Claudia Buch: Capital Markets Union - a central banking perspective on the way forward

Keynote lecture by Prof Claudia Buch, Vice-President of the Deutsche Bundesbank, prepared for the 2nd Annual Conference of the Joint Research Centre (JRC) Community of Practice in Financial Research Capital Markets Union: Unlocking Europe's Economic Potential, Brussels, 4 December 2019.

The views expressed in this speech are those of the speaker and not the view of the BIS.

1 Motivation

The free movement of capital constitutes a cornerstone of the European integration process. More than 60 years ago, the Common Market was initiated with the Treaty of Rome in 1957. Since then, a number of initiatives have been undertaken to further this integration by abolishing capital controls, harmonising financial sector and banking regulation, and by establishing the Single Supervisory Mechanisms and the Single Resolution Mechanism.

Despite these significant efforts of institution-building and legal harmonisation, there is a sense that the cross-border integration of financial markets in Europe remains incomplete compared to, for instance, the United States.

Incomplete cross-border integration of financial markets may impede investment opportunities for households and firms and an efficient allocation of assets across countries. At the same time, European societies need to deal with challenges such as demographic change, climate change, and changing patterns of globalisation. This creates a need to re-assess the state of integration of financial markets and to evaluate policy measures that can help to eliminate existing bottlenecks and reduce frictions.