The EU will put in place its “capital markets union” by 2019, starting with encouraging direct investment in businesses, an EU document shows.
The document sets out a timetable for the first time on a core policy plank of the Europ-ean Commission to help revive the bloc’s flagging economy.
Harmonising rules for capital markets to increase the trade in stocks, bonds and other securities is an important goal for the EU. Many countries have historically relied more on bank loans than on traded securities to fund their businesses, which can make them vulnerable to shocks to the banking sector. On February 18 the EU’s executive Commission is due to publish three papers to kick off its plans.
Sceptics say a fully seamless union of EU capital markets is impossible to achieve. Persuading member states to harmonise their tax and insolvency laws would be politically impossible.
Britain, supervising the EU’s biggest capital market in London, has made it clear it will not hand over full supervision of the industryto Brussels. But Brussels believes there are a number of important steps it can take to boost investment and make the continent less vulnerable to shocks to its banking sector.
A Green Paper will set out several short-term initiatives for coming months, such as making credit information on smaller companies more easily available for investors to see.
A second paper will outline proposals to encourage high-quality securitisation of debt based on pooled loans, making it easier for banks to free up their balance sheets for more lending, the document said.
A third paper will look at how EU rules on prospectuses published by companies to solicit funds will be reviewed to make it easier for smaller companies to raise capital on markets.
An action plan will be published in the second or third quarter of this year.
The Commission will also “work with the industry to develop a pan-European private placement regime to encourage direct investment into businesses,” said the document co-written by Commission vice-president Jyrki Katainen.