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The free flow of capital within the EU is one of the single market's four fundamental freedoms. However, despite the removal of legal barriers to capital flow, significant technical barriers persist and the EU's capital markets remain fragmented. DefragmentatBriefing - Viewpoints on a single supervisory authority for capital markets - 05-11-2024
The free flow of capital within the EU is one of the single market's four fundamental freedoms. However, despite the removal of legal barriers to capital flow, significant technical barriers persist and the EU's capital markets remain fragmented. Defragmentation of the capital markets – also referred to as capital markets union (CMU) or savings and investment union – is essential for the conduct of EU monetary policy, a level playing field among EU companies, and optimal allocation of capital within the EU. The coexistence of diverging rules across Member States creates opacity and uncertainty, deterring EU cross-border investors. This variation is due, among other factors, to differences in interpretation of EU law, inconsistency of decisions, and varying resources employed for supervision. The resulting variation in the application and enforcement of EU laws by the respective Member States' supervisory authorities is considered a major obstacle to completion of CMU. Harmonisation of supervision is one of the objectives of the European Securities and Markets Authority (ESMA). For the EU institutions, the establishment of an EU-level supervisory authority would be yet more efficient. Some suggest that, as with the single supervision mechanism for EU banking – whereby only 'significant banks' are subject to the EU banking supervisor – the powers of an EU single supervisory authority for capital markets could be limited to prominent players such as securities markets and asset managers. ESMA could fulfil this single supervisory function, subject to changes to its mission and governance. In its previous term, the European Parliament supported the shift of supervisory powers to ESMA. In a March 2024 statement, the Council invited the European Commission to examine the targeted strengthening of EU supervisory authorities' role and governance in order to enhance convergence. Source : © European Union, 2024 - EP Read more
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