The European Commission will release a green paper on Capital Markets Union next week, on Wednesday 18th February 2015. Let us briefly summarize what has been said about the initiative so far.
As the title of his job – Commissioner for Financial Stability, Financial Services and Capital Markets Union – suggests, the Capital Markets Union (CMU) counts as one of Lord Hill’s main political objectives. The idea is to “unlock the capital around Europe”, to “remove the barriers that stand between investors' money and investment opportunities” and to “make Europe more attractive to inward investment”, without jeopardizing financial stability. In short, the CMU is a response to what Lord Hill sees as a major problem, namely high levels of savings not finding their way to productive use in the economy.
Although Lord Hill does not, in general, expect to have to legislate as much as during the crisis, he mentioned a few specific legislative steps to be taken in the near future. The first will be proposals to build a market for high-quality securitisation1; second, a review of Directive 2003/71/EC on the prospectus to be published when securities are offered to the public or admitted to trading; and third, legislative measures that are needed to implement the legislation on the European Long-Term Investment Fund.
Unlike Olivier Guersent, Deputy Director of DG FISMA, Lord Hill has not yet commented on the contested supervisory aspect of the CMU, but it is likely that the green paper will include questions regarding supervision.
An action plan reflecting the feedback collected during a public consultation (which the green paper is going to trigger) will follow in the third quarter of this year. The aim is to complete the CMU by 2019.
Recognising the importance of the CMU for the long-term financing of the European economy, BETTER FINANCE is organizing a conference on "A Capital Markets Union for Growth, Jobs and Citizens". Learn more here.
1 Securitisation = the creation and issuance of tradable securities, such as bonds, that are backed by the income generated by an asset, a loan, a public works project or other revenue source (ft.com/lexicon).