Responding to the publication of the European Commission’s Green Paper for Capital Markets Union, the Institute of Directors has welcomed the Commission’s aims while warning against the temptation to rush through any short-term legislative fixes which may increase the regulatory burden for businesses.
Allie Renison, Head of Europe and Trade Policy at the Institute of Directors said:
“The aim of a capital markets union is a worthy one. Smoothing the flow of money across Europe and allowing companies and individuals to access different sources of finance from across the EU has clear benefits. As businesses increasingly shun traditional sources of capital, the need for ambitious reform in this area becomes even clearer.
“Both the cultural and architectural barriers which stand in the way of this project raise challenges for the European Commission, though. It is clear that the broad brush of legislation will not be a silver bullet. The Commission will need to work with the finance sector to deliver a framework which promotes industry-led initiatives that boost lending to smaller companies across the continent, such as encouraging fund managers to underwrite small-scale loans.
“Therefore, for this project to work, Europe will have to move beyond its latent suspicion and mistrust of financiers, investors and banks. For capital markets to be part of the solution we have to stop treating the financial sector as part of the problem.”