Capital Markets Union for Europe - A Political Message to the UK

Abstract

The economic case for the recent proposal on a European ‘Capital Markets Union’ is obvious. However, the name is more symbolic than real, and the substance falls short of proposing a fully unified capital market across the EU.

This short paper identifies several shortcomings of the project. In particular, the unclear methodological approach of the CMU project, and the lack of a clear commitment to a European enforcement or institutional mechanism weaken the benefits of the overall concept. Instead, the merits of the proposal lie in its political importance: above all, the CMU project is an attempt to repair the relationship with the UK and to win back support from the City of London for the European Single Market. As such, the project as a whole is certainly laudable, and it might turn out to be the right step at the right time.

Keywords: capital markets union, European Union, single market, securities regulation, United Kingdom

JEL Classification: G38, K22, P16