Dialogue on Creating an EU Capital Markets Union

London | February 23, 2015


Jim Esposito, co-head of the Global Financing Group at Goldman Sachs, and Craig Calhoun, professor and director at the London School of Economics and Political Science, lead a conversation on creating an EU Capital Markets Union.


Goldman Sachs Research

We are pleased to share research from Goldman Sachs Global Investment Research, “Unlocking Europe’s economic potential through financial markets.”



Unlocking Europe’s Economic Potential provides an overview of challenges facing the European economy and the potential benefits of CMU.


Key Takeaways

The need to create a seamless market for capital across the EU and to provide increased funding diversity for SMEs were among key takeaways from the Dialogue.



Media appearances and commentary by Goldman Sachs leaders relating to the Dialogue on Creating an EU Capital Markets Union.



Europe’s recovery from the financial crisis has been relatively slow. The European economy is now growing again, but at a modest pace. Further efforts are required to strengthen the region’s economy.

In order to further advance Europe's competitiveness, policymakers have identified the need for an EU Capital Markets Union to expand the availability and accessibility of financing opportunities for businesses and households. Through these efforts, the financial sector can support growth and job creation in Europe.

Capital markets play a vital role within the global economy. By bringing together buyers and sellers of debt and equity instruments they enable businesses to raise finances to fund their growth and expansion. Through this growth and expansion jobs are created, investment opportunities realized and economies grow.

The European capital market is significant and many segments of the European capital markets are working well. Some parts, however, are facing a crossroad.

A key feature of European financial markets is the predominance of bank financing relative to other sources of financing. For example, banks provide 70% of European firms’ external financing through loans. This differs from the United States market where consumers, small and medium sized enterprises (SMEs) and larger corporates all benefit from raising financing through the capital markets.

This is particularly important for SMEs, which form the lifeblood of the European economy. One of the differences of the European economy, relative to other economies including the United States, is the significance of the contribution by SMEs to European growth. By way of example, half of European employees work at firms employing fewer than 50 people. This is why broadening the funding options available to SMEs goes to the heart of ensuring that the European economy grows.

Europe has both a large pool of savings that are seeking higher returns, and at the same time a range of investment opportunities – in housing, in infrastructure, among entrepreneurs – that are constrained by a lack of financing.

A more efficient financial system through the development of an EU Capital Markets Union would help better connect borrowers with lenders, channeling the large pool of savings held by institutional and retail investors to the households, SMEs and infrastructure projects in Europe that are in need of finance.

An open, accessible pan-European capital market would allow both institutional and retail investors to allocate their savings in a more efficient way across the whole EU. Deeper, more liquid and better integrated markets would broaden the range of investment opportunities available, with the resulting spending helping to unlock the economic potential of Europe.

Goldman Sachs and the London School of Economics and Political Science convened a dialogue to discuss this topic on 23 February in London. The dialogue brought together thought leaders from the public and private sector to discuss the benefits of creating and the steps that can be taken to achieve an EU Capital Markets Union.

Goldman Sachs Research

A more efficient financial system is key to unlocking Europe’s economic potential, according to a paper by the Global Investment Research Division at Goldman Sachs. A team led by Huw Pill, Goldman Sachs’ chief European economist, argues that developing deep and liquid continent-wide capital markets to complement the banking sector would support trend growth in Europe. Read Unlocking Europe’s economic potential through financial markets.



Unlocking Europe’s Economic Potential: How the European Capital Markets could help unlock economic potential in Europe

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Explore research from the London School of Economics and Political Science and other organizations on the European capital markets.

In the papers presented in the Research From LSE and Other Organizations section above, the views and opinions expressed are those of the authors; the papers are presented for informational purposes only and do not constitute any investment advice or recommendation by Goldman Sachs.

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Talks@GS - EU Capital Markets Union

Huw Pill, chief European economist within the Global Investment Research
Division at Goldman Sachs, moderated a panel discussion in London
exploring the possible creation of an EU Capital Markets Union.
Watch Video