Economy
Q&A on Capital Markets Union Green Paper
What does the term 'Capital Markets Union' mean?
The free movement of capital is a long-standing objective of the European Union – a fundamental freedom which should be at the heart of the single market. Despite the progress that has been made, Europe's capital markets remain fragmented along national lines and European economies remain heavily reliant on banks for their funding needs. This makes them more vulnerable in bad times to a tightening of bank lending, as happened during the financial crisis.
The Capital Markets Union (CMU) is a flagship initiative of this Commission and will contribute to the ambition to boost jobs and growth in the EU in the context of the Investment Plan for Europe.
The objectives of CMU are to help businesses tap into more diverse sources of capital from anywhere within the EU, make markets work more efficiently and offer investors and savers additional opportunities to put their money to workin order to enhance growth and create jobs. It aims put in place the building blocks of a well regulated and fully functioning Capital Markets Union in the EU by 2019 - creating a single market for capital for all 28 EU member states by removing barriers to cross-border investment and to lower costs of funding within the EU.
The building blocks of CMU should create a situation where: small and medium-sized enterprises (SMEs) can raise financing more easily than today; costs of investing and access to investment products converge across the EU; obtaining credit through capital markets is increasingly straightforward; and seeking funding in another member state is not impeded by unnecessary legal or supervisory barriers. Whilst these changes will help capital markets to play a larger role in channelling financing to the economy, banks will remain key players in capital markets, as issuers, investors and intermediaries. Banks will continue to play a major role in credit intermediation through their role in funding and information provision.
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