Why do we need a capital markets union?

The capital markets union (CMU) is a plan to create a single market for capital. The aim is to get money – investments and savings – flowing across the EU so that it can benefit consumers, investors and companies, regardless of where they are located.

A capital markets union will

  • provide businesses with a greater choice of funding at lower costs and provide SMEs in particular with the financing they need
  • support the economic recovery post-Covid-19 and create jobs
  • offer new opportunities for savers and investors
  • create a more inclusive and resilient economy
  • help Europe deliver its New Green Deal and Digital Agenda
  • reinforce the EU’s global competitiveness and autonomy
  • make the financial system more resilient so it can better adapt to the UK’s departure from the EU

New CMU action plan

While progress has been made since 2015, EU capital markets remain fragmented. This means that European citizens and businesses are not able to fully benefit from the deep, competitive, efficient and reliable sources of funding and investment that capital markets can offer. A strong and complete CMU is needed now more than ever, in order to support the economic recovery following the COVID-19 crisis and finance the green and digital transitions.

Against this backdrop, the Commission on 24 September 2020 adopted a new CMU action plan. The plan sets out 16 legislative and non-legislative measures to deliver on three main objectives

  1. support a green, inclusive and resilient economic recovery
  2. make the EU an even safer place to save and invest long-term
  3. and integrate national capital markets into a genuine single market

More information on the new CMU action plan

The steps towards a CMU taken so far

Efforts to put in place a true single market for capital started with the Treaty of Rome more than 60 years ago and intensified with the free movement of capital, a freedom enshrined in the 1992 Maastricht Treaty and the financial service action plan in 1999. But this objective has not yet been achieved.

The CMU initiative was launched by the Juncker Commission, which adopted the first CMU action plan in September 2015. It sets out a list of over 30 actions to establish the building blocks of an integrated capital market in the EU by 2019.

Measures already implemented

The Commission has largely delivered on the individual actions announced in the 2015 CMU action plan and the 2017 mid-term review. The European Parliament and Member States have so far agreed on 12 out of 13 legislative proposals put forward by the Commission. In addition, the Commission has completed a number of non-legislative measures to further the aims of CMU.

See all the legislative measures taken so far to build a CMU

Final report of the Technical Expert Stakeholder Group (TESG) on SMEs

Broadening access to market-based sources of financing for European companies at each stage of their development is at the heart of the capital markets union. To do so, the CMU initiative has strived to create a more conducive regulatory framework supporting access to public funding for small and mid-sized Enterprises (SMEs). In October 2020, as mandated by Regulation 2019/2115 as regards the promotion of the use of SME growth markets, the European Commission set up a Technical Expert Stakeholder Group on SMEs (TESG) that brought together relevant stakeholders with technical expertise on SMEs’ access to finance. The Group was tasked with monitoring and assessing the functioning of SME Growth Markets, as well as providing expertise and possible input on other relevant areas of SME access to public markets. Their work was finalised in May 2021 and culminated with their final report setting out 12 concrete recommendations to foster SME listing.

As per action 2 of the new CMU action plan, the Commission will now thoroughly assess the proposals made by the TESG and explore possibilities to simplify listing rules for public markets, in order to facilitate and diversify small and innovative companies’ access to funding.

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Call for feedback on the feasibility assessment for a potential EU referral scheme

In the capital markets union action plan published in September 2020, the Commission committed to analysing by Q4 2021 the merits and feasibility of setting up a referral scheme to require banks (and other providers of funding) to direct small and medium enterprises whose funding application they have turned down to providers of alternative funding. The objective of this scheme, if implemented, will be to facilitate SMEs’ access to a wider set of funding options, including alternative funding options.

The present call for feedback aims at gathering evidence and feedback from stakeholders on whether there is potential for a referral scheme to help SMEs whose funding applications have been rejected by a finance provider and options for the scope, features and governance of such a possible scheme. The questionnaire will feed into the feasibility study.

The call for feedback would invite all relevant stakeholders, including banks, financing platforms, SMEs, relevant associations, national and EU institutions and supervisory authorities, to provide their input.

Take part in the Call for feedback on the feasibility assessment for a potential EU referral scheme

Development of a financial competence framework in the EU

In the capital markets union action plan published in September 2020, the Commission committed to conducting by Q2 2021 a feasibility assessment on the development of an EU financial competence framework. The report presents the results of the feasibility assessment and the way forward. The report concludes that the most appropriate way forward is to work with the OECD on joint EU/OECD financial competence frameworks for adults and youth.

The financial competence frameworks will outline key areas of competence pertaining to personal finance (e.g. planning a budget, investing, borrowing or preparing for retirement) and within these categories, specific levels of proficiency. The frameworks will cover the knowledge/awareness, skills/behaviours and confidence/attitudes/motivation that individuals need to develop and display in order to support their financial well-being throughout their lives.

The objective of the frameworks is to provide a shared understanding of necessary financial competences in the EU. They should serve as basis for future financial literacy measures.

