Working Paper: CEPR ID: DP12761
Authors: Lubo Pstor; Franklin Allen
Abstract: In September 2015, the European Commission announced the first actions of its plan to build a Capital Markets Union in Europe. We describe the key features of the Commission’s plan and discuss the economic rationale behind it. The plan has many strengths but also some weaknesses, such as limited ambition in the supervision and enforcement of securities regulations. Other challenges to the development of European capital markets include the financial transactions tax, the low-interest-rate environment, cultural reasons, and potential political opposition.
Keywords: Capital Markets Union
JEL Codes: G18; G28; G38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Capital Markets Union (CMU) (G10) | alternative financing sources for firms (G32) |
| alternative financing sources for firms (G32) | reduced reliance on banks (G21) |
| Capital Markets Union (CMU) (G10) | economic recovery (E65) |
| Capital Markets Union (CMU) (G10) | improved investment opportunities for households (G59) |
| Capital Markets Union (CMU) (G10) | more resilient financial system (P34) |
| reduced reliance on banks (G21) | improved financial stability (G28) |