In Sofia on Friday 27 April, the European finance ministers were able to agree on how to move forward together towards completing the Capital Markets Union (CMU) in 2019, setting a number of priorities in the process.
It would appear that there is agreement to reinforce the institutional framework, at least as regards supervisory practices, the Bulgarian Minister, Vladislav Goranov, reported after the meeting.
The ministerial discussions took place on the basis of the study presented by the think tank Bruegel, which calls for choices to be made. “The real question is which of the Commission proposals the Council and Parliament should prioritise, because it is difficult to imagine they will be able to adopt all the proposals before the next elections to the European Parliament in May 2019”, the document reads.
In its communication of March 2018, the Commission called on the co-legislators to step up their work on the completion of the CMU, setting the deadline of mid-2019 (see EUROPE 11979). By May, the Commission plans to have presented all the initiatives set out in its 2015 action plan (see EUROPE 11399). So far, just three of these proposals have been adopted by the EU co-legislators.
According to Bruegel, clear priorities must be set if progress is to be made. The organisation advises the co-legislators to focus on three achievable priorities which will have concrete effects on the markets, namely: - reinforcing supervision and hence the powers of the European Securities and Markets Authority (ESMA); - simplifying the prudential rules and harmonising insolvency regimes; - setting new products in place such as the pan-European personal pension product (PEPP) (see EUROPE 11985).
During the meeting, many ministers are reported to have confirmed their support for the three priorities. Some commented that the proposed directive establishing a single legal framework for corporate insolvency (see EUROPE 11673) comes under the remit of the justice ministers, whose priorities on these dossiers differ from those of the finance ministers. The European Commissioner for Financial Services, Valdis Dombrovskis, is reported to have suggested a meeting between the JHA and Ecofin configurations of the Council.
Discussions on tightening up ESMA's powers are reported to have revived the animated discussions of the Ecofin Council of November 2017 on the revision of the European financial supervisory architecture (see EUROPE 11899). The differences of opinion are now less marked, but still present.
It is worth noting that the Luxembourg minister, Pierre Gramegna, reiterated his criticism. He considers that the proposed measures will make administrative procedures more complex, burdensome and expensive for market players.
The ministers also recognised that with Brexit scheduled for the end of March 2019, there is an increasingly pressing need to complete the CMU, to stimulate the capital markets in the EU of 27 to compensate for losing the City, and to find the best way of maintaining close links with Europe's largest financial marketplace without watering down the European prudential rules or endangering the financial stability of the EU.
The Commission and the British finance ministry made progress on Friday, calling for the creation of a joint working group between the European Central Bank and the Bank of England on managing the risks related to the forthcoming withdrawal of the UK from the EU, Dombrovskis reported. (Original version in French by Marion Fontana)