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Euro-area finance ministers called for more integrated supervision of capital markets across the European Union with the aim of strengthening risk sharing and reducing red tape for businesses and investors.
According to a draft statement seen by Bloomberg, ministers want the European Commission, the EU’s regulatory arm, to come up with proposals for single supervision for entities that want it and have significant cross-border activity. This would be done by the European Securities and Markets Authority.
Another option is to have so-called supervisory colleges coordinated by ESMA on a case-by-case basis in order to reduce compliance costs for businesses. A third possibility would be single supervision for third-country entities and authorization of their documents.
The proposals by the Eurogroup, being discussed by all EU finance ministers, are part of a wish list to try to make progress on long-delayed capital markets union during the next five-year EU legislative term. The aim is to provide greater choice of funding for companies, as well as helping to pay for the green and digital transitions. In contrast to the US, the bulk of financing needs for businesses in the EU is provided by the banking sector.