Well-functioning capital markets are seen as the basis for a well-functioning economy as a whole. The Capital Markets Union (CMU) was launched by the European Commission in 2014 as an initiative to create a single market for capital. The deepening of the CMU has since been an ongoing process involving a significant number of legislative and non-legislative measures. The initiatives of the 2015 and 2020 CMU Action Plans relate, for example, to the promotion of cross-border investments, investment products, market infrastructure, sustainable finance or the design of the financial market supervision. As part of a stocktaking exercise in 2017, the EU Commission concluded that although much has been achieved, a number of further measures are still needed. This is also seen in the statement of the Eurogroup in inclusive format on the future of the Capital Markets Union. It calls on the European Commission to act again and addressed the Member States so that they implement the already adopted legal acts. In addition, there is also a paper with 20 recommendations from the European Securities and Markets Authority (ESMA).

Capital Markets Union. The new old priority of EU policy
The CMU is a key topic of current EU economic policy, not least because of the enormous investment needs of the EU. In its conclusions, the European Council in June 2024 “(…) reiterates the sense of urgency and the importance of the Capital Markets Union in mobilising the substantial amount of private investment needed to meet the challenges ahead”. Already in April 2024, the Letta report entitled “Much more than a Market” dedicated a chapter to the creation of a Savings and Investments Union. Former Italian Prime Minister Enrico Letta said: "If we don’t find a way to use private money to finance the green transition and our security needs. It will be very complicated to find a solution based only on public money." The Letta report again proposes many initiatives, such as an EU-wide long-term savings product in the context of personal pensions, the adjustment of regulatory frameworks for large insurance groups to unlock additional capital, a EU-wide scheme of guarantees to support bank landing to green investment, the renewed revision of the securitisation framework, the promotion of comprehensive financial market supervision, tax incentives to unlock investments, to establish an EU safe asset and to advance the implementation of the digital euro.

Capital Markets Union viewed from different angles
An event entitled ‘From Capital Markets Union to Savings and Investments Union’ took place at the European Economic and Social Committee (EESC) on 27 June 2024. The speakers looked at the topic from different perspectives. It was shown that the market capitalisation of listed companies in the US is five times higher than in the EU, but this is mainly due to the five to seven largest companies. Particularly on the part of financial investors, it was demanded that the focus of the Savings and Investment Union should be on strengthening the competitiveness of the EU financial industry.

Companies that would bring innovation and growth often cannot have enough assets and collateral to get bank loans. However, the extent to which this can be offset by an even ‘completed’ CMU has been questioned. The EU's steps to improve access to data and information on sustainability are an important precondition for encouraging for example green investment. Precisely because there is often an increased risk here, however, appropriate returns are needed to attract private funds. These returns are often not given. Measures to deepen the CMU might generate an additional 300 to 600 billion euros per year. However, on the other hand there are annual financing needs ranging from €800 billion to €1.6 trillion in the climate sector and several hundred billion euros in strategic investment and defence.

The further deepening of the CMU must now focus on areas that concern the self-interests of the member states and national legal systems. For example, centralising supervision at EU level has always been difficult, as it involves the transfer of sovereignty. The same is true for the common issuance of debt. Furthermore, it was demanded that there should be no downward harmonisation of capital market regulation. Social dialogue must be taken into account so that the CMU benefits everyone and leads to the creation of decent work.

AK criticizes several proposals to deepen the Capital Markets Union
Tailored forms of financing can be needed in the high-tech sector and the centralisation and harmonisation of capital markets seems sensible here. However, this must be accompanied by increased accountability to democratically mandated EU institutions. Measures that "motivate" savers to make high-risk investments and pension products must be viewed highly critically. Public pension schemes with pay-as-you-go schemes have proven to be a stabiliser in crises and should take precedence. The acceleration of securitisation, which contributed significantly to the financial crisis, is also highly problematic. Finally, it has been shown that an unstable financial sector has serious consequences for workers, consumers, businesses and the state. This insight must be brought to the fore in the deepening of the Capital Markets Union. Gaps to circumvent regulations need to be closed. The protective interests of private retail investors and employees must by no means be subordinated to the interests of companies to raise funds. If you want to implement a fair ecological transition in the interests of workers, huge public investment will be the way to go.

Further Information:
AK EUROPA: Letta report on the future of the Single Market
AK EUROPA: Reset Finance. A financial system that works for everyone! 
Enrico Letta: Much more than a market
EWSA: From Capital Markets Union to a Savings and Investments Union