The political economy of European Capital Markets Union

Abstract:

This contribution undertakes a preliminary investigation of the ‘making’ of the CMU project, explaining what CMU is, its economic and political objectives, as well as its main drivers and obstacles. It is argued that the likely winners and losers of the project largely formed the constituencies for and against CMU. The organization of national financial (and specifically banking) systems largely directed Member State government preferences on CMU. The potential winners were also influential in promoting a specific form of CMU, or at least specific priorities in the construction of CMU.

The analysis below is organized as follows. Section I discusses the incomplete financial market integration in the EU as well as the variations in financial capitalism in its Member States, which sheds light upon national preferences on CMU. Section II explains the objectives and the main features of CMU. Section III examines the promoters of and ‘foot-draggers’ on CMU, with Member State government and economic interest group preferences gauged principally by written responses to the Commission's consultation on CMU and other public statements. Section IV focuses on the specific element of the CMU project which was prioritized by EU policy-makers – namely, securitization – and was the subject of the Commission's first explicitly CMU-linked legislative proposals of September 2015.