Capital markets union: a deep dive - Five measures to foster a single market for capital

The European Union requires a single market for capital. Well-developed and integrated capital markets support economic growth and resilience across the region, offering benefits for businesses, households, and financial stability. This paper examines the importance of CMU in achieving five strategic objectives: supporting innovation and productivity, financing the twin transition, shoring up pension savings, strengthening alternatives to bank financing, and fostering convergence and inclusion. It highlights the progress made over the past decade, the challenges encountered, and the renewed impetus behind the CMU initiative. The paper proposes concrete steps to move forward, building on long-standing priorities supported by the ECB and the current policy debate on CMU. First, it suggests facilitating access to capital markets, via the creation of a new standard for a European savings and investment product. Second, it emphasises the importance of expanding capital markets across-borders which would be facilitated by improvements towards a more integrated supervisory ecosystem, an integrated trading and post-trading landscape leveraging on the potential benefits of digitalisation, and a more active securitisation market that does not compromise on financial stability. Third, the paper highlights the need to channel capital towards innovative and competitive firms by increasing opportunities for equity and venture capital financing. These actions should be complemented by longer-term initiatives, including continuing to address barriers stemming from the lack of harmonisation in insolvency, corporate and taxation regimes, designing a safe asset for Europe, completing the Banking Union, and promoting financial literacy and inclusion. JEL Classification: E61, F36, G18, G24, G51, O16