EXPERTS POINT OF VIEW Francisco Mochn Chair Professor

EXPERTS’ POINT OF VIEW Francisco Mochón, Chair Professor of Macroeconomics, (UNED) BRUSSELS ROUND TABLE EU INDUSTRY AND MONETARY POLICY The role of the EIB 12 November 2015

EU INDUSTRY AND ROLE OF THE EIB MONETARY POLICY - THE 1. A greater role to the EIB 2. A fund managed by the EIB 3. The need to focus on the digital economy 4. Is Europe losing the digital race? 5. What can we do to cover the digital gap? ü Creation of a digital ecosystem ü Prioritize Internet of Things 6. Final thoughts and remarks

A GREATER ROLE TO THE EIB 1 ü The current expansionary monerary policy implemented by the ECB represents a unique opportunity. ü It is key to efficiently manage the destination of the huge amount of financial resources that quantitative expansion entails. ü It is well known the ability of the European financial system to take advantage of increases in the money supply primarily to clean up their balance sheets, and not to the real economy. ü Is entirely justified to assign a major role to the EIB. CONOCIENDO A FONDO GLASS

A FUND MANAGED BY THE EIB ü Of the three possible operational options, the choice that I consider most appropriate would be the establishment of a fund held by the Eurosystem / ECB but managed by the EIB. ü This instrument would be one that will give greater flexibility and more capacity to EIB operations CONOCIENDO A FONDO GLASS 2

THE NEED TO FOCUS ON THE DIGITAL ECONOMY 3 ü The investments that the EIB has carried out so far show a high dispersion, having funded all sectors, although the industry, transport and energy were three most importants. Looking ahead, the EIB should try to concentrate more its goals. The digital economy (ICTs more digital content and services) should be a priority. CONOCIENDO A FONDO GLASS

IS EUROPE LOSING THE DIGITAL RACE?

U. S. AND EUROPEAN COMPANIES IN THE DIGITAL ECONOMY (OVER $10 B) Digital economy = ICT + Services and digital content CONOCIENDO A FONDO GLASS 4. 1

EUROPEAN COMPANIES IN THE DIGITAL ECONOMY (OVER $10 B) <15% of total value CONOCIENDO A FONDO GLASS 4. 2

COMPANIES IN THE DIGITAL ECONOMY-SERVICES & CONTENT 4. 3 (OVER $10 B) 47% of total value Services and Digital Content

EUROPEAN COMPANIES IN THE DIGITAL ECONOMY- SERVICES AND CONTENT 2% of total value 4. 4

COMPANIES IN THE DIGITAL ECONOMY OVER $10 B AND < 25 YEARS OLD 45% of total value < than 25 years old 4. 5

EUROPEAN COMPANIES IN THE DIGITAL ECONOMY OVER $10 B AND < 25 YEARS OLD NONE 4. 6

WHAT CAN WE DO TO COVER THE DIGITAL GAP? 5 ü Create digital ecosystems ü Internet of Things

WHAT CAN WE DO TO COVER THE DIGITAL GAP? Create a digital ecosystem ü Act selectively ü Focus efforts on specific geographic areas ü Pay sufficient attention to element of a digital ecosystem 5. 1

ELEMENTS OF A DIGITAL ECOSYSTEM 5. 2 Industry Research Financing Knowledge

SUCCESS CASES WORLDWIDE 5. 3 Silicon Valley New York Tel Aviv Waterloo Singapur

WHAT CAN WE DO TO COVER THE DIGITAL GAP? 5. 4 Prioritize attention to Internet of Things The most promising markets: ü Wearable devices such as fitness accessories ü Smart-home applications like automated lighting and heating ü Medical electronics ü Industrial automation (remote servicing and predictive maintenance) ü Connected cars ü Smart cities (traffic control) and other tasks within the public sector

FINAL THOUGHTS AND REMARKS

FINAL THOUGHTS 6 ü The digitization of the productive sector in the European Union is a necessity. ü The financing of digital projects in Europe presents serious problems due to the scarcity of venture capital. ü Funds generated by the quantitative expansion should be channeled efficiently into the real economy ü The experience and capabilities of the EIB provides an opportunity that should not be missed.

THANK YOU Francisco Mochón Chair Professor of Macroeconomics, (UNED) fmochon@cee. uned. es