France proposes starting EU Capital Markets Union with small group of countries

By Thomson Reuters Feb 23, 2024 | 4:17 AM

By Jan Strupczewski

GHENT, Belgium (Reuters) – France proposed on Friday that European Union member states which back the creation of Capital Markets Union should initially go it alone to accelerate a project that has dragged on for a decade.

Speaking before a meeting of EU finance ministers in the Belgian city of Ghent, French Finance Minister Bruno le Maire said the CMU was crucial to mobilise private cash for the investment needed in artificial intelligence and the transition to a climate-neutral economy.

France and Germany estimate that the green and digital overhaul of the European economy requires some 500 billion euros ($541 billion) in additional private funding each year — money that can flow only if it is easier to invest in now highly fragmented European capital markets.

Progress has been slow because it is hard to find a common denominator among the many different financial systems and legal cultures in the 27 countries in the EU, officials say.

“I have been trying for more than six years to build a capital markets union. My conclusion is that starting with the 27 member states is a non-starter,” le Maire told reporters.

“We want to launch today in Ghent a capital markets union on a voluntary basis. If we have at the beginning 3-4 countries joining that initiative … it will be a good basis,” he said.

EU finance ministers were expected to issue a statement on the need to accelerate work on the CMU, making it a priority for the next executive European Commission, which will take office at the end of the year.

Le Maire said this was not enough.

“The statement today is not enough. And I am fed up with discussions. I am fed up with empty statements. Do you really think that China and the United States will be impressed by our statements? We need decisions,” he said.

The Capital Markets Union project, launched in 2014, is intended to make it easier for private capital to invest across borders in the EU by unifying national rules on bankruptcies, prospectuses, taxation of capital gains, listing requirements, or different tax treatment of debt and equity, among others.

Le Maire said the initiative he wanted to launch on Friday would entail voluntary submission to single EU supervision of banks, stock exchanges and asset management, the participation in setting up a European savings product, the details of which would still be decided and voluntary participation in the same securitisation rules. Le Maire gave no other details.

German Finance minister Christian Lindner said he also hoped for faster progress but still wanted all 27 EU countries involved.

“Bilateral initiatives or in smaller circles are possible, it’s not excluded, but the goal must be for all to go forward together,” Lindner said on entering the talks.

($1 = 0.9240 euros)

(Additional reporting by Piotr Lipinski and Christian Kraemer, Editing by Timothy Heritage)