With its term of office coming to an end, the European Commission is now in the process of reviewing the situation. On Friday 15 March, it issued a communication setting out the progress made in completing the Capital Markets Union (CMU).
“Significant progress has been made”, said European Commissioner for Financial Services Valdis Dombrovskis at a press conference.
This positive finding contrasts with the last progress report of November 2018 (see EUROPE 12148/14), in which the Commission expressed its disappointment and called on the EU co-legislators to intensify their work (see EUROPE 11979/1).
The building blocks are in place
The Commission presented all the initiatives addressed in its 2015 Action Plan (see EUROPE 11399/2) and its mid-term review of June 2017 (see EUROPE 11804/15). And ten of the thirteen legislative proposals presented were agreed between the European Parliament and the EU Council.
Work intensified at the beginning of 2019 with a series of interinstitutional agreements, the latest of which, this week, concerned the supervision of central clearing houses (CCPs) established in the European Union and in third countries (see EUROPE 12214/22).
In terms of sustainable finance (see EUROPE 11977/2), high marks are also called for. Out of the three legislative proposals presented, there are two agreements on the creation of benchmarks to help investors compare the carbon footprint of investments (see EUROPE 12202/12) and on how institutional investors should integrate environmental, social and governance (ESG) factors into their investment decision-making (see EUROPE 12209/14).
Only the European taxonomy on sustainable finance, on which Parliament adopted its position this week (see EUROPE 12212/9), remains. Commissioner Dombrovskis, who considers this to be a “key proposal”, called on Member States to adopt their position “as soon as possible”.
Three other legislative texts are still on the table, including the thorny reform of the European financial supervision architecture, which is currently being negotiated between the co-legislators and could be successfully concluded on Tuesday 19 March (see EUROPE 12214/23).
On this subject, the Commissioner indicated that “good progress” had been made in the negotiations and expressed confidence that an agreement could be reached, provided that each side showed some flexibility.
The European Parliament also adopted its position on the proposal for a regulation to facilitate ‘crowdfunding’ (see EUROPE 12130/3) and on the law applicable to the enforceability of assignments of debts (see EUROPE 12193/3). But the EU Council, for its part, is not yet ready to negotiate on these texts.
What future for the CMU with twenty-seven?
Asked about his vision of the future development of the CMU, particularly after Brexit, Valdis Dombroskis considered that the next Commission should first and foremost continue work on the dossiers that are still open. He identified sustainable finance and the development of financial technologies ('FinTech') as major challenges. The EU's regulatory and supervisory framework will have to continue to adapt to keep pace with market developments, he stressed.
He also refused to link directly to Brexit certain directions taken by the CMU, while acknowledging that the United Kingdom's exit from the EU had inevitably given new directions to the European initiative.
In its communication, the Commission also pointed out that “a fully fledged Capital Markets Union would not be created overnight”. And while the measures taken so far have begun to have an impact, it will still take time for all the benefits to be realized on the ground. For the institution, it is now up to national authorities and market operators to fully seize the opportunities created by EU reforms.
The progress report will feed into the discussions of EU leaders on the development of the single market at the European Council on 21 and 22 March (see other news). See the communication: https://bit.ly/2JezHGo. (Original version in French by Marion Fontana)