Capital Markets Union: What Will It Take to Be a Sucess

The Capital Markets Union (CMU) was launched in July 2014 by the
European Commission as a project to harmonise the rules applicable to
the financial sector. The CMU is a continuation of the De Larosière report
of February 2009, which advocated “central regulation - local supervision”
for the financial industry (banking, securities, insurance). This approach
relied on the adoption of a Single Rule Book (SRB) to ensure that the same
rules are applicable throughout the single market and to the creation of a
European Securities and Markets Authority (ESMA). Critics have recently
expressed the view that the SRB has not led to a sufficient flow of cross-
border transactions. It is true that the current situation does not always
ensure a completely harmonised SRB and supervisory convergence.
However, centralisation of supervision, as advocated, will not, per se, make
the CMU a success. It might not even be effective. Rather, incremental
technical changes can achieve a much stronger single rulebook and
supervisory level-playing field. Therefore, the goal of the new legislative
action on the CMU should be to adopt targeted technical changes to
increase cross-border activities.