Delivering on the CAPITAL MARKETS UNION #CMU | #InvestEU

WHAT IS THE CAPITAL MARKETS UNION?

The Capital Markets Union aims to get money - investments and savings - to flow across the EU so that it can benefit consumers, investors and . It is part of the ’s ambition to sustain growth in Europe. The Capital Markets Union aims to break down barriers that block cross-border investments in the EU and make it easier for companies and infrastructure projects to get the finance they need, regardless of where they are located. It also sets out to foster sustainable finance by directing investment to environmentally friendly projects. Deep and well-integrated capital markets are complementary to a functioning Banking Union and are beneficial to the area and beyond.

WHAT ARE THE CURRENT ISSUES?

Start-ups and small High fixed costs Investors EU house- European businesses and medium-sized of up to 15% of face many holds save highly depend on banks enterprises need more the amount raised barriers heavily, but for their financing (50% funding for innovation makes access when do not make of total financing), with and growth (market- to stockmarkets investing the most of few alternative fund based sources of finance especially costly for in other EU their savings sources currently less than 15%) small businesses countries

“Today's proposals are part of a broader strategy to strengthen capital markets and encourage investments in the EU. To have a genuine Capital Markets Union in Europe by 2019, we need to advance in three directions: European labels and passports for financial products, harmonised and simplified rules to deepen capital markets and more consistent and efficient supervision.”

VALDIS DOMBROVSKIS Vice-President in charge of Financial Stability, Financial Services and Capital Markets Union 12 legislative 3 have been agreed on by the and the initiatives have Council of the . 12 been presented by the Juncker Commission. legislative initiatives are still on the table which the 9 European Parliament and the Council need to adopt.

WHO BENEFITS FROM THE CAPITAL MARKETS UNION?

Citizens Businesses Investors Banks

Consumers: Greater Start-ups and smaller More long-term Healthier variety and more companies: Access to investment balance transparent non-bank financing, opportunities sheets investment products such as to choose from and

Savers: Getting the most Small and medium-sized Fewer barriers when More lending out of long-term savings firms: Easier and cheaper investing beyond opportunities to finance retirement access to public markets national borders

WHAT HAS THE JUNCKER COMMISSION DELIVERED SO FAR?

Improve banks’ ability Stimulating venture Facilitating market More options when to lend capital and social access for investors saving for retirement investments EU rules on securitisation The EU has agreed on The proposed Pan- help banks and other Small and growing a new set of rules that European Personal institutions package companies and social support companies Pensions Product into securities, enterprises will enjoy raising money on capital is designed to give which are then sold to better access to finance, markets to invest and European consumers investors. This way banks thanks to revamped grow (review of the EU more choice when transfer the risk of some EU rules on venture rules on prospectuses). saving for retirement loans to other banks or capital and social This will also help as it would create a long-term investors such entrepreneurship funds. investors to make better new class of EU-wide as insurance companies and more informed pension products. and managers. decisions. THREE PILLARS OF THE CAPITAL MARKETS UNION

CAPITAL MARKETS UNION

Making the most of Supporting the Single Market businesses and A more efficient for consumers and entrepreneurs supervision of EU investors through through clearer and capital markets new European simpler rules products

NEW BUILDING BLOCKS FOR THE CAPITAL MARKETS UNION

Easier cross-border distribution of investment European covered bonds: A stable and cost-effective funds: Channelling private savings into source of funding for banks that helps banks to lend investments to businesses and households 99 More aligned national rules make it easier and less costly to offer investment funds in other 99 New rules will boost covered bonds in Member EU countries States where markets are less developed 99 The proposed measures will save up to €440 99 Better information and investor protection million in annual costs 99 Savings for borrowers of up to €1.9 billion a year 99 Investors benefit from greater choice and more competition between investment funds

Cross-border transactions in claims: A creditor transfers his right to claim a to another person or a bank 99 Legal certainty when national laws conflict

99 Helps companies of all sizes to obtain credit or liquidity

99 Legal certainty increases availability of credit

“We want to make it easier and cheaper for companies, especially small and medium-sized ones, to get the financing they need. A deepened single market will help companies to do that and will allow them to grow. The Commission is delivering on its commitment to put in place the building blocks of CMU. The European Parliament and Council must now do their part. The Commission stands ready to work with them to adopt all legislative proposals by 2019.”

JYRKI KATAINEN Vice-President responsible for Jobs, Growth, Investment and Competitiveness PROGRESS ON CMU

MEASURE DESCRIPTION European of the Commission Parliament European Union New rules that will broaden investment opportunities Rules for simple, transparent and boost lending to Europe’s households and n n n and standardised securitisation businesses. Adopted by the co-legislators in 2017. New rules that will facilitate access to financial markets for companies, particularly small and New Prospectus Regulation medium-sized enterprises. Adopted by the n n n co-legislators in 2017. Review of European Venture Capital Fund Regulation New rules to stimulate venture capital and social (EuVECA) and European Social investments in the EU. Adopted by the co-legislators n n n Entrepreneurship Funds in 2017. Regulation (EuSEF) Rules to foster insurers’ investments in infrastructure projects and corporate projects. Amendments on Solvency II adjustments infrastructure investment entered into force in 2016. n n n Amendments on infrastructure corporates entered into force in 2017. The Commission presented a legislative proposal Legislative proposal on business on preventive restructuring and second chance in n n n November 2016. The proposal is currently under negotiation in the Council. Rules to foster banks’ infrastructure investment. Capital requirement Proposed by the Commission as part of the n n n adjustments (CRR) November 2016 banking package. New rules will provide pension providers with the Commission proposal for a tools to offer a simple and innovative pan-European Pan-European Personal personal pension product. Commission presented the n n n Pension Product (PEPP) proposal in June 2017. Reform of the EU’s supervisory architecture for Commission proposal for a review stronger and more integrated financial markets. of the European Supervisory n n n Commission presented the proposal in September Authorities 2017. The Commission presented a legislative proposal for More proportionate and effective a more targeted regime to reduce risks in investment n n n rules for investment firms firms’ activities inDecember 2017. EU strategy to encourage green and sustainable Commission Action Plan on investments with regulatory measures. Presented in n - - sustainable finance March 2018. Commission Action plan on EU strategy to promote financial innovation while financial technology(FinTech) and protecting consumers and investors. New EU rules a legislative proposal for an EU to boost and facilitate cross-border activity in the n n n framework on crowdfunding and crowdfunding sector. Presented in March 2018. peer-to-peer lending New rules to promote covered bond markets as European covered bonds a source of funding for banks thereby increasing n n n lending to the economy. N Facilitate cross-border E Legislative initiative for easier EU-wide distribution of distribution of investment investment funds. n n n W funds Clear rules on ownership of Measures to enhance legal certainty in cross-border n n n securities and claims transactions in claims and securities.

n Presented/agreed n Agreement possible in 2018 if strong political commitment from all EU institutions