The European Commission has kicked off its project to create a true single market for capital across the 28 member states in the EU.
It has launched a three-month consultation round, known as a Green Paper. The paper is intended to instigate a debate across the EU over the possible measures that will be needed to create the single market for capital. Interested parties are invited to submit their contributions by 13 May.
Following the consultation, the Commission will adopt an action plan in the summer with a view to unlocking non-bank funding to support the expansion of both start-ups and larger businesses.
The Commission’s objectives are to improve access to finance for all businesses and infrastructure projects across Europe; to help SMEs to raise finance as easily as large companies; to create a single market for capital by removing the barrier to cross-border investments; to diversify the funding of the economy; and to reduce the cost of raising capital.
According to the Green Paper, the following key principles should underpin a capital markets union: it should maximise the benefits of capital markets for the economy, growth and jobs, while removing barriers to cross-border investment within the EU; it should be built on firm foundations of financial stability; it should ensure an effective level of investor protection; and it should also help to attract investment from all over the world.
Commenting on the paper, EU Commissioner Jonathan Hill said: “Capital markets union is about unlocking liquidity that is abundant, but currently frozen, and putting it to work in support of Europe’s businesses, and particularly SMEs. The free flow of capital was one of the fundamental principles on which the EU was built. More than 50 years on from the Treaty of Rome, let us seize that opportunity to turn that vision into reality.”