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Brexit and coronavirus spur EU to deepen capital market

Thu, 24th Sep 2020 11:59

By Huw Jones

LONDON, Sept 24 (Reuters) - The European Union on Thursday
presented plans to expand and bolster its capital market to help
reboot companies hit by the coronavirus and reduce the bloc's
reliance on the City of London after Brexit.

Companies need to refund themselves as they emerge from
recession caused by pandemic lockdowns, with Brussels wanting
them to use stock and bond markets and reduce reliance on bank

The plans would help give the EU market "strategic autonomy"
when Britain exits the bloc's single market on Dec. 31, the EU
launch documents said.

Digital finance forms a core plank of the bloc's third batch
of measures in five years to create a Capital Markets Union
(CMU) by including what EU officials describe as the world's
most comprehensive set of rules for cryptoassets.

"The strength of our economic recovery will depend crucially
on how well our capital markets function and whether people and
businesses can access the investment opportunities and market
financing they need," the EU's financial services chief Valdis
Dombrovskis said in a statement.

European Commission officials say top political support will
be needed to push through the reforms after patchy success with
previous attempts at building the CMU.

"There is a lack of vision for CMU on where we want to get
to in 10 years' time, and on how to consolidate the hopelessly
fragmented and expensive investment funds market," said Karel
Lannoo, chief executive of Brussels think-tank CEPS.

Pablo Portugal, managing director for advocacy at banking
and markets industry body AFME said it was time that
policymakers delivered on CMU.

The collapse of German payments company Wirecard has raised
questions about supervision. The CMU plans stop short of calling
for a single markets supervisor, but stresses the need for more

"It is an essential condition for a well-functioning CMU.
This will be particularly relevant in a post-Brexit world with
multiple financial centres across the EU," it said.

The plans include the first set of rules specifically for
supervising providers of cloud computer based services as banks
outsource more and more critical information technology.

(Reporting by Huw Jones; Editing by Andrew Heavens)

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