Cross-border investment is not a significant buffer against economic shocks, as it is across US states. The euro area still lacks genuinely integrated capital markets, which hinders the efficient investment of European savings as well as the use of the euro as an international currency.
Recent legislative steps are commendable but they do not measure up to the initial ambition of the capital markets union project. Brexit will further accentuate the need to develop and integrate the EU’s capital markets to prepare for the likelihood that the City of London will play a more reduced role in the future as a hub of European savings.