The Political Economy of European Capital Markets Union

In September 2015 the European Commission put forward an Action Plan for Capital Markets Union (CMU) and two legislative proposals concerning securitization. Further legislative activity was to follow. The ‘Five Presidents Report’ of June 2015 had presented CMU as necessary to complement Banking Union and ultimately to complete Economic and Monetary Union (EMU). CMU was also considered by the Commission(2015a) as the ‘new frontier of Europe’s single market’ with the aim of reducing fragmentation in financial markets, diversifying financing sources, strengthening cross-border capital flows and improving access to finance for businesses, particularly Small and Medium Enterprises (SMEs). More immediately, the CMU initiative was to encourage bank and other corporate securitization in the European Union, the level of which had plummeted since 2007 with the outbreak of the international financial crisis. CMU was also intended to boost the global competitiveness of European financial centres which over the previous decade had lost ground in global rankings (Deutsche Bank, 2015; FESE, 2015).