The Capital Markets Union: a New Beginning in the European Financial Sector?

The Capital Markets Union

Fact box

The Capital Markets Union (CMU) is a plan of the European Commission to mobilise capital in Europe. It will channel it to all companies, including SMEs, and infrastructure projects that need it to expand and create jobs. By linking savings with growth, it will offer new opportunities for savers and investors.

Deeper and more integrated capital markets will lower the cost of funding and make the financial system more resilient. All 28 Member States of the EU will benefit from building a true single market for capital.

Stronger capital markets will complement Europe’s strong tradition of bank financing, and will:
• Unlock more investment from the EU and the rest of the world;
• Better connect financing to investment projects across the EU;
• Make the financial system more stable;
• Deepen financial integration and increase competition.

The Capital Markets Union is a new frontier of Europe’s single market. Its creation is a key element of the Investment Plan announced by the Juncker Commission in November 2014.
source: EC

László Balogh

About László Balogh

László Balogh is Deputy Secretary of State in the Ministry of National Economy, responsible for financial policy affairs. In addition he chairs the Board of the National Debt Management Agency. Laszlo is a member of the Economic Policy Committee of the EU. He started his career as a multilateral trade negotiator, later he was posted as an OECD diplomat and had a leading role in Hungary’s accession to the OECD in 1996, finally becoming Hungary’s first ambassador to the OECD. Later, he worked at the Hungarian Financial Supervisory Authority, and then he was a member of both the ESMA Supervisory Board and the ESRB’s Technical Advisory Committee.

The financial crisis has led to plenty of conclusions in Europe. One among the many is that capital markets and their use for the real economy have been far from optimal. If real improvements could be achieved in this this area in the next few years, then growth could be promoted, alternative financing could be offered, the cost of financing could be lowered and access to funding might be improved. In 2015, the European Commission announced the inception of the Capital Markets Union (CMU) which will be a flagship project from the EU. 

On average, capital markets in Europe do not play an outstanding role in financing the real economy compared to the US economy. While the Banking Union is basically a Eurozone framework, the CMU is an EU wide project where all member states are targeted with tasks and also expected benefits. The ultimate goal is to achieve a wider and deeper capital market at the European level that will mobilise savings for investment purposes while creating prospective opportunities for savings for households and institutional investors. In that way further growth may be promoted.

The CMU is an all-encompassing multi-year project, rather than just an institution, that progresses step by step. It seems as if it will be a good initiative to create more space for alternative financing, especially for SMEs and long term investments such as infrastructures, in order to boost the real economy. 

From a Central European point of view, however, the CMU is both a challenge and an opportunity at the same time. It is an opportunity in the sense that it may provide additional and low cost financing for the start-ups and other SMEs in the region. However, it may also contribute to a deepening of the already shallow markets and this would constitute a challenge in the sense of whether economies could then compete with the much more developed capital markets within the EU. 

The question is still there: how can both EU countries with highly developed capital markets and others with lower levels of development benefit from this European initiative? Will supporting the project deepen the local capital markets of new Member States or it will it, instead, serve to further concentrate of EU key capital market players and market infrastructures? 

The CMU project was launched a year ago. The Commission’s action plan targets six objectives and at least three different time horizons including: financing for innovative non-listed companies, decreasing the burden of public issuance, promoting long term investments, fostering retail investments, facilitating cross border investments and enlarging banking capacity to support the real economy. 

There are already some 20 specific axes or actions announced, some of which have already been launched, while others, with a longer term implementation, are still under examination. There are some that have simple implementation rules while others may be very complex and requires more time. The main actions are planned to progress until 2018, with yearly monitoring; the commission will prepare a status report on progress every April.

