The European Commission (EC) has laid out its plans to accelerate the completion of the Capital Markets Union (CMU), a plan to mobilise finances in Europe and build a "true single market for capital". One of the main aims of this is to make sure businesses have all the access to funding they need.
In his 2016 State of the Union address, EC president Jean-Claude Juncker said: "Imagine a Finnish start-up that cannot get a bank loan. Right now, the options are limited. The Capital Markets Union will offer alternative, vital sources of funding to help start-ups get started – business angels, venture capital, market financing."
The EC intends to rapidly finish the first wave of CMU initiatives, which were announced over a year ago. One of these is reaching an agreement on proposals for Simple, Transparent and Standardised (STS) securitisations. If these proposals are implemented, they could lead to banks having more available funds and more opportunities to invest in businesses.
Agreement on this has already been reached within the EC, meaning progress now needs to be made in the European Parliament. It is thought that reviving EU securitisations could bring in around 100 billion euro to the European economy, as well as creating a more stable financial environment. Both of these would be very positive for businesses.
Another initiative is modernising the rules of the Prospectus, which is described by the EC as "the gateway to EU capital markets". The aim is to make this simple, allowing investors to easily understand and quickly approve it, which in turn would make it much easier for small businesses to access capital.
Jyrki Katainen, the EC's vice-president said: "The most important part of the Investment Plan is improving the business environment in Member States and removing barriers to investment. Completing the Capital Markets Union will help to knock down these barriers so that we can spur private sector investment in infrastructure and SMEs."