EU finance chief to announce capital market plan in 2015

Thu Nov 6, 2014 10:13am EST
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By Robin Emmott

BRUSSELS (Reuters) - The EU's new financial services chief will set out his plans for a pan-European capital market by the middle of next year, aiming to reduce companies' reliance on banks and help revive the bloc's fragile economy.

Jonathan Hill, the European Commissioner for financial services, said on Thursday he was seeking to create an integrated market for raising money through bonds, shares and other financial instruments over the next five years and would develop a plan by next summer following a consultation of banks, lawmakers and non-governmental organizations (NGOs).

"We still do not have a fully functioning single market for capital," Hill told a conference of EU officials and business leaders. "I will be bringing forward proposals to deliver a capital markets union; a project for all 28 EU Member States."

Channeling more money into small companies is seen as crucial for Europe's efforts to avoid economic stagnation because small and medium enterprises provide two out of every three private-sector jobs in the European Union.

Following the worst financial crisis in a generation, banks are reducing riskier lending to build up capital buffers, a problem in a continent where banks account for 80 percent of corporate loans.

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.

Jeroen Dijsselbloem, who chairs the meetings of euro zone finance ministers, said the capital markets union would need a single European supervisor and the creation of a pan-European insolvency law that would replace national laws.

"This is crucial to create the market that we so badly need in parallel to the bank lending system," he said.   Continued...

The European Commission's new President Jean-Claude Juncker greets European Financial Stability, Financial Services and Capital Markets Commissioner Jonathan Hill (R) during the first official meeting of the EU's executive body at the EU Commission headquarters in Brussels November 5, 2014. REUTERS/Francois Lenoir