Over recent months, AMAFI has been thinking about ways to reinvigorate the Capital Markets Union (CMU) initiative. To tap into the expertise of a recognised think tank, these discussions are being held in conjunction with the Centre for European Policy Studies (CEPS). Account is also being taken of work already done or under way on the topic (see editorial). While the reforms carried out so far have fallen well short of their original goals and failed to match the scale of the financing needs, the coronavirus health crisis has utterly transformed the backdrop to this discussion in past weeks. Most of the challenges are well-known and revolve around enabling the markets to grow alongside bank credit, which is now constrained, in order to finance the struggle against climate change, the digital revolution, the fourth industrial revolution, and efforts to adapt social structures to cope with population ageing. Moreover, this needs to be done while simultaneously ensuring that the European Union maintains adequate control over its financing sources, without which it cannot hope to have real sovereignty. The need for structural reforms at European level has become much more urgent, if we want markets to play their role to the full in financing the economic recovery while also being ready to cushion the impact of potential future crises.

AMAFI’s proposals will be published in the coming weeks. The overriding goal is to draw on the work done in this area in order to plot a consistent path forward based around members’ experience with market functioning and market mechanisms. Six priority areas have been identified, namely to facilitate the creation of a genuine European securitisation market, make the prudential regulatory framework more flexible, grow the role of pension funds, consider public support in specific areas, maintain access to international pools of liquidity and provide European markets with a safe asset, which is vital to structuring aspects.