Learn more in the report below:

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Feasibility assessment of a recurrent benchmarking of national loan enforcement and insolvency frameworks

In the Capital Markets Union action plan published in September 2020, the Commission committed to exploring possibilities to enhance data reporting in order to allow for a regular assessment of the effectiveness of national loan enforcement regimes for non-bank corporates. The recurrent benchmarking of national loan enforcement frameworks aims at establishing a reliable picture of the outcomes which banks experience when enforcing loans through the judicial system in the 27 Member States, and to obtain a dynamic picture over time through recurrences every two to three years in order to gauge progress.

The objective of this ongoing work should be to analyse to what extent data already reported by banks and/or parameters already used by supervisors could bear fruit for the recurrent benchmarking of national loan enforcement (including insolvency) frameworks. It could also inform any possible future policy making in this area.

The feasibility assessment undertaken to date concludes that the most appropriate way forward is for the Commission services to continue working with the European Banking Authority and the European Central Bank to explore how their respective existing experience can feed into future iterations of the benchmarking. It also concludes that if this work is not completed over the next few years, the European Banking Authority may need to repeat its ad-hoc benchmarking exercise for the next iteration.

The European Banking Authority undertook the first, ad-hoc benchmarking of national loan enforcement and insolvency frameworks in 2019/20 EBA publishes Report on benchmarking of national insolvency frameworks across the EU | European Banking Authority (europa.eu) ) and has a wide-ranging experience with data gathering, and analysis, from the 27 Member States. At the same time and with a view to avoiding additional administrative burden on banks where possible, further explorative work will be needed to ascertain to what extent the European Central Bank’s analytical credit data set (AnaCredit) system , as it continues to develop and gather traction over the coming years, could help to contain the data gathering burden on banks.

Learn more in the document below:

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Studies under the CMU

Since the launch of the first capital markets union action plan in 2015, the Commission carried out a number of studies, prepared by external consultants, to inform its work in specific areas. This research helps the Commission shape policy actions and identify where legislation may be needed.

Study13 November 2020Financial Stability, Financial Services and Capital Markets Union

Study on primary and secondary equity markets in the EU

This study contributes to the evidence base needed to further advance the equity markets in Europe.
Study29 October 2020Financial Stability, Financial Services and Capital Markets Union

Study on the creation of an EU consolidated tape

This study analyses the demand for consolidated European financial market data in equities and bonds.
Study20 July 2020Financial Stability, Financial Services and Capital Markets Union

Feasibility study for the creation of a CMU equity market index family

The purpose is to assess the feasibility of creating a CMU equity market index family that could contribute to the development of EU capital markets.
Study23 July 2020Financial Stability, Financial Services and Capital Markets Union

Study on options for development of online tools and services supporting retail investors in investment decisions

Final report of the study on options for development of online tools and services supporting retail investors in investment decisions.
Study14 February 2020Financial Stability, Financial Services and Capital Markets Union

Study on supply chain finance (SCF)

In-depth analysis of the current state and recent developments in the area of supply chain finance at EU level and within the Member States.
Study16 December 2019Financial Stability, Financial Services and Capital Markets Union

Study on the drivers of investments in equity by insurers and pension funds

As a follow-up to the Mid-term Review of the CMU Action Plan, the European Commission publishes a study on the drivers of equity investments
Study03 December 2019Financial Stability, Financial Services and Capital Markets Union

Study: Analysis of the individual and collective loan enforcement laws in the EU Member States

CMU: eliminating barriers to cross-border investment- independent study on the effectiveness of loan enforcement regimes (insolvency benchmarking)
Study12 October 2018Financial Stability, Financial Services and Capital Markets Union

Feasibility study on European secured notes

ESNs are bonds using a covered bond structure to fund assets not currently permitted under EU law, specifically loans to SMEs & bank infrastructure loans.
Study24 April 2018Financial Stability, Financial Services and Capital Markets Union

Study on the distribution systems of retail investment products

Study carried out by Deloitte Luxembourg for the European Commission.
Study16 February 2018Financial Stability, Financial Services and Capital Markets Union

Study on EU markets for private placements

Identifying market and regulatory obstacles to the development of private placement of debt in the EU
Study20 November 2017Financial Stability, Financial Services and Capital Markets Union

Study on the drivers of corporate bond market liquidity

External study produced by Risk Control Limited
Study26 September 2017Financial Stability, Financial Services and Capital Markets Union

Study on the feasibility of a European personal pension framework

Explore the feasibility of a European personal pensions framework in the context of the capital markets union (CMU) action plan.
Study25 August 2017Financial Stability, Financial Services and Capital Markets Union

Study on covered bonds in the European Union – Harmonisation of legal frameworks and market behaviour

This study examines the current state of the European covered bond markets and the likely costs and benefits of introducing a dedicated EU legal framework.
Study01 June 2017Financial Stability, Financial Services and Capital Markets Union

Study on the effectiveness of tax incentives for venture capital and business angels to foster the investment of SMEs and start-ups

Investigates the part that tax incentives for venture capital & business angels can play in fostering investment, to promote best practice in Member States
Study29 March 2016Financial Stability, Financial Services and Capital Markets Union

Study on the effects of fundamental tax reforms on effective taxation

Informs about whether different fundamental tax reforms could manage to address the debt bias and promote investment, possibly in a revenue neutral way.