The Science behind the Capital Markets Union Mid-term Review

Today's Mid-term Review of the Capital Markets Union (CMU) Action Plan took stock of the progress towards better funding and investment opportunities and economic resilience. JRC has provided support for the economic analysis and econometric modelling to find out where we stand with financial integration.

Capital Market Union Key indicators

The Joint Research Centre (JRC), the Commission’s in-house science service, supplied crucial technical support in measuring progress towards integration of EU capital markets. It provided the modelling, economic analysis and some key indicators to monitor the advancement of CMU. Among others, it estimated the degree of EU integration in the equity and bond markets showing that integration is on a steady recovery after the crisis, despite some signs of stagnation in price-based indicators. It also identified significant home bias, i.e. an overwhelming percentage of investment portfolios are in the national markets, especially in the equity market, but again on a downward trend since the financial crisis. Another finding is the decreasing diversification of cross-border debt holdings. Home bias and lack of diversification have prevented the international capital markets to significantly cushion the negative effect of the sovereign crisis and share risks across EU countries.

Further details: The Science behind the Capital Markets Union Mid-term Review