This compares with only 20% of shocks to GDP growth that can be smoothed in the euro area.3 The capital markets union (CMU) agenda therefore needs to be pursued with renewed vigour to foster a deeper integration and development of markets. Second, the banking union is still not a reality even though two of its three pillars have been put in place.
Euro area-based banks have substantially reduced their cross-border claims since the crisis, and about 60% of banks’ total exposures are to their home countries.4  This is worrying at a time when the political momentum behind completing the banking union is fading.