The free movement of capital is a key long-standing objective of the European Union. It is one of the pillars of the Single Market, along with the free movement of people, goods and services. Despite the Commission’s efforts to achieve the ambitious goal of building a capital markets union (CMU), results are still to come, according to a report presented by the European Court of Auditors (ECA) today.
In the EU, businesses traditionally largely rely on banks for financing their activities. To provide an alternative funding source for start-ups and small and medium-sized enterprises (SMEs) and to mobilise private capital, the Commission has been making efforts since 2015 to supplement the Banking Union with a CMU. The CMU is also intended to remove cross-border barriers to investment within the EU more generally.
“The Capital Markets Union is an unfinished agenda, and much work remains to be done,” said Rimantas Šadžius, the Member of the European Court of Auditors responsible for the report. “The Commission’s measures to diversify the financing options of SMEs and efforts to develop local capital markets within the CMU have had no catalytic effect so far. In our opinion, increasing the role of private risk-sharing through capital markets remains an ambitious and urgent priority. This would bring about not only a more stable and crisis-resilient EU financial system, but also one which is better equipped to boost growth, especially when traditional bank funding is not easily available or when it fails.”
Press Release: The Capital Markets Union: slow progress