On Wednesday 9 October, the French, German and Dutch Finance Ministers presented the report of the “Next Capital Markets Union” high-level working group at the Eurogroup meeting in Luxembourg.
Launched last May jointly by France, Germany and the Netherlands (see EUROPE 12257/5) and charged with analysing the functioning of the CMU with a “fresh eye”, 5 years after it first began, the group was joined by experts from Italy, Spain, Poland and Sweden.
“Overall, our feeling is that since the financial crisis, the financial sector has not yet fully regained citizens’ trust and that the purpose of the CMU should be better articulated and more widely spread”, explained Fabrice Demarigny, the chairman of the expert group, at a press conference.
The experts propose a “priority shift” and recommend that the CMU should now focus on “responding to citizens' needs” and “investment in the real, digital and sustainable economy”. They also suggest that the Capital Markets Union be renamed the “Savings and Sustainable Investment Union” - a proposal already mentioned by the French Finance Minister (see EUROPE 12327/3).
In concrete terms, the report recommends that the EU focus on four “top priorities” to build a new, more robust CMU. The first priority identified is to generate more long-term savings and investment opportunities, including strengthening measures to help households move from being “passive savers” to “active investors”, as well as increasing sustainable, measurable and comparable investments.
The EU should also, according to the experts, massively develop equity markets and, to do so, it should start by considerably simplifying SMEs’ access to public procurement markets.
The experts then recommend increasing the fluidity of financial flows between EU financial centres. This will require, in their view, enabling the emergence of competitive pan-European players by supporting cross-border mergers and acquisitions in the financial sector, reinforcing the effectiveness of insolvency regimes in the EU and developing an “ambitious EU-wide digital finance action plan”.
It should be noted that the report argues for a strong and coherent EU supervisory framework, which progressively allocates the supervisory function to different layers with respect to the level of market integration, every time a directive or regulation is reviewed.
Finally, the report identifies as a final key priority the development of debt and credit financing tools to enhance the role of the euro as an international funding currency.
To monitor progress on these four priorities, the experts also suggest the creation of an interinstitutional monitoring committee to establish concrete performance indicators.
“Reaching such ambition may require further EU legislation but perhaps even more, a revised regulatory and supervisory balance, action by the ECB and central banks, legal and tax changes at national level, and consistent private sector initiatives”, they warn at the end of the report.
At a press conference, French Minister Bruno Le Maire praised the “impressive work”. “It is now up to us to turn these proposals into decisions”, he said, while already pointing out the technical difficulties that will arise. This is not just a “report”, but a real “roadmap” for future work, promised German Minister Olaf Scholz.
See the report: http://bit.ly/311LZp8 (Original version in French by Marion Fontana)