EC published a list of indicators to help track developments of capital markets and measure progress achieved by the Capital Markets Union policy of EU. These indicators will help identify whether certain rules need to be adjusted to boost capital markets of Europe or if new measures are required. Developing capital markets and ensuring access to market financing will be essential to help Europe recover from the economic crisis caused by COVID-19 pandemic.
The purpose of the indicators is three-fold:
- Monitor progress toward objectives of the Capital Markets Union
- Provide a framework for the analysis of capital market development and an empirical basis for future analysis of the overall impact of past capital markets union measures
- Help identify the areas where existing policies may need to be adjusted or new policies may need to be developed.
EC put forward a new Capital Markets Union action plan in September 2020. While some progress has been made since the Capital Markets Union was launched, the EU capital markets remain largely fragmented. By tracking overall progress toward the key objectives of the Capital Markets Union, the indicators will complement evaluation and impact assessment of individual measures under the action plan. In its staff working document on the indicators, EC highlights that the indicators allow for a comparison between the member states. For most indicators, over the examined period, the member states with less developed markets have also been the ones where the situation has improved the most, demonstrating the well-established "catching-up" effect. However, the Capital Markets Union indicators cannot offer a complete picture of all relevant developments. They are designed to be stable, yet sufficiently open to integrate new indicators or replace existing indicators with more suitable ones, once more or better data become available, making the toolkit dynamic.
Furthermore, reporting on relevant sustainability data will be gradually introduced to track progress toward sustainable finance and more broadly towards the green objectives, notably the reporting under the Taxonomy Regulation, the Sustainable Finance Disclosure Regulation, and the recently tabled proposal for a Corporate Sustainability Reporting Directive (revising the Non-Financial Reporting Directive). These could be useful to develop new sustainable finance indicators. Other areas where new indicators may become available in the future relate to financial literacy and the state of insolvency frameworks (when the ongoing feasibility assessment on value recovery data is completed). Thus, the future iterations of the Capital Markets Union indicators toolkit, which is planned to be updated annually, may include new or adapted indicators.
Keywords: Europe, EU, Banking, Securities, Capital Markets Union, Sustainable Finance, ESG, Taxonomy Regulation, SFDR, NFRD, EC
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