A Capital Market Union for Europe

Staff Discussion Notes, September 10, 2019

Source details

Canonical URL

A Capital Market Union for Europe

Other formats

• Markdown version
• Structured JSON version
• Bundle manifest

Bibliographic details

• Authors: Ashok Vir Bhatia, Srobona Mitra, Shekhar Aiyar, Luiza Antoun de Almeida, Cristina Cuervo, Andre O Santos, Tryggvi Gudmundsson
• Published: September 10, 2019
• Series: Staff Discussion Notes
• DOI: https://doi.org/10.5089/9781498313278.006

Summary of purpose and findings

• Weighs the merits of a capital market union (CMU) for Europe, identifies major obstacles, and recommends a set of carefully targeted policy actions.
• European capital markets are relatively small, resulting in strong bank-dependence, and are split sharply along national lines.
• Consequences of fragmentation identified:
  • An uneven playing field in terms of corporate funding costs.
  • The rationing out of collateral-constrained firms.
  • Limited shock absorption.
• Benefits of integration emphasized:
  • Expanding financial choice to support capital formation and resilience.
  • Supporting a healthy diversity in European finance.
• Overall judgment: Proceeding methodically, there is no roadblock—such steps should prove feasible without a new grand bargain.

Key barriers to capital market integration

• Transparency.
• Regulatory quality.
• Insolvency practices.

Policy priorities and recommendations

• Urges three policy priorities focused on the three barriers listed above:
  • Actions to improve transparency in capital markets.
  • Measures to raise and harmonize regulatory quality across jurisdictions.
  • Reforms to insolvency practices to facilitate cross-border integration.
• Emphasis on carefully targeted, feasible steps rather than sweeping institutional redesign.

Subject areas and keywords (as listed)

• Subject: Banking, Capital markets, Financial institutions, Financial markets, Financial sector policy and analysis, Mutual funds, Securities, Solvency, Stocks
• Keywords: bilateral portfolio flows, capital market market fragmentation, Capital market union, Capital markets, company information, equity valuation, EU capital market practitioner, EU capital market rule, EU counterparty, EU treaty, EU venture capital funds, euro area, Europe, financial integration, funding cost, Global, growth performance, investment firm, monetary union, Mutual funds, nonfinancial firm, private equity, SDN, Securities, Solvency, Stocks

Content in this bundle

• Staff Discussion Note
  • Staff Discussion Note (Markdown version)
  • Staff Discussion Note (PDF)