The European Commission has published a Green Paper “Building a Capital Markets Union” to consult on its overall approach to creating a single market for capital for all member states by 2019.
The Commission’s priority is to get Europe growing again and unlock investment in Europe’s companies and infrastructure. The intention is to build a true single market for capital – a Capital Markets Union for all 28 Member States.
The Green Paper states that, compared to other parts of the world, European businesses remain heavily reliant on banks for funding and relatively less on capital markets. It argues that stronger capital markets would complement banks as a source of financing, and would:
- Unlock more investment for all companies, especially SMEs, and for infrastructure projects;
- Attract more investment into the EU from the rest of the world; and
- Make the financial system more stable by opening up a wider range of funding sources.
In the next months, the EC will:
- Develop proposals to encourage high quality securitisation and free up bank balance sheets to lend;
- Review the Prospectus Directive to make it easier for firms, particularly smaller ones, to raise funding and reach investors cross border;
- Start work on improving the availability of credit information on SMEs so that it is easier for investors to invest in them;
- Work with the industry to put into place a pan European private placement regime to encourage direct investment into smaller businesses; and
- Support the take up of new European long term investment funds to channel investment in infrastructure and other long term projects.
The Green Paper marks the beginning of a three month consultation which ends on 13 May 2015. The feed-back will help the EC to develop an action plan to put in place the building blocks for a fully functioning Capital Markets Union by 2019.
A copy of the Green Paper is available on the EC website.(PDF)