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Policy Contribution

Making a reality of Europe’s Capital Markets Union

It is high time to make the CMU project real.The authors of this publication suggest that capital markets will only transform with concrete action and that ESMA reform should be a priority but cannot be the only one. Policymakers need to set priorities that will move the project forward.

By: , and Date: April 27, 2018 Topic: European Macroeconomics & Governance

The deepening and integration of the European Union’s capital markets is a long-term structural endeavour. Although difficult to achieve, it is worthwhile for several reasons: a meaningful body of economic analysis strongly suggests that purely bank-based financial systems are more prone to crises and might produce lower growth performance; widely-accepted analysis suggests that cross-border capital market integration can be an important complement to fiscal risk sharing; and the departure from the EU of the United Kingdom – home to the EU’s main capital market centre – makes the project even more relevant. Although integrating and deepening capital markets has been a long standing goal of the EU, actual progress has been limited.

The European Commission’s welcome Capital Markets Union (CMU) agenda has led to many legislative proposals to advance the development of EU capital markets. Although the European Council has repeatedly underlined the CMU’s importance, only a few of these legislative proposals have been adopted. At this stage, significant progress will only be feasible if clear priorities are set. We argue that strengthening and expanding the role of the European Securities and Markets Authority (ESMA) should be prioritised because: (a) it is a relatively easily implementable step; (b) it would entrust an institution with driving the agenda forward; and (c) it would put an effective check on the potential financial stability and business conduct challenges that might arise from cross-border capital markets integration. Other major legislation, in particular on business insolvency and on personal pension products, could also be prioritised for completion during the current European Parliament legislative term.

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Blog Post

Big Macs in big countries: an update on euro area adjustment

Have prices moved in the direction of correcting real exchange rate misalignments everywhere in the euro area in recent years? Not between the largest euro-area economies, i.e. France, Germany and Italy, says evidence from the Big Mac index. However, latest trends may be working in the right direction in these countries too.

By: Konstantinos Efstathiou Topic: Global Economics & Governance Date: September 20, 2018
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Policy Brief

One size does not fit all: European integration by differentiation

The need for reform of the EU is increasingly urgent. The authors of this policy brief suggest a new governance model, combining a bare-bones EU with a 'Europe of clubs'. Such reform would offer scope for broad membership without stalling the process of integration for those that wish to pursue it.

By: Maria Demertzis, Jean Pisani-Ferry, André Sapir, Thomas Wieser and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: September 19, 2018
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Blog Post

The economic case for an expenditure rule in Europe

Proposals for reforming the euro area back on the agenda. An overhaul of the European fiscal rules should be on high on this agenda, because the current fiscal framework has not worked well. This column proposes substituting the numerous and complex present rules with a new, simple rule focused on limiting annual growth rate of expenditures.

By: Zsolt Darvas, Philippe Martin and Xavier Ragot Topic: European Macroeconomics & Governance Date: September 13, 2018
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External Publication

The EU’s Multiannual Financial Framework and some implications for CESEE countries

Bruegel scholars Zsolt Darvas and Guntram Wolff contributed to the September 2018 edition of the OeNB's Focus on European Economic Integration.

By: Zsolt Darvas and Guntram B. Wolff Topic: European Macroeconomics & Governance Date: September 12, 2018
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Opinion

Should central European EU members join the euro zone?

Eurozone membership (or the use of a fixed exchange rate) was not a factor determining economic success in Central Europe. There were both good and bad macroeconomic performances in both the flexible and the fixed exchange rate regimes of Central European countries. The implication is that Central European “outs” could be economically successful both with and without the euro, yet the EU is not only about economic benefits.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: September 11, 2018
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Blog Post

The higher yield on Italian government securities could soon be a burden for the real economy

The increase in the spread between Italian (BTP) and German (Bund) government securities is directly an additional burden for Italy public finance, and thus for tax payers. But it could soon also become a burden for the real economy, as the increased yield on Italian government securities could pull up the cost of bank loans for Italian firms, thus imparting a deflationary impact onto the economy.

By: Francesco Papadia and Inês Goncalves Raposo Topic: European Macroeconomics & Governance Date: September 10, 2018
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Upcoming Event

Oct
23
12:30

Europe: Back to the future of a political project

This event will feature a discussion on different ideas for reforming European Governance.

Speakers: Ulrike Guerot, Adriaan Schout and Guntram B. Wolff Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels
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Policy Contribution

High public debt in euro-area countries: comparing Belgium and Italy

This Policy Contribution looks at the evolution of public debt in Belgium and Italy since 1990 and uses the debt dynamics equation to explain the contrasting evolution in the two countries in the run-up to the introduction of the euro, during the early years of the euro and since the beginning of the crisis, arguing that the euro could have been used also by Italy to undertake sufficiently large fiscal adjustment.

By: André Sapir Topic: European Macroeconomics & Governance Date: September 6, 2018
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Podcast

Podcast

Backstage: Next steps towards banking and capital markets union in Europe

Bruegel senior fellow Nicolas Véron talks with Jörg Kukies, state secretary at the German finance ministry, about the next steps to the banking union project in Europe, as well as the potential challenges that lie ahead.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: September 4, 2018
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Opinion

Overcoming the hurdles to Italian Growth

Is the time for refining recommendations and for a serious political debate on how best to overcome bottlenecks and improve the economic prospects of Italians.

By: Guntram B. Wolff Topic: European Macroeconomics & Governance Date: September 4, 2018
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Blog Post

Fighting fear with factfulness – and engagement

Margrethe Vestager, European Commissioner for Competition, delivered the keynote speech at Bruegel's Annual Dinner 2018, held on 3 September 2018.

By: Margrethe Vestager Topic: European Macroeconomics & Governance Date: September 3, 2018
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Blog Post

Italy’s capital flight: 2011, 2016, and early 2018

International investors have been repositioning vis-à-vis Italy, after the new government took office in early May. We compare this summer turmoil to previous episodes of capital outflows. Outflows from Italian portfolio investments in May and June have exceeded the outflows recorded during the summer of 2011, and are already halfway to matching the cumulated total outflows recorded during the entire 2011-12 crisis.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: August 31, 2018
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