Public Affairs Networking
19/02 – Capital Markets Union proposal gets mixed reception

The launch of a three month long public consultation on plans for a Capital Markets Union by Commissioner Hill, receives some coverage. This plan aims at easing European businesses’ access to funding through capital markets. This important project will be to encourage growth and jobs in the EU, notes Čeh Silva in Delo.

Vice-President Jyrki Katainen called the union an important part of the European Commission’s strategy to attract private capital. Mr Hill is quoted calling it “one of the most exciting opportunities for SMEs” and noting that “we need to create a single European market for financial instruments.” Mr Weingärtner comments on Mr Hill’s statement and calls it “clumsy, but serious”, reports Mdr. Hill explained that the CMU will represent an alternative to banks and will offer more funding options.

Jonathan Hill stated that the EU wants to create a single capital markets union from top to bottom, locating the obstacles and removing them one by one. Mr Hill underlined that the Capital Markets Union aims to “unlock” the liquidity, which even though abundant at the moment is “frozen”. The objective is to create a well-regulated and integrated capital markets union by 2019.

Finland considers the timetable to be ambitious, notes Heikki Jantunen on Verkkouutiset.fi. A typical European difficulty is that banks, rather than capital markets, play the biggest part in the provision of credits and loans, explains Christoph Schmidt in Trouw; and this plan replies to that situation. According to Paulo Moutinho in Jornal de Negocios, Jyrki Katainen added that this initiative will contribute to ensuring that President Juncker’s investment plan is more than a one-off push and has a durable positive impact on the European economy.

Chris Cummings in The Daily Telegraph calls this plan “arguably the most significant EU proposal of the last 10 years.” He claims that it will benefit savers to “save more smartly” and receive better returns. Beda Romano writes in Il Sole 24 Ore that Europe’s economy is “more vulnerable than others” since this financing depends on banks and this plan should strengthen it. In Lëtzebuerger Journal, Marco Meng explains that US risk capital markets have made available about 90 billion euros to finance companies between 2008 and 2013. However, experts doubt that there is a credit crunch, in particular because of the low interest rates at which banks borrow from the ECB.

“Six years ago, the European financial sector was an enemy which required bolstered regulations by all means necessary; now it becomes an essential ally for political authorities seeking to stimulate growth,” comments Christinele Joux in La Tribune. If these consultations prove to be positive, the EU will draw up an action plan for implementation by 2019.©EuropeanUnion2015

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