A new Vision for Europe’s capital markets

Preface  

Over decades, the European economy has been relying on traditional lending to finance businesses and savings accounts to remunerate savers.  
But times are changing. 
Demographics clearly show that pay-as-you-go pensions will increasingly need to be supplemented by life-long intelligent saving and investing.  
If low interest rates persist in the long-term, savings accounts will no longer be a mechanism to increase the value of one’s savings. This will only be achieved through a large-scale switch to equity investments.  
Financing requirements of our economy have also changed.  
Whilst debt finance from banks remains the appropriate financing for numerous firms, many SMEs need access to the full range of funding sources, including private and public equity, to finance innovation and growth over the long-term. If finance through capital markets is not available or the terms on which it is offered are not balanced, growth for these firms, and for the wider economy, will be scaled back. It is also clear that capital markets will play a significant role in achieving sustainable finance and, ultimately, the ambitious EU climate goals. 
27 national capital markets have steadily become more integrated over the past - a project known as Capital Markets Union. However, they still do not function as one, and their main centre - London - is now outside the EU. Just as critically, many of these national markets are not as deep and liquid as they could be, and should be, to meet the challenges of coming years and decades.  
This adds urgency to the question of whether we are willing to take the necessary steps to ensure that the companies and projects that do not yet exist, find the financing that lets them grow and create jobs.  And to the question of whether we are willing to take the steps that are required so that savers can be encouraged to provide that finance through balanced, diversified investment portfolios. Providing cross-border access to simple, comparable, cost-efficient and transparent products that provide sustainable value for money is key for savings, and key for investments. 
Much has been done in recent years, but the project is by no means close to completion. There is no onesingle measure that will bring this about. Our High Level Forum will try to identify, before this summer, the next important measures that will bring down some of the barriers that inhibit our markets from growing, and growing together. 
In the past, we have heard many political leaders strongly support the Capital Markets Union. What we now need is to channel that strong political support into an agreement between competent legislators at the European and national levels on the sometimes rather arcane and technical measures that will help us grow, over time, towards a capital market of all, and for all. 
 
Thomas Wieser 
Chair of the High Level Forum 

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