France wants EU’s Capital Markets Union to back ‘European champions’

Jonathan Hill

Jonathan Hill launches Green Paper consultation on the Capital Markets Union (CMU), Brussels, 18 February 2015 [European Commission]

European Union plans to make its capital markets more efficient at raising funds for the economy could also help deepen eurozone monetary integration and create a new breed of European industrial champions, France has said.

A public consultation on EU plans for a Capital Markets Union (CMU) has just ended and the bloc’s financial services chief Jonathan Hill is due to respond in September on what will be his priority measures.

The aim of CMU, a core plank of Brussels’ jobs and growth agenda, is to tear down barriers that make it cumbersome and expensive for companies to tap investors for cash.

Unlike in the United States, where companies rely mainly on shares or bonds to raise money, in Europe, small and medium-sized firms primarily borrow from their own countries’ banks.

France said in its response that CMU will help deepen integration in the wider EU and, in particular, in the euro zone where it would help in the transmission of monetary policy set by the European Central Bank.

“In this regard, the CMU should be seen as an indispensable aid to putting in place a fully functioning economic and monetary union,” the response stated.

The CMU should include an industrial policy dimension to create “European champions” in new, hitherto unregulated ways of financing companies while making sure consumers are protected.

In Britain, whose government is keen for the CMU to focus on pragmatic measures to improve the EU’s single market, such views may smack of old-style French “dirigisme” or state-led economic policy .

Britain is holding an in/out referendum on membership of the 28-country bloc and is keen to show that it still has a strong say over financial rulemaking that affects the City of London.

France said the creation of a CMU can strengthen Europe’s influence globally to require non-EU countries to be regulated and open to the same extent if they want access to the European market.

Pan-EU watchdogs should use their powers “to the full” to harmonise financial supervision across all EU markets.

“What’s the point of having a single set of rules if they are applied differently by supervisors?” Inconsistent application of rules effectively amounts to a race between financial centres, it added.

France said the creation of a new EU accounting and auditing body should be “seriously considered”, throwing its weight behind an idea first floated among EU finance ministers by Brussels think tank Bruegel last month.


The European Commission opened a public consultation in February on its plans for a pan-European capital market.

The proposed Capital Markets Union (CMU) envisages creating a new super-regulator for capital markets, despite opposition from Britain, France and Germany.

A concrete proposal to be published at the end of the summer, is designed to make it easier to raise funds for the bloc's flagging economy through markets, rather than banks.

The consultation on CMU also considers harmonising the market for covered bonds, securitisation and creating a single accounting standard for smaller companies.

>> Read: European Commission mulls super-regulator for capital markets

Officials say a capital markets union would also mean the EU moving beyond public subsidies and loans to coordinate financing for companies and infrastructure through project bonds, public-private partnerships and infrastructure funds.

Jonathan Hill, the EU's new financial services commissioner, said his first steps would be to push a proposal for European long-term investment funds for infrastructure and businesses, to develop a framework for securitisation and to carry out analysis of private placements - the sale of securities to a small number of chosen institutional investors.


  • Feb. 2015: Commission publishes green paper and launch public consultation on Capital Markets Union (CMU)
  • 8 June 2015: Commission hosts public hearing on the “Next steps to build a Capital Markets Union”
  • By summer 2015: Jonathan Hill expected to lay out "Action Plan" on CMU for the next five years
  • 2020: End of CMU action plan

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