Capital Markets Union by itself is insufficient

The lack of investment and high dependency of European businesses on bank lending are the main grounds of the new Commission ́s proposal on the Capital Markets Union. The European Commission aims at providing companies with a better approach to the sources of funding across the EU, at contributing to investment mobilization in private sector and at facilitating diversification of the sources of funding.

The impact of Commission ́s proposal on the range of investment products and investment needs of companies was discussed with stakeholders and financial experts at a debate hosted in European House in Prague on 25th February. Some participating experts stressed that deeper integration and stimulating liquidity on the capital markets could result in continuous pressure on the competitiveness of Czech companies that are recipients of foreign capital. Experts and visitors also agreed that the Capital Markets Union is the first and significant step to improving the current situation, but by itself is insufficient. “When accessing finance, companies are struggling with non-functional infrastructure causing that fiscal solutions do not answer legislative and administrative solutions”, said Jana Michalíková, Director of Czech Association of Capital Markets. Therefore improvement of legal environment and less fragmentation of market is only a part of the solution to asymmetry between potential investors and companies looking for financing.

According to Martin Špolc, representative of DG FISMA of the European Commission, bigger diversification of financial instruments will result in lowering the dependency of businesses on bank financing, reducing costs of financing and boosting the economic growth. It will create a better environment for the investors as well by giving them broader variety of investment opportunities and turning savings into productive investments, including infrastructure projects. The proposal on the Capital Markets Union was introduced along with a public consultation that is open for all stakeholders until 13th May 2015 and its results will be used for creating an action plan that is supposed to be published in the third quarter of this year.