Concrete Steps Toward A CMU

The European Commission cites four concrete steps for kick-starting the Capital Market Union

The first: a plan to reduce capital constraints for insurance companies as a way to free up funds for infrastructure investments. The idea is to assess the prudential treatment of private equity and privately placed debt under Solvency II.

The second: to revitalize European securitization markets with the launch of a simple, transparent and standardized securitization called STS. This will allow lower capital requirements for banks and bring, according to EU commissioner Jonathan Hill, around
€100 billion ($113 billion) in additional investments.

The third: to make lighter and cheaper the prospectus containing mandatory information that companies have to publish when they want to list on a stock exchange. A proposal on the detail is planned by year-end.

The fourth: a package to better support venture capital that will start with a change in the current regulation.

In addition to these measures, the EU committed itself to study all regulatory measures that have been imposed on financial intermediaries since the 2007–2008 financial crisis to check if they produced any unintended consequences that are limiting their ability to fuel credit to the real economy. The European Union will also be launching a green paper to suggest alternatives for those who save for retirement or seek health insurance.