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The Capital Markets Union’s (CMU) overarching objective of creating a financial ecosystem which supports Europe’s businesses to flourish has been a long-standing priority for the EU. Some early successes such as the introduction of a new framework to reinvigorate securitisation markets and reforms of prospectus regulation, which made it easier for SMEs to list shares on stock exchanges, were a promising start. But to achieve the real step-change that is needed ambitious reform in areas such as creating a vehicle for pan-European pension savings and significant streamlining of insolvency regulation are also needed.
But with significant hurdles such as Brexit and European Parliament elections on the horizon, for major advances to be made there must be renewed political momentum to ensure CMU remains a priority. There is no doubt the departure of the UK from the EU poses the possibility of substantial disruption for Europe’s capital markets. But CMU will arguably become even more important after the UK, one of the EU’s largest economies, departs from the bloc.
Sustaining momentum on such a large-scale project is a challenge, so in order to keep focus AFME is proposing a set of measurable Key Performance Indicators (KPIs) for CMU are introduced, to track progress in key policy areas. Such indicators would aid politicians to prioritise what action and initiatives need to be pursued with the most urgency.
It is also important to understand the differences between member states in terms of how well developed their capital markets are. Such KPIs could also help to identify the countries which have the furthest to go versus those where their markets are more well-developed, and where lessons can be learned.
As the end of the current Commission approaches in October 2019, so too does its self-imposed deadline for having delivered the first stage of the CMU action plan. This is a tight and demanding timescale. But the scale of CMU’s ambition has always meant it would need to be a long-term project and 2019 should not be viewed as the end of the story. The next Commission must continue the good work done to date.