The annual joint conference of the European Commission and the European Central Bank on financial integration and stability took place on 25 April in Frankfurt. The focus of this year's event was the continuing development of the Banking Union and the Capital Markets Union as catalysts for further financial integration in Europe. During the conference, the Commission presented a status report of the Capital Markets Union, summing up the progress so far.

The main milestones

The Capital Markets Union action plan, which was launched by the Commission in September 2015, set out a number of measures to help link savings with growth, give companies greater choice about where and how they get their financing and provide more options and better returns for consumers who want to invest their money.

Along with the action plan, the Commission made a proposal to restart Europe's securitisation market, which at € 216 billion in 2014 is worth about a third of its value in 2007. If the EU could revive this market to its pre-crisis average, it could potentially provide an extra € 100 billion of credit to the economy. The proposal sets out criteria for simple, transparent and standardised securitisation, and is accompanied by a proposal to revise the relevant bank capital requirements to increase lending, notably to SMEs. The package moved quickly through Council and is now with the European Parliament.

Another part of the action plan is the proposal to create a simpler, faster and cheaper prospectus regime, to make it easier for companies of all sizes to tap public capital markets, while ensuring appropriate investor protection. Streamlining the process for companies that have already issued a prospectus and want to raise capital again could potentially save listed companies up to € 100 million a year. In addition, this proposal should, in particular, simplify corporate capital-raising for smaller companies. It is currently being examined by the Council and the Parliament, which are aiming to start trilogue discussions in the summer.

The Commission also wants to stimulate more long-term investment like infrastructure projects. It put forward a proposal to define infrastructure investment as an asset class under Solvency II and for long-term investment funds (ELTIFs), and bring with it lower capital requirements. This development, which takes the form of a Delegated Act under the Solvency II Directive, entered into force on 2 April.

Gathering feedback

In some of the areas covered by the Capital Markets Union the Commission has taken steps to get feedback from stakeholders, which will feed into future policy action. For example, in December 2015 it launched a consultation on consumer financial services, which received 428 responses. It also held a public hearing on consumer financial services in March 2016, which brought together around 450 participants from the financial industry, consumers and users associations, national public authorities and EU institutions. Also in March, the Commission launched a wide-ranging consultation as a first step towards preparing a legislative proposal in the area of business restructuring and insolvency.

The status report is published twice a year. The next one will be presented in October 2016.

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