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BackThis week, the British EU Commissioner Jonathan Hill presented a core project of the Juncker Commission: the Capital Markets Union. First and foremost this shall assist SMEs with regard to financing as it is still difficult in many European countries to get a loan. This week, the European Commission has initiated three consultations with regard to the Capital Markets Union. These concern the Green Paper with 32 proposals, the revision of the Prospectus Directive and a new Directive on Securitisations.
The entire project would be a continuation of the Commission‘s investment offensive as first and foremost SMEs should benefit from the simplification of cross-border capital market transactions. Infrastructure investments shall also be made easier by a Europe-wide Capital market. This should boost the economy and create jobs.
The Commission emphasised that in Europe only 25 % of companies’ financing came from the capital market and the rest from banks, which currently were rather reluctant to lend. The proportion was exactly the reverse in the USA. It would be the target of the Capital Markets Union to have overall more investment capital available. However, the important role of banks, which are also active on capital markets, should not be called into question.
This was a long-term project, which according to a Commission source should not involve too many new legislative initiatives. Instead one would rely on non-legislative measures such as self-regulation or the more effective enforcement of existing laws. New institutions, such as those in the Banking Union had not been planned; this was a bottom-up approach.
Even though comparisons with the USA were frequently cited, it was clear that the transatlantic degree of market integration could not be achieved within five years. Apart from that, there were many aspects where the United States could not be hailed as an example, emphasised Hill, who added that one surely would not repeat the mistakes, which had led to the subprime crisis.
The Prospectus Directive shall be “debureaucratised”, which would enable smaller companies to become active on capital markets. Until now, SMEs have been put off by the high and thereby expensive requirements.
The new law on securitisations is part of the focus of harmonisation in the Green Paper, which also addresses Europe-wide uniform rules on bonds, private placement and small investors. Best practice examples would exist for all these types of financing, which the Commission would take into account. In any case, harmonisations had to enable more simplicity and transparency to allow as many market participants as possible access to these products. The negative role securitisations have played in the crisis has allegedly not been forgotten.
According to the Commission source, it would certainly be necessary to also address subjects such as tax, insolvency and securities law at European level in the distant future.
In cooperation with their partners (e.g. Finance Watch), AK und ÖGB will pay close attention to the planned initiatives of the Commission concerning the Capital Markets Union. Even though the project is only in its initial phase, there are doubts whether a harmonised capital market can help to create sustainable jobs. For SMEs, banks – as also hinted at by the Commission source – will continue to be the first point of contact. The suspicion that Europe-wide capital markets will above all benefit the finance industry, is not unfounded. The latter will know how to accommodate its interests in the planned “self-regulating” bottom-up process. The planned revival of securitisations, which are partly responsible for the crisis, has now also come under the critical view of many.
The entire project would be a continuation of the Commission‘s investment offensive as first and foremost SMEs should benefit from the simplification of cross-border capital market transactions. Infrastructure investments shall also be made easier by a Europe-wide Capital market. This should boost the economy and create jobs.
The Commission emphasised that in Europe only 25 % of companies’ financing came from the capital market and the rest from banks, which currently were rather reluctant to lend. The proportion was exactly the reverse in the USA. It would be the target of the Capital Markets Union to have overall more investment capital available. However, the important role of banks, which are also active on capital markets, should not be called into question.
This was a long-term project, which according to a Commission source should not involve too many new legislative initiatives. Instead one would rely on non-legislative measures such as self-regulation or the more effective enforcement of existing laws. New institutions, such as those in the Banking Union had not been planned; this was a bottom-up approach.
Even though comparisons with the USA were frequently cited, it was clear that the transatlantic degree of market integration could not be achieved within five years. Apart from that, there were many aspects where the United States could not be hailed as an example, emphasised Hill, who added that one surely would not repeat the mistakes, which had led to the subprime crisis.
The Prospectus Directive shall be “debureaucratised”, which would enable smaller companies to become active on capital markets. Until now, SMEs have been put off by the high and thereby expensive requirements.
The new law on securitisations is part of the focus of harmonisation in the Green Paper, which also addresses Europe-wide uniform rules on bonds, private placement and small investors. Best practice examples would exist for all these types of financing, which the Commission would take into account. In any case, harmonisations had to enable more simplicity and transparency to allow as many market participants as possible access to these products. The negative role securitisations have played in the crisis has allegedly not been forgotten.
According to the Commission source, it would certainly be necessary to also address subjects such as tax, insolvency and securities law at European level in the distant future.
In cooperation with their partners (e.g. Finance Watch), AK und ÖGB will pay close attention to the planned initiatives of the Commission concerning the Capital Markets Union. Even though the project is only in its initial phase, there are doubts whether a harmonised capital market can help to create sustainable jobs. For SMEs, banks – as also hinted at by the Commission source – will continue to be the first point of contact. The suspicion that Europe-wide capital markets will above all benefit the finance industry, is not unfounded. The latter will know how to accommodate its interests in the planned “self-regulating” bottom-up process. The planned revival of securitisations, which are partly responsible for the crisis, has now also come under the critical view of many.