Jan Krahnen: "The new plans for Europe's Capital Market Union miss out on determination"

SAFE Director welcomes the European Commission’s new Capital Markets Union (CMU) action plan as helpful but lukewarm. It lacks the long-awaited push for a supranational market supervisor in the interest of investor protection.

To reboot the CMU project, the European Commission published a new action plan today. This plan sets out to 16 specific actions to move closer to “a genuine Capital Markets Union in Europe”. Jan Krahnen, Director of the Leibniz Institute for Financial Research SAFE, comments on the matter:

“While most of the Commission’s planned actions can make the capital market development in Europe more efficient, and more supportive with respect to financial stability and economic growth, it is unlikely that these policy measures will trigger the emergence of a stronger capital market culture in Europe and unify capital markets in Europe. A move towards a more integrated and effective European capital market requires profound policies that change the fundamentals of institutional development in financial markets.

One particularly important policy in the light of a looming no-deal Brexit, is the introduction of a single European market supervisor that ensures common and consistent regulatory and supervisory practices across member states – thereby substituting for the implicit leadership role London’s supervisor has held for a long time. The global investment community will never perceive European capital markets as one large capital market if there are 27 national supervisors in charge.

No less important is that this supranational authority is not only a rule-setting body, as the European Securities and Markets Authority ESMA is today, but also has a strong mandate to integrate national enforcement powers and ensure investor protection. The Securities and Exchange Commission in the US can serve as a role model for Europe.”


SAFE Policy Letter No. 85 on „Priorities for the CMU agenda“