EC Launches a Public Consultation on Capital Markets Union


As anticipated, this week the European Commission launched its landmark project to unlock funding for Europe’s businesses and to boost growth in the EU’s 28 Member States with the creation of a true single market for capital.

The Capital Markets Union (CMU) aims to break down the barriers that are blocking cross-border investments in the EU and preventing businesses from getting access to finance. The current environment is tough for businesses that remain heavily reliant on banks and relatively less on capital markets. The opposite is true in other parts of the world. One example of the opportunities a fully functioning single market for capital could offer: if EU venture capital markets were as deep as the US, as much as €90 billion more in funds could have been available to companies between 2008 and 2013.

With the CMU, the Commission also wants to clear obstacles that are preventing those who need financing from reaching investors and make the investment ecosystem for channeling those funds as efficient as possible.

On Wednesday 18th February, the Commission launched a three-month consultation round, known as a Green Paper, the outcome of which will shape an Action Plan to help unlock non-bank funding so that start-ups can thrive and larger companies can expand further. The CMU is a long-term project that will require sustained effort over many years although early progress can also be made in some areas in the coming months.

Among the issues to be tackled and on which the EC is seeking feedback among all the relevant stakeholder there is equity and lending- based crowdfunding. The Green Paper aims to identify barriers to the development of an appropriately regulated cross-boarder crowdfunding market and if and how these should be addressed.

Other interesting points raised by the EC’s document are the creation of a EU pension regime and the use of Fintech to foster the digitalisation of  the EU capital market, while reducing burdens, costs and other inefficiencies.

Contributing to the Green Paper

The Commission is seeking feedback from the European Parliament and the Council, other EU institutions, national parliaments, businesses, the financial sector and all those interested. All stakeholders and interested parties are invited to submit their contributions by 13 May 2015 (see link to consultation page).

ECN will also contribute to the discussion, as it has been already doing for the past two years, advocating the importance of creating a truly pan-European crowdfunding market to be able to unlock private savings as a relevant source of funding for early stage companies.

Once the public consultation period is over, the Commission will adopt an Action Plan this summer setting out its roadmap and timeline for putting in place the building blocks of a Capital Markets Union by 2019.

On the basis of the outcome of this consultation, the Commission will identify the actions that are necessary to achieve the following objectives:

  • improve access to finance for all businesses and infrastructure projects across Europe;
  • help SMEs raise finance as easily as large companies;
  • create a single market for capital by removing barrier to cross-border investments;
  • diversify the funding of the economy and reduce the cost of raising capital

The Green Paper identifies the following key principles which should underpin a Capital Markets Union:

  • it should maximise the benefits of capital markets for the economy, growth and jobs;
  • it should create a single market for capital for all 28 Member States by removing barriers to cross-border investment within the EU and fostering stronger connections with global capital markets;
  • it should be built on firm foundations of financial stability, with a single rulebook for financial services which is effectively and consistently enforced;
  • it should ensure an effective level of investor protection; and
  • it should help to attract investment from all over the world and increase EU competitiveness.

This is the the first milestone of a long road ahead to Capital Markets Union, which should make Europe a better place for business, investors and credit institutions.

The European Crowdfunding Network and its members will contribute to a positive discourse on the Capital Markets Union, by responding to this open consultation, but also through collaboration with other stakeholder groups, from business angels and venture capital funds, from incubators to banks and customer protection groups. To this end, the European Crowdfunding Network is involved in a number of discussions with relevant stakeholders which will help to refine the input most appropriate for the crowdfunding sector.


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