In September, the new Commission president Ursula Von der Leyen, decided to prolong Commissioner Dombrovskis in his duties as financial services Commissioner. In her mission statement to him, she requested him to “speed up the work towards a Capital Markets Union”, to diversify sources of finance for companies and tackle the barriers to the flow of capital.
The new Commission has not taken office yet. However preparatory work for a new blueprint has started. The European Commission has published a call for expression of interest to join a High Level Forum (HLF) on capital markets union.
This group will start its work on 26th November 2019 and will bring together highly experienced industry executives, top international experts and scholars to feed into the work on the future CMU policies. The group’s tasks should aim at proposing targeted policy recommendations in:
- Areas where further action may be needed or where a different policy approach might be necessary; and
- Long-term trends, such as those triggered by technological developments, Brexit and sustainability considerations, that will impact the future of Europe’s capital markets and its integration process, including the completion of the Economic and Monetary Union (EMU).
The group is expected to come up with an interim report in February 2020 and a final report in May 2020. This will inspire the Commission to present a new CMU roadmap.
In the meantime, the debates on the measures which should be adopted are certainly going to intensify as other stakeholders are raising their voices on the topic. For instance, some member states are also calling for more work on the CMU. In particular, the French, German and Dutch governments have set up a high-level CMU working group before the summer which has already delivered for the 9th October ECOFIN Council a report including 20 recommendations.
The specific recommendations centered around:
- Generating more long-term savings and investment opportunities
- Massively developing equity markets
- Increasing financial flow fluidity between EU financial market places
- Developing debt, credit and forex financing tools in a manner that increases the international funding currency role of the Euro
On the industry side, several trade associations and financial institution have also vocally requested more CMU actions. The Markets 4 Europe campaign launched by the European Banking Federation a couple of weeks ago, and supported by the ABBL, is a good example of this trend.
The renewed enthusiasm for the Capital Markets Union is certainly creating a consensus. What is not certain at this stage is whether the outcome of these debates on the “how to deepen the CMU” will lead to consensus. Indeed, some of the issues which have already in the past proven difficult to agree on are eventually resurfacing. Examples in case are insolvency, European supervision, as well as, tax issues.
By Aurélie Cassou, Senior Adviser, ABBL & ALFI