Principles for a Capital Markets Union in Europe

Published 24/09/2014

Over recent years, EU policymakers have expressed the desire for capital markets to comprise a more substantial role as a provider of finance within the European financial system. Post-crisis deleveraging and the shift towards more stringent capital requirements have contributed to constraints on the availability of finance, particularly for SMEs.1 Market finance solutions such as private placement and securitisation have been mooted as alternatives to traditional bank lending for certain customers and purposes. Furthermore, the capital markets channel of financial intermediation is regarded as means of mitigating the economic impact of shocks to the banking system.

The IRSG fully supports the creation of a Capital Markets Union. This briefing sets out 7 guiding principles for the creation of a Capital Markets Union:

  1. Dynamic and innovative capital markets can facilitate sustainable economic growth;
  2. A Capital Markets Union should include all 28 Member States;
  3. The global competitiveness of the EU’s financial sector should be maintained;
  4. Financial stability, investor protection and market integrity are essential elements of sustainable capital markets;
  5. Europe can benefit from innovation and new technologies;
  6. Non-legislative and market-based solutions approaches should be used wherever possible; and
  7. Capital markets development can work in tandem with other policy priorities.