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Symposium 2015

Capital market union - How Should it be Designed to Solve the European Growth Problem?

The Challenge

The basis idea of a capital market union is simple: Capital should flow from surplus countries to deficit countries. In South European economies there is a general lack of capital. Most firms, especially those oriented to the domestic market, have trouble to get finance from their banks and from the capital market. On the other hand, investors in Germany and other parts of Northern Europe suffer from low yields and a lack of investment alternatives. It looks as if there is a straight forward solution to this problem: Let those people from northern Europe looking for investment alternatives finance those firms in southern Europe, which are seeking capital and which are willing to offer higher rates than their peers in the north. These investments should be done through the capital market and/or the banking market. It would be win win situation as investors would get higher yields and broader diversification while companies lacking capital would be enabled to do more business. The result would be more real investment and higher growth rates throughout Europe.

As simple as this idea sounds, as complex are the institutional requirements to realise this concept. What role does the insolvency law as well as tax regimes have in the context of a capital market union and how should they be reformed? Will banks be substituted by capital markets or are banks and capital markets complementary in this process? How could finance through the stock market be increased? Are the proposals of the European Commission pointing in the right direction? What can we learn from the US capital market union?

This session is organized by the HSH Nordbank.

    Solutions

    Solution
    Symposium 2015

    Financial Regulation and Stabilization

    Financial Regulation and Stabilization

    Financial Regulation and Stabilization