A recent study from the IMF finds that Euro area capital markets only absorb a very small share of shocks, compared with almost 50% in the United States. Shock absorption is particularly weak during crisis periods.
1 A capital markets union, and the corresponding increase in cross-border holdings of debt and equity, will allow for greater diversification in risk-sharing, helping businesses and households cushion economic downturns. A capital markets union, and the corresponding increase in cross-border holdings of debt and equity, will allow for greater diversification in risk-sharing, helping businesses and households cushion economic downturns.