On 03 Dec. 2020, The Council of the EU approved approved a set of conclusions on the Commission’s new action plan on the Capital Markets Union (CMU), published on 24 September 2020.
CMU is a long term policy project that aims to achieve a single market for capital across the EU. Its objective is to get investment and savings flowing across all member states for the benefit of citizens, businesses and investors. Advancing towards a genuine CMU has become more important in the context of the COVID-19 crisis and the necessary conversion to a digital and sustainable economy. All of this will lead to increased funding needs on the part of EU companies and SMEs, which cannot be shouldered by banks alone.
In light of this, in its new CMU action plan the Commission outlined a number of measures designed to make real progress in deepening the CMU. With its conclusions, the Council aims to give political steering for future work in this area. The conclusions set out the Council’s priorities among the outlined measures, to provide the Commission with guidance when preparing future legislation and non-legislative initiatives.
“The economic fall-out of COVID-19 and the transition to a sustainable and digital EU economy as well as Brexit highlight the need for stronger and truly integrated capital markets in the European Union. Well-functioning capital markets are key for our citizens and companies providing better investment opportunities and sufficient access to finance particularly for small and medium sized enterprises, the backbone of Europe’s economy. EU member states are sending a strong signal in support of accelerating the work towards a genuine Capital Markets Union by giving clear guidance on the political priorities on future legislative and non-legislative initiatives.”, stated Olaf Scholz, Germany’s Federal Minister of Finance and Vice Chancellor.
The conclusions stress that, at this juncture, the highest priority should be given to those actions that are important for improving the funding of the economy and particularly of SMEs and that have the potential to support a swift economic recovery in the context of the COVID-19 pandemic. These actions should be delivered as soon as possible and no later than the end of 2021. The measures that are considered to be the most important for mobilising private capital should also be delivered as soon as possible. These should be followed by measures that are deemed to be of major importance for progressing towards a more vibrant and globally competitive capital market in the short and medium term.
Among other things, the Council highlights the following measures as the most urgent:
facilitating access by corporations, in particular SMEs, to financing on capital markets
creating a single access point to financial and non-financial company data for investors
supporting the role of insurers, banks and other institutional investors as long-term investors in EU businesses enhancing financial literacy to promote well-educated investment decisions
enhancing the cross-border activities of post-trading infrastructures and settlement
promoting further supervisory convergence and working towards a more harmonised legal framework for regulated capital market activities in the EU.
The Council encourages the Commission to work on more complex and time-consuming initiatives as well. These include increasing the convergence of the outcomes of insolvency procedures and strengthening the confidence of investors and facilitating cross-border investments by evaluating possible deficits in the rules on enforcement of financial reporting of listed companies.
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