Creating a European Capital Markets Union (CMU) is a key project of the European Commission, with the goal to establish a stable and sustainable economic environment. The core objectives of CMU are to better integrate and deepen capital markets in Europe, comprising all Member States. The first CMU action plan was adopted in 2015. However, the Commissions estimates that challenges and barriers to a single market still exist, and concludes that a set of new measures for a deeper CMU integration are warranted. Therefore, a new CMU action plan was released in September 2020. The Commission highlights that the CMU is needed to, inter alia, help the EU economy recover from the COVID-19 crisis, as well as to mobilise the necessary funds to support the green transition. Among the actions included in the action plan are the intention to set up a European single access point (ESAP) that provides investors with seamless access to financial and sustainability-related company information; appropriate prudential treatment of long-term SME equity investment by banks; work towards an enhanced single rulebook for capital markets by addressing the need for further harmonisation of EU rules and monitoring progress towards supervisory convergence A strong emphasis in the action plan is made on sustainability and the role played by EU capital markets in that context. Indeed, tackling the climate and biodiversity emergencies and rising to broader environmental challenges requires enormous investments that the CMU can help mobilise and channel. The new sustainable finance strategy announced by the Commission in July 2021 put forward a set of actions to increase private investment in sustainable projects and activities.
The EAPB priorities in the area of capital markets include inter alia the review of the Benchmarks Regulation and the possible designation of a statutory replacement rates for LIBOR benchmarks, the future of clearing via UK CCPs, the upcoming MiFID/MiFIR review, and the Regulation on a European green bond standard. The EAPB advocates for a well-designed European green bond standard which should be adapted to different business models of market participants, including bond-by-bond issuers as well as issuers who apply a portfolio approach.
The EAPB is convinced that
- The primary focus of Capital Markets Union should be to establish a stable, market-stimulating environment ensuring sustainable and fair competition between credit markets and capital markets. Regulatory measures need to be examined as to their appropriateness and possible conflicts with political goals;
- Improved access to capital is essential to address the structural deficits of the European economy;
- A stable business environment and long-term legal certainty are key success factors for a European Capital markets Union;
- The principle of subsidiarity and the best practices from various EU member States need to be observed in developing new legal frameworks for accounting, tax, and insolvency law;
- Public banks consider partnerships between the public sector and private partners as suitable for providing a comprehensive life-cycle concept (“design- build – operate”), going beyond pure financing.