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08 June 2017

EUbusiness: Brexit spurs reboot of EU's capital markets union

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As Europe faces up to the departure of its biggest financial centre, the European Commission moved to strengthen its Capital Markets Union project to unlock funding for growth in Europe.

The Commission's Mid-Term Review of the Capital Markets Union (CMU) lays out progress over the last two years to develop stronger European capital markets. The aim of CMU is to strengthen the flow of private capital to growing businesses, infrastructure investment, energy transition and other projects to underpin sustainable growth.

Improving the connection between savings and investments would strengthen Europe's financial system by providing alternative sources of financing and more opportunities for consumers and institutional investors.

The Mid-Term Review also details upcoming actions, which include an initiative to remove existing barriers to cross-border marketing of funds, revision of Solvency II risk-weights and a study on venture capital tax incentives. The announcement follows last week's agreement on a review of the European venture capital funds (EuVECA) regulation.

For companies, especially SMEs and start-ups, the CMU means accessing more funding opportunities, such as venture capital and crowdfunding. The rebooted CMU puts a strong focus on sustainable and green financing: as the financial sector begins to help sustainability-conscious investors to choose suitable projects and companies, the Commission is determined to lead global work on supporting these developments.

"We are committed to stepping up our efforts to further strengthen and integrate the EU capital markets, "said Commission Vice-President Valdis Dombrovskis. The Review finds two-thirds of 33 actions have been delivered. Co-legislators agreed recently in principle on two major proposals:

  • The securitisation package will free up capacity on banks' balance sheets and generate additional funding for households and fast growing companies.
  • The venture capital funds reform will facilitate investment in small and medium-sized innovative companies.

There was also agreement last year on a new Prospectus regime to allow easier access to public markets especially for SMEs.

New actions for the coming months include a pan-European personal pension product to help people finance their retirement. The Commission also promises to continue work on enhancing the supervisory framework for integrated capital markets, increasing the proportionality of the rules for listed SMEs and investment firms, harnessing the potential of FinTech and promoting sustainable investment.

Alongside the CMU Mid-Term Review, the Commission is also unveiling measures to encourage long-term investment through a review of prudential calibration for investments in infrastructure corporates. It is proposing to reduce the amount of capital that insurance companies need to hold when they invest in infrastructure corporates. It hopes targeted changes to the Solvency II Delegated Regulation will provide a boost to investment in infrastructure.

Full article on EUbusiness

Opening remarks of Vice-Presidents Jyrki Katainen and Valdis Dombrovskis on the Mid-Term Review of the Capital Markets Union Action Plan

Questions and Answers on the Mid-Term Review of the Capital Markets Union Action Plan

© EUbusiness

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