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22 December 2022

Capital markets union

The EU capital markets union will strengthen the European economy and promote capital market financing to complement bank-based loans. The aim is to deepen and expand the EU’s single market for capital and for financial services.

#EuroABC – Capital markets union

Deepening the capital markets union will improve access to financing on capital markets and make it easier for companies – especially small and medium-sized businesses – to borrow money. Additional aims are to promote economic growth, create jobs, and make sure the EU remains an attractive place to invest. This will support economic recovery while facilitating the development of a climate-neutral economy, and is therefore in the interest of investors, consumers and businesses.

Opportunities for businesses, investors and the environment

The free movement of capital is one of the four fundamental freedoms underpinning the EU’s single market. The capital markets union aims to remove existing barriers to capital market transactions in the Union and to give companies easier access to financing. Facilitating access to capital market financing is a key cross-cutting issue in the EU’s financial market policy.

Deepening the capital markets union will play a central role in ensuring the competitiveness of Europe’s financial sector and boosting the real economy in Europe. In Europe, small and medium-sized businesses in particular still struggle to access funding on capital markets, even though they are the ones that stand to benefit most from a broad range of cheap and flexible sources of financing that can help them get established on the market and become internationally competitive.

Capital markets in Europe are often fragmented along national borders, and financing conditions vary significantly among EU member states. As a result, shareholders, investors, and buyers of corporate debt securities conduct comparatively few transactions across national borders. This drives up financing costs and restricts the options open to investors and savers. By deepening the capital markets union, the EU and its member states aim to achieve improvements in these areas. Providing businesses with easier access to financing can promote economic growth and is especially important now as the EU works to overcome the economic effects of the Covid-19 pandemic and to accelerate the shift towards a climate-neutral economy.

The German government supports the deepening of the capital markets union and champions these efforts at the European level. Establishing a capital markets union is a long-term and large-scale project. The European Commission published an EU capital markets union action plan in September 2020 that proposes a wide range of measures, which are now being designed in detail.