Theodor Stolojan: "70% of Europeans' savings are still held in banks"

Former Prime Minister Theodor Stolojan claims that the strategy presented by the European Commission is a step in the right direction and that the starting point was Marios Draghi's report on competitiveness and Enrico Letta's report on how to further develop the European single market.

Theodor Stolojan stated: "The reports showed very well that Europeans save a lot, but the way these savings are used does not yet resemble what it should be, that is, 70% of Europeans' savings are still kept in banks, in deposits, in various instruments offered by banks, and this volume of savings that is kept in banks amounts to this impressive figure of over 10 trillion, that is, 10,000 billion euros. The Draghi report also showed a characteristic of the use of Europeans' savings, namely that many, instead of investing in shares of European companies listed on European stock exchanges, invest a lot in companies listed on other stock exchanges, especially the United States, even Great Britain. And this is another disadvantage for European companies. And of course, this strategy now comes to try to eliminate the obstacles that exist."

He reminded that in the EU the capital market is still fragmented, because there is no single market for potential capital in Europe yet.

"The stock markets are, in practice, still fragmented, meaning that we do not yet have the possibility to make investments, we do not have financial instruments that can operate throughout the European Union. The new strategy discusses, on the one hand, creating opportunities, especially for European citizens who save a lot. It discusses here creating some tax incentives to encourage them to invest in shares of European companies listed on stock exchanges in the European Union, in the member states of the European Union. On the other hand, of course, there is discussion about eliminating the legislative obstacles that have created this fragmentation of the market", Theodor Stolojan told us.

The liberal leader also referred to the impact that the Union of Economy and Investments will have on companies in our country, given the fact that they need financing.

Theodor Stolojan stated: "One of the fundamental ideas of this strategy is to finance innovative start-up companies, which are very agile, move very quickly and which do not have much access to the bank financing that prevails in the European Union. Why do they not have access? Because they do not have an economic history behind them. Or, you see, the capital markets, the stock exchanges would be exactly the necessary instrument. And not only the stock exchanges, we are also talking about venture capital and so on, which these innovative companies, startups can call on. Let's not forget that Romania has a startup that is a unicorn that has listed in the US, right? We have another big successful company in Romania, which is called Bitdefender and which announced that it would like to list in the US and not in Europe. And of course we can understand why in the US and not in Europe, because there are these very large venture capital funds there, there is very high liquidity on the stock exchange, which unfortunately the Romanian stock exchange does not offer at the moment."

In the context in which the European Commission speaks in the cited strategy about increasing the returns offered to citizens for the money invested, the former prime minister criticized the Ciolacu government's decision to increase the dividend tax, classifying it as a decision against what Brussels officials want.

Theodor Stolojan stated: "We are acting in exactly the opposite direction provided for in this strategy. We have recently increased the tax on dividends, from 8% to 10%. Of course, 10% is not a high tax rate compared to others practiced in other countries, but the trend actually recommended by this strategy is not to increase tax rates exactly on the benefits granted, as Ursula von der Leyen says. And I will give you another example. It is inexcusable that in Romania we have not yet managed to put that occupational pension pillar into operation, because we have legislation, but unfortunately we do not offer any advantage in that way. At the level of one year, if I invest in such an occupational pension fund, let's say, I know, 1,000 lei, 2,000 lei, these 2,000 lei should be exempted, deducted from the taxable income base. Not to mention, that everything that is called special pensions by the people today should be transformed into occupational pensions in which the citizen who wants a higher pension in old age should contribute and the company or institution that employs him should also contribute. We are as afraid as hell of putting this fund into operation and making it work. This would also end the conflicts we have with magistrates, and with the conflicts with parliamentarians and with the conflicts with the peoples about I wonder who benefits from these special pensions. If we managed to put them in the proper, moral position, which everyone accepts, of occupational pensions in which the institution or company also contributes".

Regarding the impact of the future union on the banking system in our country, Theodor Stolojan said that this can only be positive, because banks will be put in a more competitive state for capital resources in the economy.

"At the moment, of course, banks dominate the financing of everything that concerns companies and citizens' needs, and the capital market is still very small in Romania and not only is it small, it has no liquidity. (...) We are discussing, for example, why it is necessary to come with fresh money, to increase the capital at CEC and Eximbank, when part of the shares, let's say 20%, could be listed on the capital market. So there are things that can be solved in Romania to strengthen the capital market, to reduce the role of banks, which is currently the majority, dominant, in financing the economy, which would not cause any harm to the banks, but would even be greater competition, because the banks will be forced to adapt to this competition", Mr. Stolojan told us.

The former prime minister stated that our country needs to take some measures before integrating into the future Union of Savings and Investments, and among these is the elimination of hundreds of thousands of companies that register negative capital and which, for this reason, are unbankable and unfinanceable even from the capital market.