Access to finance is vital for companies and growth. For historic reasons, European businesses, and especially smaller and medium-sized businesses, are highly dependent on bank lending. Given regulatory and balance sheet pressures, bank lending will continue to be under pressure in the coming years. There is a significant risk that as economic growth picks-up banks will be unable to meet companies‟ funding requirements on the desired scale. Capital markets are fragmented and regulated differently across the EU. Some of the integration achieved has been lost due to the crisis.
As a result, while in some Member States there is a shortage of funding for productive investment, in other Member States there is abundant liquidity and a lack of assets offering adequate returns. Against this background, if Europe wants to create growth and jobs, financing sources need to be diversified and cross-border capital flows strengthened. It is therefore particularly important to create a comprehensive and well-designed Capital Markets Union which encompasses all 28 Member States and favors the development of a level playing field and allows markets to integrate.
In a comprehensive and well-designed Capital Markets Union all market participants with the same relevant characteristics should face a single set of rules, have equal access to a set of financial instruments or services, and be treated equally when they are active in the market. Therefore, it has to be clear which areas have to be included in an effective “union” and, on the other hand, which areas need to be simply better harmonized.
This will in particular help growing medium-sized firms to access finance. Deeper and more liquid markets would also act as a buffer in the face of financial turmoil and are key for reducing the cost of financing whilst encouraging cross-border trade and investment. Such a Capital Markets Union, supporting and complementing the Banking Union and the objectives of the Juncker Plan, is the true keystone of the Commission‟s strategy to strengthen Europe‟s competitiveness and to stimulate investment for the purpose of job creation over the next five years.
BUSINESSEUROPE thus welcomes the Commission consultation also because it is addressing a more balanced regulatory approach between financial stability and growth.
