05 November 2014

Bloomberg: EU capital markets union still a glimmer in Juncker’s eye

European Union policy makers have come up with a new idea to drive investment and economic growth by building a “capital markets union.” Now they have to figure out what that means.

Jean-Claude Juncker, president of the new European Commission, issued the call back in July, telling EU lawmakers that developing and integrating capital markets “would cut the cost of raising capital, particularly for small and medium-size enterprises.” It would also “help reduce our very high dependence on bank funding,” he said.

Since then, everyone from the European Central Bank to lenders and exchanges has come forward to fill Juncker’s slogan with content. Notably absent in the clamour is the commission itself, the bloc’s executive arm, which will be in charge of coming up with the plan.

“If you ask ten different people, you’ll get ten different answers as to what capital markets union means,” Verena Ross, executive director of the European Securities and Markets Authority, told U.K. lawmakers on Oct. 28.

Economic expansion in the currency bloc is anemic. The commission cut its growth forecasts on Nov. 4 to 0.8 percent this year and 1.1 percent in 2015.

ECB Executive Board member Yves Mersch acknowledged on Oct. 22 that while expectations for the planned capital-markets union are high, “there is no common understanding of what it means or what it should look like.”

“For the financial industry, it means new business opportunities; for financial stability experts, it means better control of shadow banking; and for entrepreneurs, it means better access to funding sources,” he said.

Full article on Bloomberg

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