ECMI's Lannoo: How to continue CMU

10 February 2020

Karel Lannoo, General Manager of ECMI, writes that CMU’s project future depends on a clear plan to achieve more European market finance. Whether this will emerge or not, it remains to be seen. But time is running out, warns Lannoo.

As the von der Leyen Commission reflects on how to strengthen market finance in Europe, global markets are moving on. While the first five years of the Capital Markets Union (CMU) have underlined the necessity of the project, and some new rules have been introduced, no significant change has occurred in market financing. European capital markets remain very fragmented, the participation of retail investors through funds is still limited and hindered by high costs, and the attractiveness for start-ups has not increased. These inefficiencies place Europe at an increasing disadvantage compared to other international markets.

In several reports published in recent months, a consensus exists on the need for more market finance for start-ups, the importance of well-functioning channels to allow households to invest long term, the crucial role of government bond markets, including for green finance, and the need for interconnected EU markets. However, it remains to be seen if the EU can achieve these objectives. [...]

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