The European Union is facing calls for Europe-wide capital market reform from Germany, France and the Netherlands as the threat of Brexit makes the issue an ‘urgent strategic issue’, according to a joint letter sent to the EU.
Among their requests, the countries call for a new working group to define capital market reform priorities after this week’s European Parliament elections.
The letter states: ‘It is critical for the union to bolster its capacity to finance its growth and job creation, as a necessary condition to ensure the resilience of its economy. The decisions taken in this respect will play a considerable role not only with regard to the shape of the future EU financial markets but also to the international competitiveness of the European economy as a whole.’
The letter further notes that while progress has been made on the issue in recent years, the need to further integrate national markets ‘is still very much present.’
It stresses that the UK’s decision to leave the EU only makes the capital markets reform project more important.
Through a number of initiatives, the EU has been working to break down barriers for capital flows within the EU. A range of legislation has recently been agreed, but some proposals have faced opposition from certain member states that are cautious about handing nation-based authority powers to the EU.
Work on and development of EU capital markets will also define the kind of relationship the EU will have with the City of London after Brexit.