Players in the non-financial arena are expecting results; however they have some uncertainties still. How can the process contribute to both lower cost SME financing and ensure more private funding for large EU infrastructure projects at the same time? How will SMEs in Europe be able to cope with the lower, but still significant burdens of issuance? Could these burdens be alleviated by regulation, without losing sight of transparency and investor protection objectives? How much will the competitive financing environment and the deeper financial markets contribute to economic growth and improve competitiveness at an EU level? Will the CMU lead us to an effective single market in financial services at the end of the day? How will the recent Brexit vote affect the process? 

These are the issues that need further mutual reflection and action. Most probably, the results will only come gradually. The set objectives of the CMU are to be welcomed; however implementation and practical details will be very important if we are to realise these noble targets effectively: more available financing at lower cost for everyone, especially for SMEs; more boosts for the real economy and improving Europe’s overall competitiveness in a balanced way. 

This could be seen as a win-win situation for all participants and for all member states. The CMU project has the potential to achieve this and everyone involved in the implementation should face up to and embrace to this opportunity.



The Capital Markets Union will be discussed at the  Economic Forum, which will be held from the 6th to the 8th of September, 2016 in Krynica, Poland. Emerging Europe is a media partner of the Forum. Click here to register for the Krynica Forum.


The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.


Moldova Falls Victim to Politicising

moldova emerging europe

Azerbaijan: The Rich Get Richer and the Poor Get Nothing


The Netherlands’ Objection to the Ukraine-EU Association Agreement could be Costly to Europe

Macedonia’s Controversial Coalition Government

SKOPJE MACEDONIA emerging europe

Poland: Is it Ready, and is it Time to Adopt the Euro?

Business Moving Forward with Cautious Optimism — Can Investors Win the Confidence Game?

Governments Across CEE Introduce New Regulations to Unleash the Region’s Full Potential

Changing Perspectives and Showing That True Romania is a Vibrant Innovative Country

Prepare for a New Europe

Breaking With Imitations of the Past

How strong is V4?

Viktor Orban

Good Match But Unlikely Marriage

Examining How a Strong Swiss Franc Could Single-Handedly Topple Poland’s Economy

History as Destiny? Institutional Erosion in Ukraine and Poland

LGBT in CEE — A New Acceptance Is Being Born From Migration

The Morawiecki Plan Promises a Brighter Future for Poland

How Will Trump’s Visit Affect Polish Politics?

Donald trump

A Bosnian Referendum Shows Russia’s Influence in the Balkans—As Well As Its Limits

CEE — Do We Need a Launch Pad For Our On-Site Tech Intelligence in the Silicon Valley

Resignation in Ukraine: War, Revolution, Crisis — Some Things Never Change

The Czech Republic Is On the Way To Become a Fully Developed Economy

Krynica: Mapping the Road to Central and Eastern Europe — 26 Years On

Outsourcing in Germany: Stop Talking at and Start Talking to

Europe Needs To Be More Proactive In Embracing Armenia

Old Fashioned Skulduggery Overshadows the Elections in Moldova

Czech Own Currency Insures Against Euro Losses

Euro Czech republic emerging europe

Belarus 2020: Turning the Vicious Circle Into an Upward Spiral

January Kicks Off an Exciting Year for Emerging Europe

Hungary’s Nationalist Assault on Free Enquiry

victor orban ceu

Adam Smith’s Warning for Poland

Czech Republic Renaming Has Real Economic Costs

Ukraine’s Reputation for Cheap Labour May Not Ring True in the Long-term

Bulgaria Needs a Reform-Oriented Government to Take Full Advantage of its EU Membership

bulgaria emerging europe

How Will Poland Approach the Brexit Negotiations?

Will a Two-speed European Union Side-line the Visegrad Four?

The Competitive Edge in Central and Eastern Europe

SOFIA BULGARIA - MAY 5: View of the Ivan Vazov National Theatre in Sofia on May 5 2016. Sofia is the largest city and capital of Bulgaria.

PiS Uses Media Control to Bring Poland to Heel

Jaroslaw kaczynski pis emerging europe

Not All Quiet on the Eastern Front

The Sharing Economy Could Bring New Business Models to CEE

Moving Forward Together Guarantees a Bright Future for CEE

Fiscal Policy Predictability in CEE — It’s Time for Change

A New Division Between Eastern And Western Europe?

