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An EU Capital Markets Union offers a 'real opportunity across Europe'

An EU capital markets union (CMU) has the potential to be the driving force for growth across the continent, according to the UK’s City Minister, Andrea Leadsom MP.

Craig Calhoun Steffen Kampeter Andrea LeadsomThe Minister made her comments during a discussion with the German Parliamentary State Secretary for Finance, Steffen Kampeter, at a conference organised by LSE’s Systemic Risk Centre and Goldman Sachs on Monday 23rd February.

In line with many of the conference contributors, she asserted that creating a single capital markets union would make it easier for small and medium enterprises to access innovative forms of financing, such as private placements or bonds, and mean the union is a “framework for jobs and prosperity”. But she added this proposed system would be an opportunity to “expand what we have” rather than replacing more traditional bank-based financing of firms.

Agreeing with much of what Ms Leadsom said, Steffen Kampeter added that the EU needs a functioning CMU to foster growth and employment and that such a union would be a big chance for deepening European integration.

The timely conference, which followed the release of the EU Commission’s Green Paper on CMU on 18th February, brought together leaders in banking, regulation, government and academia to discuss the potential benefits of a union and the obstacles which may impede its creation.

Jon DanielssonEchoing a recent article he co-authored at VoxEU, Dr Jon Danielsson, Director of the Systemic Risk Centre at LSE, argued that in order for a CMU to succeed, EU and national authorities will need to “embrace disruptive technologies" and adapt their regulatory systems.

In the closing session, LSE’s Professor Paul de Grauwe sounded a note of caution, suggesting a CMU could lead to greater exposure to systemic risk in the EU economy without adequate regulatory oversight. Without trust, capital markets could be a huge source of instability, he argued.

Videos of the panel sessions and interviews with contributing academics are available to view here: Dialogue on creating an EU Capital Markets Union

More information

Full details about the conference sessions are available here: Dialogue on Creating an EU Capital Markets Union

24 February 2015