Towards Variable Union in Europe's Capital Markets

In the past seven years, the European Capital Markets Institute (ECMI) has brought together academics, policymakers and industry representatives to take stock of the progress made so far in building a genuine European capital market. At the Annual Conference organised in November 2017, the participants identified the challenges and opportunities that lie ahead but also assessed whether more ambition is required. In particular, they shared their views on long-term investment, supervisory architecture, derivatives markets and fintech. The key message was that the capital markets union (CMU) must go beyond the actions set for end-2019. CMU is a long-term project that requires the support of multiple stakeholders from both the public and private sectors. Capital markets, in particular equity and long-term institutional investors, are best suited to finance real assets in the economy. There are undoubtedly areas that should be brought within the remit of ESMA, but achieving supervisory convergence will be the main objective where this is neither possible nor necessary. Brexit-driven relocation might lead to a more balanced landscape of the euro-denominated clearing activities in Europe. With respect to the potential of distributed ledger technology, it is essential to establish a critical mass of market players and interoperability with the existing infrastructures.