Updated: October 2019
ESBG believes that a new European Commission plan for a ‘CMU 2.0’ should be used to identify and remove
burdens presented by bureaucracy with the objectives of ensuring capital markets stability as well as providing
capital markets access to all investors. Since the CMU aims at unlocking capital around Europe, increase in
the participation of retail investors in EU capital markets is necessary. Therefore, in our opinion, the ‘CMU 2.0’
should be focused on:
Restoring investor trust and raising confidence in capital markets.
Increasing financial education. Well-informed investors will make responsible investment decisions from the
range of available capital markets products that are more adequately suited for their needs.
Widening access to equities. Broad sections of the population should have access to equities. This has to
be duly taken into account in regulatory requirements, especially with regard to MiFID and PRIIPs.
As stated above, ESBG is convinced that it would not be in the interest of the European economy, taking into
consideration that is strongly based on SME structures, to favour funding from capital markets over traditional
bank lending. ESBG believes that the European Commission should also ensure the proper functioning of the
lending market. Pluralism and diversity in the
European banking sector should be preserved in
order to have a safer financial market.
ESBG supports the European Commission's plan
to create a CMU. However, the success of the
CMU is not conceivable without a properly
functioning lending market. SMEs rely significantly
on bank loans for funding. 70% of outstanding
SME external funding in Europe comes from
banks, and evidence shows that bank lending
remains the favourite source of SME financing for
the majority of SMEs. CMU is a supplementary
vehicle, not a primary path to support SME
ESBG believes that a policy of complementarity
remains the best way forward to create a stronger
and more competitive European Union. This should
be borne in mind by policy-makers when further
designing the CMU. In our opinion, it is equally
important to promote the lending capacity of
European credit institutions. This is where savings
and retail banks in Europe can help. Backed by
their long-standing experience in the regions,
their wide network and proximity to the local
companies enables them to build an irreplaceable
knowledge and trustworthy relationships. It also
puts savings and retail banks in an ideally placed
position to help empower the economy and boost
sustainable, inclusive and smart growth by
granting loans to SMEs.
As part of the Juncker Commission’s priority to
boost jobs, growth and investment across the
EU, the Capital Markets Union (CMU) has been a
key pillar of the Investment Plan. The CMU aims
to unlock more investment for all companies,
including small and medium enterprises (SMEs), to attract more investment into the EU from the rest of
the world and to make the financial system more stable by opening up a wider range of funding sources.
In 2015, the European Commission adopted an action plan setting out 20 key measures to achieve a single
market for capital in Europe proposing a mix of mix of regulatory and non-regulatory reforms. This was followed
by a mid-term review in 2017 where the Commission reflected on the achievements so far and developed new
priorities. Finding the best way to finance the real economy remains a high priority for EU policymakers for
the next years. Some more work is also expected on the CMU project, as the results, so far, have not been as
remarkable as hoped.
>> Related: ESBG high-level messages on CMU