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From the Investment Plan to the Capital Markets Union: European Financial Structure and Cross Border Risk-sharing

Author

Listed:
  • Jesper Berg
  • Laurent Clerc
  • Olivier Garnier
  • Erik Nielsen
  • Natacha Valla

Abstract

Following the financial crisis, Europe is suffering from a significant investment deficit. It has long been appreciated that growth will suffer in Europe over the medium term unless the shortfall in investment is addressed, but considerable disagreement on how to achieve this, and in particular on the role public investment should play. In addition, mobilising finance to increase investment in Europe requires both a good understanding of Europe’s financial structure, and a fine knowledge of the composition of cross-border financial imbalances. In this paper, we take stock of the state of play regarding investment, financial structures and cross-border imbalances. We contend that any initiative meant to provide a sound basis for long-term, stable investment flows has to acknowledge the fact that Europe is engaged in a debt-deflation deleveraging phase, with accompanying disintermediation, the full extent of which is as yet unknown. We then draw policy conclusions that would allow for a sustainable investment revival, insisting on the need to have an overall strategic vision for the main EU policy initiatives - the Investment Plan, the Capital Markets Union, and the €1,100bn new money issued by the ECB within its Large Asset Purchase Programme.

Suggested Citation

  • Jesper Berg & Laurent Clerc & Olivier Garnier & Erik Nielsen & Natacha Valla, 2015. "From the Investment Plan to the Capital Markets Union: European Financial Structure and Cross Border Risk-sharing," Working Papers 2015-34, CEPII research center.
    • Handle: RePEc:cii:cepidt:2015-34
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    References listed on IDEAS

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    4. Miguel A. Segoviano & Bradley Jones & Peter Lindner & Johannes Blankenheim, 2015. "Securitization: The Road Ahead," IMF Staff Discussion Notes 2015/001, International Monetary Fund.
    5. Natacha Valla & Thomas Brand & Sébastien Doisy, 2014. "A New Architecture for Public Investment in Europe," CEPII Policy Brief 2014-04, CEPII research center.
    6. Jesper Berg & Christian Sinding Bentzen, 2014. "Mirror, Mirror, who is the Fairest of Them All? Reflections on the Design of and Risk Distribution in the Mortgage Systems of Denmark and The UK," National Institute Economic Review, National Institute of Economic and Social Research, vol. 230(1), pages 58-75, November.
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    Cited by:

    1. Natacha Valla & Jesper Berg & Laurent Clerc & Olivier Garnier & Erik Nielsen, 2015. "A holistic approach to ECB asset purchases, the Investment Plan and CMU," CEPII Policy Brief 2015-07, CEPII research center.

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    More about this item

    Keywords

    ECB; Capital Markets Union; Policy Srategy; Securitization; Covered Bonds; Financial Structure; Quantitative Easing; Cross-border Capital Flows;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization; Treasury Policy

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