The upturning of the geopolitical world order in the aftermath of the pandemic, Russia’s in-vasion of Ukraine and the rise of Donald Trump has awoken the EU to the need for an economic transformation to avoid getting left behind by the US and China.
The realisation that the Capital Markets Union could be a way to mobilise the EU’s private savings to fund this overhaul has put the initiative at the centre of the EU’s agenda following a decade of very limited progress. ECB President Christine Lagarde has called for the creation of a Euro-pean version of the US Securities and Exchange Commission to get things moving, while the recent Letta report on the European Single Market makes the initiative one of its central planks, with a suggested rebranding as a Savings and Investments Union. As support has coalesced behind the CMU, the European Council of EU leaders in April directed the European Commission to work on proposals for advancing the CMU. However, the fallout from recent elections throws French leadership of the project into question, potentially creating a void that someone would have to fill for the CMU to advance. Even substantial progress in ad-vancing the CMU would not necessarily guarantee the mobilisation of private capital to fund the EU’s strategic goals, since the incomplete Banking Union and households’ cultural prefer-ences are also obstacles to overcome. However, even if the pursuit the CMU does not guarantee a successful pursuit of those goals, it may nevertheless lead to the transformation of the EU’s capital markets landscape.
Read the report here: GLOBAL AND REGIONAL FOCUS NOTE 18 JULY 2024
