The European Commission plans to undertake 16 actions between 2020 and 2023 to accelerate the establishment of the Capital Markets Union (CMU), according to a draft action plan due to be presented by the Commission on Wednesday 23 September.
Supporting a green, inclusive and resilient economic recovery, making the EU a safer place for individuals to save and invest for the long term, integrating national capital markets into a true single market: these are the three objectives that should guide these actions, according to the draft text of which EUROPE received a copy on Thursday 17 September.
The vast majority of the proposed actions are based on the final recommendations of the High Level Forum on CMU presented in June (see EUROPE 12503/13). These include the idea of setting up a “European Single Access Point” for financial and environmental information for companies, or exploring the possibility of setting up a fund for the IPO of SMEs by the fourth quarter of 2021.
The Commission is also expected to take up the proposal to review the functioning of European long-term investment funds (see other news) and to amend the MiFID II Directive to reduce the administrative burden and information requirements for a subset of retail investors.
The Commission would also consider presenting, in 2022, “a legislative or non-legislative initiative for minimum harmonisation or further convergence in targeted areas of non-bank insolvency law”.
In addition, the draft text includes a commitment to assess, by the end of 2021, the benefits of a system obliging banks to direct SMEs whose credit applications have been rejected by them to alternative financing providers in order to save costs - a commitment which was already present in a first draft of the action plan in June (see EUROPE 12514/2).
The idea of presenting a proposal in 2022 for a common standardised system for the reduction of withholding taxes at source at EU level is also maintained.
“These procedures lead to considerable costs that discourage cross-border investment when taxes on the return on investment have to be paid in both the Member States of the investment and the investor, only to be refunded after a long and costly process”, explains the draft text.
Caution on financial supervision
According to the draft text, the Commission should not venture to reopen the thorny issue of revising the governance and powers of the European Financial Supervisory Authorities (ESAs).
Indeed, the text does not contain any concrete proposals and merely states that the Commission will assess in 2021 the need for further harmonisation of EU rules and whether convergence powers are used effectively under current governance. If necessary, it could consider proposing measures to strengthen supervisory coordination or direct supervision by the European Supervisory Authorities, the text says.
Finally, the Commission should also undertake to assess the implications of the ‘Wirecard’ scandal (see EUROPE 12558/4) for the regulation and supervision of capital markets and act to remedy any shortcomings identified in the EU legal framework.
“There is no single measure that will complement the CMU. The only way to progress is to move forward step by step, in all areas where barriers to the free movement of capital still exist”, recalls the draft text, which calls for the support of the European Parliament and the Member States in taking these actions forward.
See draft text: https://bit.ly/3iEf1os (Original version in French by Marion Fontana)