As part of the Juncker Commission priority to boost jobs, growth and investment across the EU, the Capital Markets Union (CMU), a key pillar of the Investment Plan, aims to tackle investment shortages head-on by increasing and diversifying the funding sources for Europe’s businesses and long-term projects. Also published today are the first and most urgent steps in that Plan, such as relaunching sound securitisation markets.
Alternative sources of finance, complementary to bank-financing - including capital markets, venture capital, crowdfunding and the asset management industry - are more widely used in other parts of the world, and should play a bigger role in providing financing to companies that struggle to get funding, especially SMEs and start-ups. Having more diversified sources of financing is good for investment and business but is also essential to financial stability, mitigating the impact of potential problems in the banking sector on companies and their access to finance. For this reason, CMU is also an important part of the work on the completion of the European Economic and Monetary Union.
The Commission also wants to break down barriers that are blocking cross-border investments in the EU to make it easier for companies and infrastructure projects to get the finance they need, regardless of where they are located.
The CMU is a medium-term project but with some important early initiatives. The Commission is today unveiling a first set of measures to relaunch high-quality securitisation, and to promote long-term investment in infrastructure. In addition, the Commission will announce proposed changes to the Prospectus Directive before the end of the year, with a view to making it easier and less expensive for small and medium-sized companies to raise capital.
In addition, the Commission has started two consultations on Venture Capital Funds and on Covered Bonds.
And in line with the principles of Better Regulation, the Commission is also launching a call for evidence on the cumulative impact of financial legislation — to make sure that it is working as intended without (for example) overlapping reporting requirements or inconsistencies between the various laws.
The Commission's overall goal for CMU is to create opportunities for investors, connect finance to the wider economy, and foster a more resilient financial system, with deeper integration and more competition. Our approach will be pragmatic, step-by-step, based on rigorous economic analysis and mindful of financial stability risks.