The European Commission Wednesady launched the Capital Markets Union Action Plan to help build a true single market for capital across the 28 EU Member States.
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The Capital Markets Union – the flagship financial project of Jean-Claude Juncker’s Commission – is created to make Europe more resilient to financial shocks and bank failures.
Only fund managers with less than 500 million euros in assets under management can now use the EuVECA label, while bigger companies may fall under similar rules for alternative investment funds.
Europe does not have a real market in asset-backed securities.
Hill also issued a proposal on attracting finance in long-term investment projects in conjunction with the EU’s ambitious investment plan, a key policy of Commission head Jean-Claude Juncker.
The City – London’s financial center – is shaping up as critical voice in support of staying “In” the European Union ahead of the referendum on British membership in the bloc that Prime Minister David Cameron has promised to hold by 2017.
The medium-term actions include a package of venture capital measures, reviewing barriers to SMEs listing on exchanges, and work on debt-equity tax bias as part of the Common Corporate Tax Base.
“When a lot of this system was put in place … the thing at the forefront of people’s minds was the financial crisis”, Hill told POLITICO. “A low-growth environment is not just a threat to financial stability, it’s a broader threat”.
Other proposals, like harmonizing European insolvency rules in to reduce anxiety levels for cross-border investors, will take years.
“Dublin is well-poised to get the benefits from the Capital Markets Union”.
European companies tap banks for up to 80 % of the funds they need to grow and Brussels hopes its planned reforms will switch a few of this heavy lifting to markets.
The commission believes that the lack of options has also siphoned off venture capital and denied Europe its own Silicon Valley capable of creating tech giants to compete with Facebook (NasdaqGS: FB – news) or Google (Xetra: A0B7FY – news).
Burkhard Balz, a senior German member of the European Parliament, said banks should continue to play a central role in funding smaller companies and called on Hill to act faster.
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European Commission Vice-President Jyrki Katainen, responsible for Jobs, Growth, Investment and Competitiveness said: “The most important part of the Investment Plan for Europe is removing obstacles to investment by deepening the single market”.
