ECB calls for further financial integration following 'disappointing progress' on the issue

EU action plan to create single market for capital across member states with the aim of allowing money to flow more easily across the bloc was adopted  in 2015 but progress has been slow

The ECB said the new EU Parliament should focus on policy to further integrate financial markets across the bloc. 

A report by the European Central Bank (ECB) has called for urgent policy action by the new European Parliament to further integrate financial markets across the bloc following “disappointing progress” on the matter since the start of the monetary union.

The ECB said a better integrated eurozone internal market for financial services was necessary to secure European economic and financial resilience following years of significant economic shocks and international conflicts experienced.

The report said advancing the integration of the financial markets of the EU and implementing the open strategic autonomy agenda at the EU level “are vital steps for strengthening and securing economic and financial resilience”.

The EU’s capital markets union (CMU) is a plan to create a single market for capital across member states with the aim of allowing money to flow more easily across the bloc so it can benefit consumers, investors, and companies, regardless of where they are located.

It was envisioned the CMU would offer greater choice of funding at lower costs and provide small and medium-sized businesses with the financing they need. The EU Commission first adopted the CMU action plan in September 2015, however, progress on it has been slow.

In the report, the ECB said progress on integrating these markets had been “disappointing overall”.

“Despite significant legislative efforts over the last decade, cross-border financial market activities and risk sharing have not grown, and it appears that a piecemeal approach has been taken towards many of the reform efforts,” it said.

In advance of the newly elected MEPs taking their seats next month, the ECB’s report said policy should now focus on developing a strategy as well as creating an environment for mobilising savings and funding.

It suggested a number of policy areas which are “crucial” for bolstering the integration of Europe’s financial markets.

These include: integrating the EU capital market regulatory and supervisory architecture; removing barriers to cross-border crisis management and facilitating cross-border banking; harmonising the definition of key concepts in EU regulatory frameworks; and reviving securitisation for the capital markets union.