Capital Market Union is progressing too slowly, says European Court of Auditors

Despite the European Commission's efforts to meet its 2015 target of establishing a Capital Markets Union (CMU), the results are too slow and still awaited, according to a special report by the European Court of Auditors published on Wednesday 11 November.

“The Commission’s measures to diversify the financing options of SMEs and efforts to develop local capital markets within the CMU have had no catalytic effect so far”, said Rimantas Šadžius, author of the report.

Indeed, the report notes that most of the legislative acts relating to the CMU have not yet been implemented or have only recently been implemented. Furthermore, it stresses that many key actions of the Commission’s Action Plan on CMU that have not yet been launched can, in fact, only be undertaken by Member States or with their full support.

Thus, many of the measures that the Commission was able to take within its powers were non-binding or limited in scope and therefore did not allow substantial progress in the establishment of the CMU, he regrets.

According to the Court of Auditors, the Commission could also have done more to promote financial literacy among SMEs and potential investors. In addition to this, the auditors regret that the Commission has also not developed a clear and comprehensive strategy to overcome the geographical disparities between Member States regarding the capitalisation, liquidity and depth of local capital markets.

Finally, the auditors also noted that the progress of the CMU had not been regularly and systematically monitored. They therefore recommend that the Commission considerably strengthen the monitoring framework and implement well-targeted actions to further facilitate SMEs’ access to capital markets.

The auditors also invite the EU Council to reflect on how to move forward on the Commission’s proposal concerning the asymmetrical tax treatment between return on equity and interest on debt, which they believe is detrimental to the development of the CMU.

See the report: https://bit.ly/35kSVD8 (Original version in French by Marion Fontana)