CEE Countries Are on Their Way to Create Their Own ‘Silicon Valleys’

The Right to Water: Who Can Change Today’s Situation?

Stuck in Neutral: Georgia’s Constitutional Reforms

Tbilisi Parliament Georgia

Can Armenia Keep a Foot in Both Camps?

European union armenia russia emerging europe

Europe at Odds over OPAL and Nord Stream 2

The Global Outsourcing Industry — the Rise of the Phoenix

Central and Eastern European Consumers Are Joining the Global Trends for Change

Ex-Transition Economies’ FDI Recovery

dollar euro fdi

Poland’s Drift Away From Democracy

Could the West At Least Help Ukraine To Insure FDI Against Political Risks?

Nagorno-Karabakh Conflict Moves from Frozen to Kinetic


Polish Tax Laws — Fighting a Winning Battle Against Tax Evaders

We, the Post-Communist Generation, Have the Skills to Rid of the Past And Create Our Own Future

Where’s My Cheese? – The GREAT British Food Tour 2014

Cheese Shop

People Power Reminds the Government of the Rule of Law

China: A Giant That Is Hard to Crack

A Positive and Modern View of Entrepreneurship

Are There Differences Between How Tax Regulations in Poland and IAS Treat Intangible Assets?

EU Visa-Liberalisation Strengthens Georgia’s Pro-Western Path

georgia emerging europe eu

Poland Needs to Cling to the Eurozone

zloty euro emerging europe

International Women’s Day — Let’s Take Action And Then Celebrate

After 25 Years of Restructuring, the Romanian Power Sector Is at a Crossroad

The GREAT London Food Scene

Bakery in London

Will the New Five-day Visa-free Regime Encourage More Visitors to Belarus?

The CEE Region Is Making Advances in Prioritising Waste-to-Energy Projects

CEE Competing to Pick Up the Brexit Fall-Out

Digitalisation Is Keeping CEE Top 500 Companies on Top And Competitive

Romania Surviving the Waves of Recent Political Tsunamis in Europe

What Is the Post-Brexit Future of Foreign Direct Investment in Central and Eastern Europe?

Finalising the DCFTA is Expected to Bring Multiple Benefits to Ukraine

Are Labour Shortages Driving Economic Growth?

Falling into Old Ways in 2017? Ukraine’s Struggle for Functioning Economic Institutions

Poland’s Capital Saturation Lower Than the Czech Republic’s

deloitte fdi poland

The Long Tail of Global Expansion

United or Divided? Europe in the Face of the Challenges of Tomorrow

Global Expansion in the Digital Age

The EU’s Benign Neglect Of Eastern Europe

EU-CEE Is Still Growing at a Healthy Rate

Prague emerging europe

The EU’s Choice: Fundamental Reform Or Disintegration

Let’s Stop Wasting Time Redefining our Place in Europe

European Volatility Makes Economic Development Slower for Ukraine

The Voice of European Business Must Be Heard Loud and Clear by Brexit Negotiators

CEE Countries Expect Brexit to Result in More Opportunities for the Region

Impact of Brexit on EU-CEE Not Overstated

theresa may brexit

Big Fish, Small Fish, Where to Fish? On the Eve of the Fourth Industrial Revolution

Brexit: Let’s Learn the Lesson and Hope a Better Europe Will Arise

2018 Elections — Vital Decisions for Hungary’s Future

Victor Orban energing europe

Albania’s Election Apathy

tirana albania

Measuring Growth of Societies with GDP Alone Shows an Incomplete Picture

Poland’s Unicorn, Slovakia’s Flying Car and the Future of Europe

Poland’s Confusing GDP Growth

Serbia’s New PM Is Cut From a Familiar Cloth

Serbian flag emerging europe

Leave a Reply

Your email address will not be published. Required fields are marked *