Europe’s Untapped Capital Market - Rethinking Financial Integration After the Crisis

The quality of financial integration is one of Europe’s principal concerns in the aftermath of the great crisis. The lack of risk sharing lies at the heart of the financial instability produced by the rapid retrenchment of capital flows within national boundaries. The limited cross-border banking and capital markets activity is unable to provide investors with the necessary risk diversification to allow economies to withstand asymmetric shocks. This book builds on a year-long discussion with a group of academics, policy-makers and industry experts to provide a long-term contribution to the Capital Markets Union project, launched by the European Commission in 2015. It identifies 36 cross-border barriers to capital markets integration and provides an organic plan, consisting of 33 policy recommendations, to relaunch EU financial integration. These aim to improve the key components of cross-border capital market transactions: price discovery, execution and enforcement. It also provides a comprehensive overview of the current structure and the state of integration of Europe’s capital markets.

Foreword / Preface / Members of the European Capital Markets Expert Group (ECMEG) / Executive Summary / Introduction / 1. A Brief History of EU Policies for Financial Integration / 2. Does Europe Need More Capital Market Integration? / 3. European Financial Market Structure and Integration in the CMU Era / 4. A Single Market for Capital in Europe: Designing an Action Plan / References / Annex 1: Matching Objectives and Proposal of the CMU Action Plan / Annex 2: Task Force Members and Observers / Annex 3: List of Abbreviations