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Speech by Jonathan Hill, EU Commissioner for Financial Services, Financial Stability and Capital Markets Union, during the Conference on CMU held in Brussels, 08 June 2015
The aim of the Green Paper was, first, to make sure that we had identified the right overall areas for action. Second, to get ideas and suggestions from those closest to the action as to where the barriers and obstacles to a single market in capital are and how we might overcome them. And third, to check that people supported the step-by-step approach that I am taking, combining long-term ambition with immediate practical steps.
I also wanted to go about things in a way that would take people with me, to demonstrate to the industry in particular that CMU would be something done with them, rather than to them.
Alongside the formal consultation, we have been travelling across Europe to talk to politicians, consumers, business start-ups, regulators, the financial services industry and investors large and small. By the summer we will have been to every country in the EU. That in itself underlines a central point: this is a classic single market project for all 28 Member States.
Those many conversations have been pointing in the same overall direction. While I already knew that we had the support of Member States and European parliamentarians, what has been encouraging is that we have received that same message, a real groundswell of support, from right across Europe.
It is the same message that emerges from the responses to our consultation. That we are on the right track. That we are concentrating on the right areas. That we have identified the right issues. That we are right to be taking a step-by-step approach.
People want us to be ambitious for the Capital Markets Union, but they also want us to make quick progress where we can, for instance by creating a new market for simple, transparent and standardised securitisation products, and by reviewing the Prospectus Directive.
There is also a shared analysis of the benefits of a stronger single market in capital to help support more cross-border risk-sharing, create deeper and more liquid markets, and diversify the sources of funding to the economy. It will deepen financial integration and help increase growth and competitiveness over the medium term.
Or in other words, it will better link savings with growth. It will provide more options and better returns for savers and investors. It will offer businesses more choices of funding at different stages of their development. It will channel investment to where it can be used most productively, increasing the opportunities for Europe's companies and infrastructure projects. My colleague, Jyrki Katainen, who has been so energetic in driving forward the Investment Plan, will talk about this more this afternoon. It will also help to ensure that the financial system supports growth and jobs and helps with the demographic challenges Europe faces.
And when we talk about the CMU helping to boost growth, I mean growth throughout the EU, for those countries without well-developed capital markets as well as those with them. Indeed, it is countries which don't have established financial centres whose businesses and investors could benefit the most, because the CMU should create the conditions for capital to cross borders, to flow to entrepreneurs with high growth potential, no matter where they are located.
And it can strengthen the stability of our financial system. Our current system is heavily dependent on bank financing, so if there is a contraction in banking, lending in the whole economy dries up – which is of course exactly what we have seen in recent years. If we encourage equity investment, in place of debt, we could make the economy more resistant to shocks.
If these are some of the benefits of the CMU, what practical steps will we need to take? We have identified three themes as being at the heart of the project: how the CMU can increase funding options for business; how it can create more opportunities for investors; and how it can encourage cross border investment.