Events

Britain’s departure from the EU poses challenges for European capital markets with far-reaching implications. Perhaps the most important is the call for full integration and the need to create a single unified capital market. The CMU project has been focused on the development of capital markets, mainly at national level, as alternatives to banking, and less on actions that will remove cross-border obstacles (e.g. harmonization of insolvency laws, taxation and company laws).

Three key building blocks, 6+1 key areas of priority, 33+9 policy actions. Has the CMU project been successful in delivering deeper and more integrated capital markets in the EU? The opinions on the progress (or lack thereof) are certainly mixed. However, CMU remains more relevant than ever for EU-27. BUT it needs re-branding, re-focusing, new energy and momentum, as well as political support.

In the year since its introduction, the second Markets in Financial Instruments Directive (MiFID II) has triggered structural changes and operational challenges in EU markets. On the structural side, there are now many more Organised Trading Facilities (OTFs) and Systematic Internalisers (SIs); some business such as in commodity derivative contracts has relocated from EU to US venues; and the market’s microstructure is altering (e.g. periodic auction and RFQ systems). 

Three key building blocks, 6+1 key areas of priority, 33+9 policy actions. Has the CMU project been successful in delivering deeper and more integrated capital markets in the EU? The opinions on the progress (or lack thereof) are certainly mixed. However, CMU remains more relevant than ever for EU-27. BUT it needs re-branding, re-focusing, new energy and momentum, as well as political support.

The European Union’s expansions of 2004 and 2007 brought about extension of the single market for financial services to the countries of the Central and Eastern European Union (CEEU). As a result, the financial institutions established in the CEEU region are today subject to the same EU regulatory framework as their western European counterparts. Many also belong to the same groups that dominate the western financial landscape. This, however, did not obliterate the differences in the development of financial services and in the roles played by the financial institutions in the western and the eastern part of the EU.

Well-functioning, deeper and highly integrated European capital markets are expected to play a greater role in providing alternative corporate funding and better investment opportunities. To this end, the Capital Markets Union (CMU) project should aim beyond the actions set for end-2019, towards a revamped strategy for EU-27. This year's annual conference will contribute to the public debate about the capacity of capital markets to enable long-term value creation in the real economy, namely supporting innovative companies and sustainable economic growth.

With an outstanding volume of about €2.1 trillion, covered bonds rank high among the main funding sources for EU banks. These specialised debt securities provide banks with attractive funding for the financing of mortgages and public authorities in many EU member states. Due to overcollateralisation, covered bonds are relatively cheap and have a longer maturity. In turn, they are also an appealing investment class for risk-averse investors (including other banks), as long as the collateral is of sufficient quality and the amount is large enough.

Issuing equity or debt instruments can provide SMEs with the stable, long-term financing that bank lending typically does not.