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Analysis of developments in EU capital flows in the global context (2nd report)

The purpose of our report is to provide a comprehensive overview of capital movements in Europe in a global context.

By: , , and Date: January 28, 2016 European Macroeconomics & Governance Tags & Topics

This report analyses capital movements in Europe in a global context. Capital outflows from the EU as a whole declined in recent quarters and there was even a net inflow in 2015Q1, driven by both euro-area and non-euro area countries.

Some emerging countries experienced capital outflows, which are likely related to expectations about tightening monetary policies in the United States. Our econometric results confirm the importance of global factors in driving capital flows to emerging countries, but also show that FDI flows are rather insensitive in contrast to portfolio and other investment flows.

Following a period of more than two decades of large-scale foreign exchange reserve accumulation by primarily emerging-country central banks, reserves started to decline, which is a rather marked trend-change and can lead to interest rate increases in advanced countries and offset the impacts of quantitative easing policies.

At the EU’s border, Ukraine managed to attract some capital in recent months, but Russia continues to display persistent net capital outflows. We report a remarkable similarity between capital flows in central and eastern European member states and euro area periphery countries during the past twelve years.

We analyse the bilateral patterns of capital flows to Greece and Cyprus in the context of their respective crises. Intra-euro area financial integration continues to be lower than it was in the pre-crisis period.Our econometric analysis shows the dis-anchoring of EU countries’ domestic savings and investments in the pre-crisis period, which has reversed in the past six years.

While the euro-area aggregate financial cycle fluctuated rather moderately, a major divergence of domestic financial cycles can be observed within the euro area, which was very much linked to capital flows. The credit cycles for the UK, Denmark and Sweden are found to have been close to the euro-area cycle. We analyse the challenges faced by macro-prudential policy in the euro area and suggest improvements.

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Nicolas Véron

Brexit should drive integration of EU capital markets

Brexit offers EU-27 countries a chance to take some of London’s financial services activity. But there is also a risk of market fragmentation, which could lead to less effective supervision and higher borrowing costs. To get the most out of Brexit, the EU financial sector needs a beefed up ESMA.

By: Dirk Schoenmaker and Nicolas Véron Topic: Finance & Financial Regulation Date: February 24, 2017
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Policy Contribution

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Brexit and the European financial system

Brexit will lead to a partial migration of financial firms from London to the EU27. This Policy Contribution provides a comparison between London and four major cities that will host most of the new EU27 wholesale market: Frankfurt, Paris, Dublin and Amsterdam. It gives a detailed picture of the wholesale markets, the largest players in these markets and the underlying clearing infrastructure. It also provides data on professional services and innovation.

By: Uuriintuya Batsaikhan, Robert Kalcik and Dirk Schoenmaker Topic: Finance & Financial Regulation Date: February 9, 2017
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External Publication


Analysis of developments in EU capital flows in the global context (3rd annual report)

The purpose of this report is to provide a comprehensive overview of capital movements in Europe in a global context.

By: Zsolt Darvas, Konstantinos Efstathiou, Pia Hüttl and Dirk Schoenmaker Topic: European Macroeconomics & Governance Date: January 10, 2017
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External Publication


What role for the financial markets in Europe?

The European European financial system is too strongly bank-based. How can it be rebalanced to become favourable to growth and employment again? (This paper is only available in French).

By: Grégory Claeys Topic: Finance & Financial Regulation Date: November 16, 2016
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Diversifying funding for growth in transition countries

Debt levels in transition economies have risen by 25% relative to GDP since the financial crisis, yet there is still a huge gap in growth-friendly investment. Which financial tools could offer the region the diversified funding needed to support convergence?

Speakers: Çağatay Bircan, Zsolt Darvas and Hans Peter Lankes Topic: Finance & Financial Regulation, Global Economics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: November 13, 2015
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Capital Markets Union: what’s the vision for European debt capital markets?

After the launch of the Commission's Capital Markets Union action plan on September 30, what changes can be realistically expected in Europe’s debt capital markets over the next five to ten years?

Speakers: Harriett Baldwin MP, Nicolas Véron, Katharine Braddick, Colin Ellis, Martin Merlin, Stuart Anderson, Matt Cavanagh and Bruegel Topic: Finance & Financial Regulation Location: 100 Parliament Street, SW1A 2BQ Date: October 21, 2015
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Past Event

Past Event

From start-up to scale-up: fueling growth firms in Europe

While there has been an increased policy focus on start-ups, few of these firms are able to survive and grow longer term. It is the high-growth businesses, ones that are able to scale-up, which create jobs and economic growth, drive innovation and improve societies. What are the barriers for young innovative firms to scale up and how can they be addressed?

Speakers: Sherry Coutu, Thomas Hellmann, Dörte Höppner and Karen E. Wilson Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 29, 2015
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Blog Post

Marco Antonielli
Carlo Altomonte

Are capital markets the only friend of innovation?

Intangible assets are the key to growth in the knowledge economy, but innovative entrepreneurs can find it hard to secure the financing to kick-start their projects. The role of capital and credit markets in procuring funds for innovation is therefore crucial. 

By: Marco Antonielli and Carlo Altomonte Topic: Finance & Financial Regulation, Innovation & Competition Policy Date: March 19, 2014