Mairead McGuinness has been the European Commissioner for Financial Stability, Financial Services and the Capital Markets Union since October 2020. She talks about the progress made during her mandate, how she sees the future of finance, and what she’ll be doing next.
You came into this role when the Commission’s mandate had already started. How hard was it to hit the ground running? Especially considering you don’t come from a finance background, but rather from journalism and agriculture.
Yes, but I had 16 years of experience in the European Parliament, and I think that prepared me very well for any portfolio. True, I was a specialist in agricultural economics, but I also had a qualification in accounting and finance. Of course, it was a challenge. But because I came in during Covid, I think it was different for everyone compared to previous Commissions, especially with the added difficulty of not being able to meet effectively as a College. So, although it was a big challenge, I did have the background and knowledge, but I was also very open to asking the right questions. I’m surrounded by a lot of expertise in the Commission Directorate‑General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) and in my cabinet, and rather than approach an issue with fixed views, I ask questions – why, what, when – the basic questions I would have asked as a journalist. And that helped us to make the right decisions around insurance legislation, for example, or the cyber security risks to our financial system.
One of the issues you have championed is financial literacy. How did you come to be interested in this?
One thing I have learned is that the financial system has enormous potential and power – not just in transactional ways, like investment and savings – but it has an enormous capacity for social change. Growing up on a farm, I learned the value of money by picking fruit and saving what I was given for doing that. But I’m aware that not everybody has that opportunity. I think that if we could empower people with money, particularly those who don’t have a lot of resources, we could do an enormous amount of good. And I’m happy that the financial industry has heard what I’ve said around this. I wanted to make sure that in our work in DG FISMA and my cabinet, we look at how finance interlinks with citizens, businesses, small savers, large investors – in other words, a bigger‑picture look at the role of finance in society.
During your time as commissioner, FISMA made a lot of progress in a number of areas. Is there anything in particular that really stands out for you?
Together both with FISMA colleagues and my cabinet I think we did a lot of good work in the main areas that are part of my mandate. We did a lot of work on pursuing the capital markets union and preserving financial stability. Apart from legislation, one of the topics of discussion was money and its role. Will we have cash? What about a digital euro? How do we as citizens evolve in the way we use money? And Covid really changed how we look at money and how we use it. I remember leaving my wallet back in my Member State by accident and realising that actually I had everything on my phone and could make transactions. Although of course, it’s important to add that cash also has to be available. So, part of what really interested me was trying to get a conversation going with the finance industry and citizens, to see what we want as citizens from the finance industry.
If we’re talking more about specifics, one area I would highlight is anti-money laundering. For me, the game changer really was our package, the anti-money laundering package, including a new authority. So, a European dimension to tackling money laundering. Of course, the fruits of that work will be seen during the next Commission. But I’m glad that we’re handing over something that’s concrete and delivered. And I think our work on cryptocurrencies and the discussions we had around that are still pivotal. Rather than ignore it, or try and ban it, we’ve legislated to ensure we at least have some sort of consumer protection there. One of the areas that evolved without us realising at the start of my tenure that it would be such a big topic is sanctions. However, with the Russian invasion of Ukraine, sanctions packages and their implementation became pivotal. So, we had to gear up and we’ve done a great deal of work. We know there is circumvention, and we have to tackle that. And a lot of the work we did went beyond the sphere of just finance – it was also geopolitical.
Would you say there’s a subject or area where the co‑legislators – the European Parliament and the European Council – maybe dropped the ball a bit? Or at least, is there an area where they could have done more?
Absolutely – the retail investment strategy. For me, this was a real opportunity to get more people in Europe engaged in managing their savings and making investments and making their hard-earned money work for them. And I really had hoped, particularly that the Parliament would be very supportive. And the Council too. But it hasn’t turned out that way. However, I’m also a great respecter of what we call democracy, and we have institutions that take a different view than I did. I would go back to the Draghi report – he speaks the language that I’ve been speaking around savings and investments, and getting people engaged in this. We have a lot of money and deposits in banks. It’s great that we have a savings culture, but it’s not enough for the green and digital vision that we have for the future of Europe. So, I think that’s the one area where I had the greatest disappointment.
If you could look into your crystal ball now – in the future, how do you think we are going to be banking, saving, or getting ready for our pensions…?
That’s a huge question! Just in my own personal experience, things are changing so quickly. The banking I did as a student is completely different compared to my children’s experience of banking. They don’t do physical infrastructure – when I was young, we knew nothing else. And like I said, Covid has forced the world of finance to evolve faster than it would have otherwise. So, it’s evolving rapidly. There are new players entering all the time, and those who make up the establishment – unless they change – they will not be around in 50 say years’ time.
We’ve moved forward a lot when it comes to how we make transactions – instant payments, for instance, is a big development. And we’re looking at other ways of trying to make the financial system more agile and more responsive and safer at the same time. It’s a very exciting area to be working on, but also a very challenging one because it moves so quickly.
Where I see the potential that this rapid change could be halted is with the risk of a cyber-attack. If people lose faith in digital – the way they lost faith in the banks following the financial crisis – that’s a real problem. Because trust and faith in the system is everything.
Looking forward, pensions is obviously a core area. Our demographics mean that there’s going to be a lot more older people. So, we need to have a conversation with our children, and they will need to have one with theirs, about how we can remain a resilient society that can care for people in their older years as they live longer and provide the services that are required. What we need to remember in Europe is that we’ve had a very good system of looking after people, but that has to be funded. So, how can we get young people thinking about pensions at the age of 20 rather than 30 or 40? And how will they provide for their own future when we know they will likely change careers every so often? These are big, big challenges for the body politic.
Finally, there is one other area where I would like to see changes in the future. In the world of finance, we’ve generally seen more men than women. We need to get that balance right and encourage young women who are students to look at the financial industry to discover what opportunities there are there.
Lastly, on a more personal note – what’s next for you?
Well, the great thing is, I don’t quite know. And that’s really a first. I’ve worked since 1980, when I left college at 21. And, apart from a week or two here and there – and I had a few children along the way – I’ve always worked. But I feel I still have a lot to do in this role, and I think you need to focus on the job in hand. But afterwards, in all likelihood I’ll be back in Ireland more, because that’s where I’m from. So, I think I will be doing something either in the financial area or the agricultural rural area, which is where my background is. I’d still like to contribute, whether that’s in the public space or the private space. I hope that my years of experience – 20 years in the European institutions and 24 years in journalism – will still be harnessed. And I think there probably will be opportunities. Looking back, these past few years have been great. Irish poet Seamus Heaney wrote ‘Learning’s easy carried!’ – and I carried the learning I had accumulated over the years and that helped me in my role as Finance Commissioner. It was a challenge, of course, but it was one that I have enjoyed enormously.
Related links
Commissioner Mairead McGuinness (2020-2024)
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