EU Capital Markets Union

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.

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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.

In a nutshell, the development of CMU is projected to lead to 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 theInvestment Plan announced by the Juncker Commission in November 2014.

The challenges

  • Investment in Europe remains heavily reliant on banks
  • Significant differences in financing conditions between Member States exist
  • There are differing rules and market practices for products like securitised instruments or private placements
  • Shareholders and buyers of corporate debt rarely go beyond their national borders when they invest
  • Many SMEs still have limited access to finance.

The objectives

  • Develop a more diversified financial system complementing bank financing with deep and developed capital markets
  • Unlock the capital around Europe which is currently frozen and put it to work for the economy, giving savers more investment choices and offering businesses a greater choice of funding at lower costs
  • Establish a genuine single capital market in the EU where investors are able to invest their funds without hindrance across borders and businesses can raise the required funds.

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