The euro area still lacks genuinely integrated capital markets, which hinders the efficient allocation of European savings, private cross-border risk-sharing to smoothen consumption during idiosyncratic shocks and the use of the euro as an international currency. Recent legislative steps are commendable but 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. A large number of banks and investment firms are in the process of establishing or expanding their euro area presence, possibly resulting in the development of a multi-centric European financial system.