Capital Markets Union: a new sources of investment and growth across the E.U.

The European Union authorities on Wednesday on Feb 25, 2015, recommended streamlining rules for financial markets. The ideas — called the Capital Markets Union, which still need to be turned into formal proposals by lawmakers in Brussels and could take years to fully carry out — should make it easier for start-up companies to raise cash from sources other than banks.

The European Commission, the union’s executive body, said the plan would lift financial hubs like the City of London and offer innovative businesses across the region more access to American-style venture capital.

“If we get this right, the benefits to Britain and Europe’s smaller firms could be huge, through opening up new sources of investment and growth across the E.U.,” George Osborne, the British chancellor of the Exchequer, said in a statement.

Reforms will be needed to both supply and demand to achieve these objectives. January 20, 2015 in a speech to a conference organised by the City of Londen Corporation and Open Europe, Jon Cunliffe discussed how the European Union has achieved and should continue to achieve a balance between developing a single market for financial services and the need for financial stability.

Jon notes that the establishment of a Capital Markets Union to put European savings to better use by deepening and diversifying, the sources of finance available to business and offering more investment choices and portfolio diversification to savers, can help to further the objective of encouraging the free movement of capital in the EU by promoting the development of market-based financing…but the step change needed in market-based financing in the EU to achieve a full Capital Markets Union will be a marathon not a sprint.

All speeches are available online at http://www.bankofengland.co.uk/publications/Pages/speeches/default.aspx

  • While it is obviously true the impact of increased financial capital support outside the traditional banking sector they can also amplify crises when things go wrong, which is why Sir Jon say “they have to be built on a foundation of sustainable economic policies, good regulation and robust institutional structures”.
Source: New York Times article & City of Londen Corporation and Open Europe conference.
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