What Happened: France, Germany and the Netherlands have called on the European Union to speed up the creation of a capital markets union within the bloc, the Financial Times reported May 16. Specifically, the three governments have urged the European Commission to appoint a special team to draft proposals to reduce barriers to cross-border investment in the European Union.
Why It Matters: The United Kingdom's withdrawal from the European Union is forcing the bloc to create new financial centers, while also creating an opportunity for member states to deepen the integration of their financial sectors. Although the EU single market ensures the free movement of capital, the bloc's financial sectors remain relatively fragmented due to diverging regulations and practices.
Background: The European Commission first proposed a plan to deepen the integration of capital markets in the bloc in 2014 to provide companies and households with greater choices to access funds, although difficulties regarding the elimination of national barriers and the harmonization of rules have slowed down its implementation.