Brussels,

Capital Markets Union

The Capital Markets Union (CMU) initiative is designed to establish a unified market for capital within the European Union. The objective is to facilitate the movement of funds – including investments and savings – across the EU, benefiting consumers, investors, and businesses, irrespective of their geographical location.

The primary goals of a capital markets union are:

- Enhancing funding options for businesses while reducing costs, particularly for small and medium-sized enterprises (SMEs), ensuring they have access to necessary financing.
- Contributing to economic recovery following the Covid-19 pandemic and generating employment opportunities.
- Presenting new avenues for investors and savers.
- Cultivating a more inclusive and resilient economy.
- Aligning with Europe's Green Deal and digital agenda, fostering sustainability and technological advancement.
- Strengthening the EU's global competitiveness and self-sufficiency.
- Bolstering the financial system's resilience to effectively adapt to the UK's departure from the EU.

The endeavor to establish a comprehensive single capital market commenced over six decades ago with the Treaty of Rome, gaining momentum through the inclusion of capital movement freedom in the 1992 Maastricht Treaty and the financial service action plan in 1999. However, this goal remains unrealized.

The CMU initiative was initiated by the Juncker Commission, which introduced the inaugural CMU action plan in September 2015. This plan outlines a series of more than 30 measures aimed at laying the foundation for a unified capital market within the EU.

The EU Actions for the creation of a European Capital Market

In 2015, the European Commission introduced 13 legislative proposals. To date, 12 of these proposals have been approved by European legislators.

Some of them are already the subject of completed legislative acts, others are still under discussion, and others are already undergoing revision.

1. Simple, transparent and standardised securitisation to broaden investment opportunities and boost lending to Europe’s households and businesses.
2. Prospectus regulation to facilitate access to financial markets for companies, particularly small and medium-sized enterprises.
3. Several measures relating to collective investment funds, such as setting up the European Venture Capital Fund Regulation (EuVECA) and European Social Entrepreneurship Funds Regulation (EuSEF) to stimulate venture capital and social investment in the EU and facilitating cross-border distribution of collective investment funds to remove burdensome requirements and harmonise diverging national rules.
4. Pan-European Personal Pension Product (PEPP) to give citizens more and better options for retirement savings.
5. Covered bonds to provide a source of long-term financing for banks in support to the real economy.
6. Crowdfunding to improve access to this innovative form of finance for start-ups, while maintaining investor protection.
7. Investment firms review to ensure a level playing field between the large and systemic financial institutions while introducing simpler rules for smaller firms.
8. Preventive restructuring, second chance and efficiency of procedures to provide honest entrepreneurs with a second chance and facilitate the efficient restructuring of viable companies in financial difficulties.
9. Promotion of SME Growth Markets to cut red-tape for small and medium-sized enterprises trying to access capital markets.
10. Third party effects on assignment of claims to enhance legal certainty about the applicable national law to the effects on third parties where a claim is assigned cross-border.
11. European Supervisory Authorities review including anti-money laundering rules to enhance supervisory convergence and strengthen enforcement, including against money laundering and terrorist financing.
12. European market infrastructure regulation (Supervision) to ensure that the EU supervisory framework effectively anticipates and mitigates risk from EU and non-EU central counterparties servicing EU clients.