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03 March 2020

ECB's De Guindos - Capital markets union: the role of equity markets and sustainable finance


Luis de Guindos, Vice-President of the ECB, delivered an update on the progress achieved so far on the CMU project, and then turned to the way forward, focusing on two key dimensions in developing deeper capital markets: risk capital markets and sustainable finance.

Well-functioning and innovative capital markets are essential in enabling firms, households and governments to access stable funding and saving opportunities that are vital for consumption, investment and, ultimately, economic growth and employment. One could even argue that the CMU is a common denominator across many – if not all – EU strategies and a pillar for strengthening the EU’s autonomy on the global stage. Without progress towards a fully-fledged CMU, we will face significant difficulties in effectively addressing the global challenges facing the EU. Further developing and integrating EU capital markets takes on even more urgency in light of the challenges posed by the United Kingdom’s departure from the EU. Last, but certainly not least, there are strong synergies between the completion of the CMU and the finalisation of banking union. Though the world of finance may sometimes seem distant or arcane, it is more important to people’s everyday lives than many might think. For one, badly functioning financial systems have the potential to harm all of us – as the experiences of 2008 and beyond have shown.

Thanks to the efforts of the European Commission together with the Council and Parliament, 11 out of 13 proposals from the original action plan were successfully adopted across a number of important areas, including insolvency frameworks, covered bonds, securitisation markets and the development of a pan-European pension product. These policies are expected to have very positive effects on the development and integration of EU capital markets, even though initial ambitions had to be scaled back in some cases in order to reach agreement among the co-legislators.

Recent developments have increased the urgency of bringing the CMU to the next level. First, the EU needs to address the consequences of the United Kingdom’s departure from the EU. Given uncertainties regarding regulatory divergence, we should not take it for granted that the EU and UK financial systems will retain their current degree of interconnectedness. As I have said before, a degree of decoupling is inevitable. We therefore need to develop capital markets in areas where the EU financial system is now strongly reliant on the City of London and support the efficient interaction of EU financial hubs, as well as prevent regulatory arbitrage within the EU.  Second, deeper, more efficient and innovative markets can help finance the fight against the climate emergency. Future actions on sustainable finance will be crucial, also in increasing public support in Europe for further policy measures. I will come back to this later. Third, relaunching the CMU agenda goes hand-in-hand with enhancing the international role of the euro, which has become more important in the present global context. Together with banking union, the CMU encourages the further development, integration and safety of products and markets that are essential for convincing global investors to hold more assets denominated in euro.

Developing private equity markets and supporting efforts towards a greener economy are very much on the minds of decision-makers, and we welcome the work of the various groups and forums that contribute to these debates. In particular, we look forward to the recommendations of the High Level Forum on CMU set up by the Commission. We trust these will play an important role in shaping the Commission’s new set of CMU measures for the benefit of the European citizens.

Full speech



© ECB - European Central Bank


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