At this critical juncture, marked by the colossal strains brought about by the COVID-19 pandemic, rebuilding a more resilient European economy through the development of a fully-functioning integrated market for capital has become more urgent than ever. While banks have played a prominent role in mitigating the effect of the health crisis on the economy by extending large scale moratoria to support liquidity needs, it is recognised that, in current market conditions, bank finance alone is not sufficient for a strong and rapid rebound. “Without stronger market financing, economic growth will remain subdued”, commented Thomas Wiesser, Chair of the HLF. Describing the EU’s 27 capital markets as fragmented and underdeveloped, the HLF identifies a number of barriers to entry for market-based financing which, if left untackled, could restrain economic recovery. A strong bias towards debt finance rather than equity finance; constrained access to public equity; high, disincentivising costs associated with legal compliance; and the lack of easily accessible, reliable and comparable public information - these are a number of the inefficiencies of the EU ecosystem that are thought to have discouraged EU market players from taking up or scaling up financial activity, and consequently, hindered the EU capital markets from competing globally on an equal footing. Summary of recommendations To this end, in its report, the HLF puts forward a package of 17 interconnected, mutually reinforcing measures covering the full spectrum of market activities, intended to allow the EU to break through existing barriers in its capital markets and propel the CMU towards completion. (Source: Final report of the High Level Forum on the Capital Markets Union – A new vision for Europe’s capital markets, 10 June 2020) Next steps On the date of issue of the report, the European Commission launched a call for feedback from stakeholders on its proposed measures that ended on 30 June, 2020. Drawing on the report and the public consultation, the European Commission intends to publish, in Q4 of 2020, the second CMU Action Plan to be composed of short-to-medium term actions and related measures, with a view to establishing a true single market for capital. For further information on the final report on the Capital Markets Union, please contact us on [email protected].