Jonathan Hill, the European Commissioner for
financial services, said he was seeking to create an integrated
capital market over the next fives years and would develop a
plan by next summer following a public consultation.
"We still do not have a fully functioning single market for
capital," Hill told a conference of EU officials and business
leaders. "I will be bringing forward proposals to deliver a
capital markets union; a project for all 28 EU Member States."
Channeling more money into small companies is seen as crucial
for Europe's efforts to avoid economic stagnation because small
and medium enterprises provide two out of every three private
sector jobs in the European Union.
Following the worst financial crisis in a generation, banks are
reducing riskier lending, a problem in a continent where banks
account for 80 percent of corporate loans.
A capital markets union would mean the EU moving beyond public
subsidies and loans to coordinate financing for companies and
infrastructure through project bonds, public-private
partnerships and infrastructure funds.
Hill said his first steps would be to push a proposal for
European long term investment funds for infrastructure and
businesses, to develop a framework for securitization and to
carry out analysis of private placements - the sale of
securities to a small number of chosen institutional investors.
"I am interested in ideas for more market finance instruments –
but not just in safe short-term debt, but in longer term stable
debt that encourages long term investment, and in real risk
capital that encourages innovation."
The European Central Bank is at the heart of wider efforts to
create a capital markets union by trying to revive
securitization, or the bundling of loans into bonds to raise
cash for companies to invest.
(Reporting by Robin Emmott)
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