Download publication

Policy Contribution

How to make crowdfunding work in Europe

Crowdfunding markets around the world have experienced significant growth rates in recent years, but many questions remain open on their proper design, implementation and feasibility. The authors here analyse the European Commission's proposal for the EU-wide development of crowdfunding markets, address its shortcomings, and provide policy recommendations.

By: , and Date: March 27, 2019 Topic: Macroeconomic policy

Crowdfunding markets around the world have experienced significant growth rates in recent years. With an aggregate amount of almost €50 billion raised worldwide between 2010 and 2017, crowdfunding has attracted increasing economic, political and regulatory attention on the international level. However, many questions remain open on the proper design, implementation and feasibility of these markets, of which there are four general types: debt, rewards, equity, and charity (ranked by their respective volumes). The first three types of crowdfunding are comparable to existing sources of traditional financing and either complement or substitute for these sources. Investors thus expect returns or other financial benefits from these types of crowdfunding. The fourth type – charity-based crowdfunding – is purely philanthropic.

The United States and United Kingdom are responsible for the majority of crowdfunding transactions. The share of European Union markets (excluding the UK) is still low, with negligible cross-border activity. We argue that the lack of a clear and consistent regulatory framework in Europe is a major obstacle to the development of these markets. The European Commission proposed in March 2018 a set of measures aimed at addressing the major shortcomings of the current regulatory framework and employing instead an EU-wide regime (European Commission, 2018b).

The Commission’s proposal moves in the right direction to provide a solid basis for the development of crowdfunding markets in Europe, but has at least three major shortcomings that need to be addressed. First, an EU-wide framework needs to have a precise and transparent legal definition of crowdfunding activities, eliminating any legal confusion for investors, enterprises and platforms. Second, such a framework requires a clear stance on investor protection. We suggest including in the proposal a more refined requirement for agents who want to invest more than a certain threshold amount to undertake a ‘qualified investor test’. Third, the proposal would limit crowdfunding offers to €1 million per project over a period of 12 months. We argue that this threshold is too restrictive and should be raised to €5 million in order to enable the frictionless development of investment-based crowdfunding in Europe.

Read about event More on this topic
 

Upcoming Event

Jun
29
14:00

Autonomous, digital and green Europe: a conversation with Margrethe Vestager

At this event Margrethe Vestager will reflect on strategic autonomy, digital regulation and the implications of the Green Deal on competition.

Speakers: Guntram B. Wolff and Margrethe Vestager Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event
 

Upcoming Event

Jul
6
12:30

Shifting taxes in order to achieve green goals

How could shifting the tax burden from labour to pollution and resources help the EU reach its climate goals?

Speakers: Heather Grabbe, Femke Groothuis, Carola Maggiulli, Niclas Poitiers and Kinga Tchorzewska Topic: Green economy, Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event More on this topic
 

Upcoming Event

Jul
5
12:30

Green public investment after COVID-19

How can the public sector meet the climate funding needs of the EU?

Speakers: Zsolt Darvas and Elena Flores Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read article More by this author
 

Blog Post

European governance

Discretion lets Croatia in but leaves Bulgaria out of the euro area in 2023

Crucial decisions about whether a country can join the euro area depend on questionable discretionary decisions.

By: Zsolt Darvas Topic: European governance, Macroeconomic policy Date: June 22, 2022
Read article Download PDF More on this topic
 

Working Paper

Measuring macroeconomic uncertainty during the euro’s lifetime’

The basic idea is that observable forecasts of macroeconomic variables are transformations of the sets of macroeconomic information, which are so complex as to be unobservable, prevailing when the forecasts are made.

By: Monika Grzegorczyk and Francesco Papadia Topic: Macroeconomic policy Date: June 20, 2022
Read article More by this author
 

Podcast

Podcast

Growth for good?

Can economic growth be a force for good and help in the fight against climate change?

By: The Sound of Economics Topic: Green economy, Macroeconomic policy Date: June 15, 2022
Read article Download PDF
 

Working Paper

Raising EU productivity through innovation: Lessons from improved micro data

Combining recent unique firm-level data and state-of-the art research methodologies, MICROPROD research provides a better overview of which firms are most likely to adopt digital technologies and to innovate, and to turn these investments into productivity growth.

By: Reinhilde Veugelers and Frederic Warzynski Topic: Digital economy and innovation, Macroeconomic policy Date: June 13, 2022
Read about event
 

Upcoming Event

Sep
6-7
09:00

Bruegel Annual Meetings 2022

The Annual Meetings are Bruegel's flagship event which gathers high-level speakers to discuss the economic topics that affect Europe and the world.

Topic: Banking and capital markets, Digital economy and innovation, European governance, Global economy and trade, Green economy, Inclusive growth, Macroeconomic policy Location: Palais des Academies, Rue Ducale 1
Read article Download PDF More on this topic More by this author
 

Working Paper

Technology, trade, work councils and income distribution: new insights from MICROPROD

Using various micro datasets, Work Package 5 of the MICROPROD project made significant contributions to our understanding of the distributive implications of trade and technological change.

By: Zsolt Darvas Topic: Macroeconomic policy Date: May 31, 2022
Read about event More on this topic
 

Past Event

Past Event

MICROPROD Final Event

Improving understanding of productivity, its drivers and the way we measure it.

Speakers: Carlo Altomonte, Eric Bartelsman, Marta Bisztray, Peter Bøegh Nielsen, Italo Colantone, Maria Demertzis, Wolfhard Kaus, Javier Miranda, Steffen Müller, Hannu Piekkola, Verena Plümpe, Niclas Poitiers, Andrea Roventini, Gianluca Santoni, Valerie Smeets, Nicola Viegi and Markus Zimmermann Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 31, 2022
Read article More by this author
 

Opinion

European governance

Three headaches for the European Central Bank

Even though inflation in the euro area is lower than in the US, three issues make it a lot more difficult for the ECB to control inflation and preserve financial stability. Once again, the limits of EMU architecture are visible and will require a rethink.

By: Maria Demertzis Topic: European governance, Macroeconomic policy Date: May 31, 2022
Read article More on this topic More by this author
 

Podcast

Podcast

Taming inflation?

What are the implications of prolonged inflation?

By: The Sound of Economics Topic: Macroeconomic policy Date: May 25, 2022
Load more posts