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Policy Contribution

Making a reality of Europe’s Capital Markets Union

It is high time to make the CMU project real.The authors of this publication suggest that capital markets will only transform with concrete action and that ESMA reform should be a priority but cannot be the only one. Policymakers need to set priorities that will move the project forward.

By: , and Date: April 27, 2018 Topic: European Macroeconomics & Governance

The deepening and integration of the European Union’s capital markets is a long-term structural endeavour. Although difficult to achieve, it is worthwhile for several reasons: a meaningful body of economic analysis strongly suggests that purely bank-based financial systems are more prone to crises and might produce lower growth performance; widely-accepted analysis suggests that cross-border capital market integration can be an important complement to fiscal risk sharing; and the departure from the EU of the United Kingdom – home to the EU’s main capital market centre – makes the project even more relevant. Although integrating and deepening capital markets has been a long standing goal of the EU, actual progress has been limited.

The European Commission’s welcome Capital Markets Union (CMU) agenda has led to many legislative proposals to advance the development of EU capital markets. Although the European Council has repeatedly underlined the CMU’s importance, only a few of these legislative proposals have been adopted. At this stage, significant progress will only be feasible if clear priorities are set. We argue that strengthening and expanding the role of the European Securities and Markets Authority (ESMA) should be prioritised because: (a) it is a relatively easily implementable step; (b) it would entrust an institution with driving the agenda forward; and (c) it would put an effective check on the potential financial stability and business conduct challenges that might arise from cross-border capital markets integration. Other major legislation, in particular on business insolvency and on personal pension products, could also be prioritised for completion during the current European Parliament legislative term.

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Blog Post

How have the European Central Bank’s negative rates been passed on?

Negative rate cuts are not that different from ‘standard’ rate cuts. Like them, they reduce banks’ margins, but this effect does not appear to be amplified below 0%.

By: Grégory Claeys and Lionel Guetta-Jeanrenaud Topic: European Macroeconomics & Governance Date: July 7, 2021
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Blog Post

Banks post-Brexit: regulatory divergence or parallel tracks?

Post-Brexit UK bank regulation is not likely to compromise on international standards, but will place greater emphasis on competition, making close UK-EU dialogue essential.

By: Alexander Lehmann Topic: Finance & Financial Regulation Date: July 6, 2021
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Policy Contribution

Commercialisation contracts: European support for low-carbon technology deployment

To cut the cost of decarbonisation significantly, the best solution would be to provide investors with a predictable carbon price that corresponds to the envisaged decarbonisation pathway.

By: Ben McWilliams and Georg Zachmann Topic: Energy & Climate Date: July 1, 2021
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External Publication

European Parliament

UK banks in international markets

Implications of UK-euro area divergence in regulation and supervisory practice

By: Alexander Lehmann Topic: European Parliament, Finance & Financial Regulation, Testimonies Date: June 25, 2021
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Blog Post

Inflation!? Germany, the euro area and the European Central Bank

There is concern in Germany about rising prices, but expectations and wage data show no sign of excess pressures; German inflation should exceed 2% to support euro-area rebalancing but is unlikely to do so on sustained basis.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: June 9, 2021
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Policy Contribution

Europe should not neglect its capital markets union

The European Union’s capital markets remain very underdeveloped compared to the United States. The market for equity, as measured as the size of the total market capitalisation of listed domestic firms relative to GDP, is much larger in the US and in Japan than in Europe.

By: Maria Demertzis, Marta Domínguez-Jiménez and Lionel Guetta-Jeanrenaud Topic: Finance & Financial Regulation Date: June 7, 2021
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Blog Post

Emergency Liquidity Assistance: A new lease of life or kiss of death?

Use of Emergency Liquidity Assistance to prop up euro-area banks needs to be more transparent; available evidence suggests its use has not always been within the rules.

By: Francesco Papadia and Leonardo Cadamuro Topic: European Macroeconomics & Governance Date: May 28, 2021
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Opinion

Europe must fix its fiscal rules

The pandemic has shown that the EU’s spending framework reflects an outdated economic orthodoxy.

By: Maria Demertzis Topic: European Macroeconomics & Governance Date: May 27, 2021
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Podcast

Podcast

A stronger euro comes with more responsibility

What does strategic sovereignty mean to and for Europe?

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: May 19, 2021
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Blog Post

Confronting the risks: corporate debt in the wake of the pandemic

As European economies emerge from lockdowns, it is becoming clearer that corporate debt has reached critical levels. A new French scheme, in which the state guarantees portfolios of subordinated debt, shows how financial support could be targeted better.

By: Alexander Lehmann Topic: Finance & Financial Regulation Date: April 28, 2021
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Opinion

The ECB needs political guidance on secondary objectives

While EU Treaties clearly stipulate that the ECB “shall support the general objectives of the European Union”, it is not appropriate to simply stand by, wishing that the ECB will use its discretionary power to act on them. Political institutions of the EU should prioritise the secondary goals to legitimise the ECB’s action.

By: Pervenche Béres, Grégory Claeys, Nik de Boer, Panicos O. Demetriades, Sebastian Diessner, Stanislas Jourdan, Jens van ‘t Klooster and Vivien Schmidt Topic: European Macroeconomics & Governance Date: April 22, 2021
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Podcast

Podcast

The idea of Europe: more than a feeling?

What can 70 years of news(paper articles) and how we talk about 'Europe' tell us about pan-European identity? Is there even such a thing as a European public sphere?

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: April 16, 2021
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