Report on accelerating the Capital Markets Union: addressing national barriers to capital flows

The success of the Investment Plan for Europe in channelling funding to projects with an added value for the European economy depends partly on the collective capacity of the EU and its Member States to overcome barriers to cross-border investment. Therefore, as part of the third pillar of the Investment Plan, which focuses on removing obstacles to investment, the Commission committed to accelerating the process of creating a Capital Markets Union (CMU).

Building integrated financial markets as part of the CMU requires important decisions at EU level, but also decisive commitments by each Member State to tackle national barriers. Action at national level is needed to set up the clear, predictable and stable environment that will allow for more investment and a more efficient allocation of capital, and ultimately boost financing of business and infrastructure.

Following a call by the ECOFIN Council of June 2015, the Commission and an expert group of Member States’ representatives have been working together, with the European Parliament as observer, to map national barriers to cross-border capital flows and find the best ways of tackling those that are either not justified by public interest considerations or are disproportionate. This work should result in a joint roadmap for removing these barriers that would complement other initiatives on existing obstacles to investment identified by the Commission in the context of the European Semester and the CMU-related work aimed at developing capital markets with assistance provided by the Structural Support Reform Service (SRSS).

The Commission believes that this collaborative method of working with Member States, on the basis of the mutual evaluation of national requirements, peer reviews and an exchange of best practices, can bring substantial benefits. In this spirit, the expert group has started working on a number of barriers that are mainly in the area of national competence, which were selected based on Member States’ input and stakeholders’ replies to various CMU-related consultations. This report represents the Commission's interpretation of the legal situation in the Member States, based on the evidence and information available. Further to the adoption of the first version of this report on 27 February 2017, the Commission was made aware of certain inaccuracies, mainly due to incomplete or conflicting information, and consequently decided to adopt this amended version.

A first set of barriers identified by the expert group includes issues that hamper investors’ cross-border operations throughout the investment cycle. This report distinguishes between ex ante barriers (of immediate concern when investors consider engaging in crossborder activity), in itinere barriers (deterring investors from maintaining or increasing their cross-border exposure) and ex post barriers (leading to difficulties at the end of the investment process).

For each of the above, this report builds on the discussions in the expert group and proposes next steps, without necessarily reflecting a consensus between the Member States on each subject. The Commission expects Member States to agree on the proposed roadmap and take action accordingly. It intends to monitor the implementation of the roadmap and, while continuing to work with the Member States to gather exhaustive and updated information, it invites the expert group to identify other barriers in CMU-relevant areas. It sees the roadmap as a living document that will need to be updated with additional action, to be taken before 2019, on barriers which may be identified in a second stage.