared. Because there was a political vision, and even in some way today, it was probably optimistic in time, to say that once the euro is made, fiscal integration will come by itself. In fact, it did not happen. Then we had the fiscal crisis, we had the spreads that are now part of our business of the last 15 years, and now we are back at the starting point and you understand why fiscal integration is so important. Why did I market it as positive? Because I saw the Next Generation U, which in the end is a form of fiscal integration, if still shy, at least in terms of greatness. So here we return to the question of financial integration, and also fiscal integration. For Europe, to be able, I do not say to replace the dollar, because this would be, in some way, impossible, at least in the middle of the period. But surely, to attract a greater amount of this question of safe and asset, it must accelerate on financial integration, so more European bonds to simplify, and also on the fiscal side. I wrote and concluded an article on Onfit for a few days in which the title was "The U.S. Dollar, the Dominant Currency, but for how long?" In the sense that there is no doubt that what is happening in the United States in some way has been created. I paraphrased Mark Twain a little, saying that these news of the death of the dollar are in some way premature, but there are some foundations. And now we are exactly in this phase, there is a question of diversification of the dollar, there is a lack of alternatives, the euro has an incredible possibility in some way to take a step forward on these aspects of integration of which Eric has spoken eloquently in the previous interventions. I will answer both these last questions. Imagine, it is 2030, we will find ourselves here, referring to the same podcast, what happened in the meantime. But you have to tell us with which mood we have to approach it. Optimist, optimist. Well, I have no doubt in 2030 we will find ourselves here with a European financial market with a system of supervision that has been created, therefore not 27 Consob, but a unique system that does not mean a single European Consob. It means a system that manages to have common rules, a port of income of financial instruments, today one of the European problems that we have 27 port of income, and this creates a discrete problem, from many points of view. We have decided to finance the innovation, the growth of the real economy, therefore a rise in money in all this, aside from this, a European energy market, we have not talked about it because we are focused on finance, but the energy is fundamental, the cost of energy today in Europe is very high, because we are fragmented, the interconnections are missing, if we had the interconnections of all the sources of energy we have, Europe could never have a single source of energy, we have to maintain the diversification, but why the diversification is positive, there must be the interconnections that allow us to use all the sources of energy, obviously when the most economic is available and you have to use it immediately, and this is the other fundamental point. And then, obviously, Europe has taken the flag of the fifth freedom and applied the 28th order to help start-ups not to go away from Europe, to help small and medium-sized companies, and then to conclude this quick dream race, a unique European market integrated in this sector that we have talked about, finally sees the growth and birth of European champions, which is the other real problem. Today we have a unique market that remains in some key sectors, a market of 27 national markets, in which the protagonists are national champions, which, being national champions, remain blocked, in the sense that they can't become European because the neighboring country prevents the growth to defend its own national champion. This is the biggest limit today. We are not able to compete with American and Chinese champions in many sectors, because we have a national dimension. In this sense, maybe this is the last dream I have to have a lot of European champions, a lot of Airbus, the security Airbus, the bank Airbus, the financial Airbus in general. Let's talk about it. The most integrated Europe in 2030 is 4 years old, 5. It's not a very long horizon, for financial markets that don't have the ability to look at more than 6 months. But surely a more integrated Europe, because what happened in Europe in the last few years, from Covid, from the generation, are all shortcuts that go in a certain direction. Surely a more integrated Europe. It's an ecological transition that, in my opinion, is a very important thing, because the world, in particular the United States, is somehow making a step back on that, but I see that the question of exposure to assets that have these characteristics remains very strong, and this I say at the global level, including the Middle East, Asia, Europe has a huge opportunity to become the engine of this trend, which, in my opinion, is irreversible. I must be a little more pessimistic to counterpillage Enrico. On the issue of the champions, I think it will depend a lot on the political will of those national resistances as mentioned before. I focus on the financial sector, the day in which we will have a cross-border consolidation in the banking sector, in which there will be no more limits to the acquisition of banks that will certainly be something that has been given the green light to go forward with integration. I know that sometimes banks are seen negatively in society, but there is no doubt that banks in Europe will continue to play a very important role in the financing of the real economy. I hope less because I want the development of the capital market, but banks will certainly become important. What I am sure is that Europe will remain an area of stability in a world that, geopolitically speaking, I think will remain very unstable. And this is a value that, in my opinion, will also have a very positive impact on investors who are always looking for stability in a volatile world. Super! We wish you all the best. Thanks to Enrico Letta and Massimiliano Castelli for being so close to this very, very arrogant chat. Thank you Clara. Thank you Clara. I remind you that you can listen again to "Sexplained" on Spotify, Apple Podcast and on the OBS Set Management website and we will listen to you again in the next episode. Bye! This material is exclusively published in the information scope. Please read the disclaimer available on this platform or directly on the OBS Set Management website. [Music]